Reducing the urban-rural wage gap and providing income-generating opportunities in rural areas has been high on China’s political agenda since 2018, when China first launched its rural revitalization strategy. In Yunnan Province, a focal area for China’s poverty alleviation and rural development initiatives, the International Fund for Agricultural Development (IFAD) has been working with the Chinese government to increase income opportunities for vulnerable households. These efforts aim to ensure that rural communities benefit from the growing agro-industrial economy.
Upon invitation from IFAD, on 6 January, DCZ expert Michaela Boehme visited Yongping Guoliang, a local walnut company that has been supported by IFAD, to gain insights into how rural development mechanisms are transforming farmer livelihoods in the region.
Development model: creating value chains for organic, local products
Founded in 2010, Yongping Guoliang is a leading enterprise in Yunnan’s walnut industry. The company operates a vertically integrated supply chain, encompassing cultivation, processing, and export, and is based in Yongping County—one of Yunnan’s most vulnerable areas in terms of rural poverty.
By collaborating with farmers to produce and export high-quality, organically certified walnuts, Guoliang has contributed to stabilizing and increasing household incomes. The company works with 6,000 farmers and cooperatives across 12 villages, covering over 1,300 hectares of walnut plantations. In return for cultivating walnuts exclusively for the company, farmers receive guaranteed purchases at premium rates. Guoliang also provides training in organic farming practices, taking advantage of the region’s pristine environment, which is free from industrial pollution.
IFAD support and impact
In 2023, Guoliang secured a grant of 1.2 million RMB from IFAD’s Yunnan Rural Revitalization Demonstration Project, supplementing this with 1.59 million RMB of its own funds. The investment enabled the company to renovate its walnut roasting and sorting workshop and acquire new processing equipment. According to IFAD, the project has directly benefited 470 farmers, including 34 households that were previously classified as impoverished. It has also supported 68 existing employees and created 41 new jobs, with a strong focus on empowering rural women.
Beyond direct employment, Guoliang encourages local households to invest in the walnut industry for shared benefits. The company says that, to date, 152 farmers have invested 3,000 RMB each in the company, earning annual returns of 6% to 8%. According to company director Peng Zhiqiang, farmer incomes have significantly increased, with the walnut industry now accounting for 60% of rural household income in the region.
Challenges and the path ahead
The contract farming model rolled out by Guoliang, with support from IFAD, has significantly contributed to rural development by creating income opportunities for vulnerable households and strengthening local industries. However, challenges persist. The high labor costs associated with manual harvesting, shelling, and skin removal have impacted the company’s economic sustainability. Additionally, ongoing rural out-migration in search of better job opportunities and higher wages has led to labor shortages. The project highlights the complexities of developing a rural model that balances fair inclusion of smallholders with long-term economic viability.
