WP No.2012-01

School of Contemporary Chinese Studies

China Policy Institute

Farmer Innovation Diffusion via Government Intervention:

An empirical study of straw utilisation technology

development and diffusion in China

WORKING PAPER SERIES

Dr Bin Wu

Dr Liyan Zhang

Working Paper No. 21

April 2016

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Farmer Innovation Diffusion via Government

Intervention: An empirical study of straw utilisation

technology development and diffusion in China

Abstract

Farmer innovation diffusion (FID) in the developing world is an important channel

for farmers to learn and adopt new technologies which are made by farmer

innovators (Wu and Zhang, 2013). Depending upon many factors or conditions,

some farmer innovations can be disseminated widely across geographic, ecological

and cultural boundaries via the involvement of external actors, such as government

or non-government organisations. In this regard, China is a good case study in

terms of the roles of government intervention in FID. Many questions arise here:

What is the interplay between government intervention and FID? Under what

conditions can government intervention be successful, with regard to an

acceleration of FID and wide adoption in rural communities? Why do government

interventions often fail in reality and what lessons can be learned from China's

practices? The above questions will be addressed by an empirical study of the

development and diffusion of straw utilisation technology (SUT), an

environmentally-friendly technology based upon an effective use of local biomass

resources. By combining a review of government biomass policies and narratives of

two cases of farmer innovation diffusion -the semi-gasified stove and straw

mushroom cultivation - this paper distinguishes two types of government

intervention: intervention with FID and intervention embedded into FID. The

features of each intervention and the conditions of successful government

intervention are highlighted.

Key words: farmer innovation diffusion (FID), government intervention, straw

utilisation technology (SUT), rural China

Dr Bin Wu* Dr Liyan Zhang*

University of Nottingham Tianjin University of Finance and Economics

School of Contemporary Chinese Studies Centre for Entrepreneurship and Innovation

Email: bin.wu@nottingham.ac.uk Studies

Email: liyan_zhang_666@163.com

Publication in the CPI Working Papers series does not imply views thus expressed are

endorsed or supported by the China Policy Institute or the School of Contemporary

Chinese Studies at the University of Nottingham.

* The authors would like to acknowledge financial support from the Tianjin Education Committee for the study of

“innovation and development mechanisms for small and micro business and cross-country comparisons” (Project No.

sewzy-17010204). Our thanks are also extended to Liu Yongquan, Gao Dedian and many other local participants for

sharing information. We are grateful to Professor Niv Horesh for his encouragement and constructive comments on

the draft, to Jon Nix for English copy-editing, and to Mandy Felton and Jenny Hall for publication support.

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1. Introduction:

For rural development in the developing world, there is an increasing emphasis on the

participation of farmers in agricultural innovation system so that they can contribute

local knowledge and good practice into agricultural research and innovation diffusion.

By contrast, we know less about farmer innovation diffusion (FID) referring to a

process of agricultural technology (or method, technique, product) advance or

improvement which are made by farmer innovators and then widely disseminated and

adopted by rural users in local or distant communities.

In comparison with the conventional diffusion of innovation from the formal sector

(e.g., research centre or extension station) to farmers at the large scale (e.g., national

provincial level or county level) and longer duration (e.g., a number of years from the

beginning of the preparation to the completion of a project), the vast majority of FIDs

are rather limited to the local area surrounding innovators or last for only a short

period. In reality, some FIDs have been widely adopted and provide benefits to a large

number of rural people in distant communities who share similar challenges or

technical dilemmas. This raises the question: to under what conditions or by which

mechanisms can a farmer innovation be widely diffused and adopted in rural

communities which may be far away from the location of the innovation origin?

Wu and Zhang (2013) suggest that successful FID in China depends upon many

conditions, such as farmer leadership and their communication network, technological

appropriateness, and, in particular, government intervention. The latter refers to all

means or measures (e.g. legal, administrative, financial, propaganda) taken by

governments at various levels for rural development, ecological protection and other

public good. A further research question arises here regarding the interconnections and

interactions between FID and government intervention: why are some government

intervention projects successful, leading to the acceleration of FID and wide adoption

by local farmers, while others fail in practice? Where are interfaces between FID and

government intervention, and what are the keys determining the success(or failure) of

the intervention?

The above questions will be addressed via an empirical study of straw utilisation

technology (SUT) in China, afield of agricultural innovation and ecological protection

for the full use of biomass resources. Whilst the Chinese government has paid

increasing attention and financial support to the development and diffusion of SUT in

last two decades for various purposes (e.g. "new countryside construction", clean

energy and CO2 decline), no research has been done focusing on the links and

interfaces of government intervention with FID.

This paper attempts to fill the above gaps by a combination of secondary document

analysis and our empirical study on two cases: continuous improvement and diffusion

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of the semi-gasified stove, and the development and scaling up of straw fermentation

for mushroom plantation. Accordingly, the following section will provide a critical

review of relevant literature on FID, followed by the background and the evolution of

Chinese government policies in biomass resource use. An analysis framework for the

interplay between government intervention and FID will be established in Section 4

which will be applied to the narrative of two cases in Section 5. The bringing together

of the secondary information and our empirical data, research findings and three types

of government intervention will be discussed in Section 6. This paper ends with

conclusions and policy implications.

2. Literature review: FID and government intervention

After the research and promotion over three decades, the importance of farmer

participation in agricultural innovation and diffusion (or extension) in the developing

world have been widely recognised and accepted by academic scholars, developmental

professionals and international organisations(Chambers, 1983; Chambers et al., 1989;

Leeuwis and van den Ban, 2004; Wu, 2003; Wu and Pretty, 2004; Gupta, 2012; Gupta

and Zhang, 2012; Swaans et al., 2014). Less is known, however, about the roles and

mechanisms of farmer innovation diffusion (FID) for sustainable rural development

and poverty alleviation. It is even rare to find any research on the roles or interfaces of

government intervention with FID. The aim of this section is to provide a critical

review of relevant literature from three perspectives: FID concept, government

intervention, and the contribution from actors.

The term FID here is used as a combination of farmer innovation and the diffusion of

farmer innovation to users within and beyond the region of origin. The former refers to

the process of technological invention, improvement or modification made by farmer

innovator(s) whilst the latter denotes the process of learning, sharing and

disseminating of any new technologies (or products, methods, techniques, procedures

or know-how) made by farmer innovators either locally or externally. Despite

differences in many aspects (e.g., meaning, source of innovation, technological

maturity, scope of impact), the two processes are barely separate but more likely to be

interwoven together. This is partly because most of farmer innovations, if not all, are

difficult to protect by any formal or informal measures. Rather, they are easily copied

or imitated by neighbours or friends due to the nature of farmer innovation and also

similarity in the terms of technological application environments. Before massive

adoption of new technologies are introduced from outside, a process of technical

learning, testing and even modification is necessary which involves a few local

innovators or “early adopters”. Such a process is inevitable because rural communities

are not homogenous in terms of innovation needs, attitudes, capacities as well as

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resource endowments(Wu 2003, Wood et al., 2014). Unlike the classical linear model of

technology transfer from the formal sector (e.g., researchers via extension station) to

rural users, FID is a process of farmers' communication, interaction and cooperation in

the search for and testing and sharing of new technologies (principles, methods,

means, products and know-how) within or beyond geographic, ecological and cultural

boundaries.

FID cannot be sustained without the establishment and development of farmers'

communication networks (Wu, 2002; Wu and Pretty; 2004, Wu and Zhang, 2013; Wood

et al., 2014 ). In addition to the share of updated information and progress made by

other farmers, another key function of farmers' communication network is to ensure

the appropriateness of a new technology introduced from the outside, which involves a

series of tests based upon local environments or conditions (natural, economic, social,

political and cultural aspects). The interfaces of the new technology with local

technological system, production conditions and skills of local farmers thus become a

key for the success of technological transfer and diffusion in the countryside. In this

sense, the more complex and diverse the local community, the more important it is that

the FID meets the conditions and needs of local residents (Wu, 2003a; Wu and Pretty,

2004; van Damme et al., 2013).

FID, however, is not necessarily limited to the boundary of local communities because

many farmer innovations may have potential to be applied to distant communities

where rural residents share similar technical issues, environmental challenges or

market opportunities to their counterparts in the source region of the new technology.

As a result, FID could be used by external agencies, either governments or non-

government organisations, as an important means for local sustainable development

and agricultural innovation across geographic, ecological and cultural boundaries (Wu,

2003a; Foster and Heeks, 2013; Wu and Zhang, 2013). In this regard, FID could be

multiplied by external agents toward maximum benefits beyond regional and even

country boundaries.

The potential role of external agents in FID for rural development across geographic,

ecological and cultural boundaries raises a salient question about the conditions or

interfaces of government intervention with FID. In this regard research on government

intervention sheds useful light on the theme of this paper.

In the field of public policy economics, government intervention is often thought

necessary to deliver public goods and services in order to correct “market failures”.

Such neo-classic assumption, however, has been increasingly challenged and criticised

(Karnik, 1996). This is because the good intentions of government intervention do not

necessarily ensure good results. Rather, it is not uncommon for many government

interventions make things worse. Why is this the case? And how should public policies

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be formulated so as to reflect the limitations of government activism? Such questions

are addressed by a theory of public choice. With a focus on the “roots of government

failure”, for instance, Simmonds (2011) identifies a number of sources causing

government policies’ inefficiencies, including: perverse incentives; the collective

provision of private wants; deficient signalling; the distortion of preferences;

institutional myopia; dynamic difficulties, and policy symbolism.

Whilst many government intervention projects in developing countries fail to deliver

their promises due to the complexity of the social context, why are some successful?

With an empirical study on the case of rice intensification in Benin, Totin et al (2015)

draw attention to the interplay between government intervention and local actions in

which farmers’ agencies or intermediaries play an important role in the success of

government intervention.

Different from linear model of transfer of technology, agricultural innovation system

(AIS) emphasises interconnectivity, multi-directional flow of knowledge and

information between different stakeholders including farmers, demand sides and

innovative capacity building (Leeuwis and van den Ban, 2004; Schut et al. 2014).

Mediating between farmers and external players (e.g., government agencies, formal

research institutions and NGOs), according to Klerkx and Leeuwis (2009), innovation

brokers play a crucial role in the innovation system in three aspects: demand

articulation (in terms of technology, knowledge, funding, and policy), network

formation (facilitation of linkages between relevant actors) and innovation process

management (facilitating learning and cooperation in the innovation process).

Applying this framework into agricultural innovation practices in rural upland

Vietnam, Friederichsen et al. (2013) raise a question of "how CEW [commune extension

workers] can mediate between or harmonise farmers' demands and government

development policy in cases where the two conflict...unless CEWs feel supported by

their line managers and local authorities, farmers' knowledge runs the risk of entering

the extension system through CEWs only to end up ignored by decision-makers higher

up the organisational hierarchies".

Following a similar line, Yang et al. (2014) find that farmer cooperatives (FC) in China

as innovation intermediaries can provide corresponding services to link farmers to

relevant actors, such as extension agencies, research institutes and supermarkets, and

such functions cannot be overestimated due to the strong influence from government

policies and limited participation of farmers in decision making.

The importance of innovation mediation between farmers and external interventionists

(government agencies and NGOs) is further stressed by an actor-oriented approach.

According to Long (1992, 2001), farmers as an important actor of rural development in

the developing world are not passive recipients of intervention but active participants

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"who process information and strategize in their deadlines with various actors as well

as with outside institutions and personnel” (Long, 1992). This is not merely because

knowledge of farmers is a localised rather than a universalised accomplishment and

such highly context-specific may have different meanings for different actors

(Verschoor, 1992). Equally important is the multiplicity of social actors with "multiple

realities" which "imply potential conflicting social and normal interests, and diverse

and discontinuous configuration of knowledge", and which determines the multiple

dimension of the government intervention (Long, 2001: 19).

Compared with the actor-oriented approach, actor-network theory differs in that it

gives even more weight to local knowledge of farmers and their relationship with local

nature and ecological system because the two systems are mutually inclusive and

constitutive (Biggs and Matsaert, 2004). As a result, the importance of local people and

their perceptions and experiences in interaction with the local natural and ecological

system is emphasised. Such an approach, however, may underestimate the powerful

relation which influences the behaviours of all social actors and their networks. By

bringing two approaches together, Guareau (2012) calls for an alternative development

which “can work to improve the networks of rural spaces in a just, locally sensible

way”.

With a focus on the needs and interests of the poor, the term inclusive innovation has

been popular in innovation studies which emphasise that new goods and services are

developed for and by the poor (Foster and Heeks, 2013). The challenging issue,

according to Swaanset al. (2014), is “how to create appropriate policies and

interventions to stimulate inclusive innovation”. By bringing different types of

stakeholders together, innovation platforms (IPs) have been developed as a way to

include the poor more explicitly as beneficiaries and as active participants in

innovation processes. Based upon a comparative case study on the formation and

functioning of IPs in livestock value chains in India and Mozambique, Swaans et al.

(2014) suggest the importance of flexible planning process stimulating incremental

change through innovation bundles (combinations of technological, organisational and

institutional innovations), reflective learning (systematically challenging constraining

factors), and the vital role of innovation brokers in facilitating the innovation process.

Despite many improvements compared with the generic innovation system

approaches, which do not sufficiently consider that inclusivity of the poor in the

process of innovation, the IPs are still heavily dependent upon external inputs or

initiative, with an ignorance or underestimate of the internal process of technology

learning, improvement and invention within rural communities.

Having briefly review the literature on the links and interfaces between FID and

government intervention in the developing world, some research gaps can be drawn as

follows. Firstly, despite the increasing emphasis on farmer innovation in the local

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context, little research has been focused on FID as a source of agricultural innovation

and rural development. Secondly, it is widely recognised that the government

intervention plays a key role in promoting the diffusion of innovation from the formal

sector to farmers but little is known about the role of the government intervention in

facilitating FID across geographic, ecological and cultural boundaries. Thirdly, we

know that innovation brokers play an important role mediating between government

intervention and farmer innovation, but do not know the role of farmer innovators in

the process given the fact that farmers are not homogenous in terms of knowledge,

attitude, capacity and resource endowment.

3. Background and evolution of government intervention in the use of biomass

resource in China

The role of government intervention in FID across geographic boundaries can be

illustrated from the evolution of Chinese government policies in the area of biomass

resource utilisation over a half century. From 2000 onwards, in particular, the Chinese

government has significantly enhanced its intervention in clean energy and biomass

utilisation technology, which has offered unique opportunities for FID. Accordingly,

this section attempts to provide a background of the distribution and trends in the use

of biomass resources in China, and to outline the evolution of government policies

related to technological innovation and application in this field.

China is rich in terms of biomass resources including the variety of straw and

agricultural processing residues, such as corn, rice, wheat, cotton, and oil-bearing

crops. In theory, there is a total of 820 million tons of straw every year, of which about

690 million tons are available to collect. Currently, about 350 million tons of straw

resources are used as fertilizer, feeding animals, materials for food (e.g., mushroom

plantation) and industrial (e.g., paper manufacturing) production per year, and the rest

340 million tons for the purpose of energy utilization. The situation of biomass

resource utilization, however, is far from optimal. According to Liu et al. (2008), the

large parts of the crop residues in China are used with lower efficiency or wasted: 37%

being directly combusted by farmers, 15% lost during the collection, and the remaining

20% discarded or directly burnt in the field.

Since 2000, the Chinese government and also the public media have paid increasing

attention to the efficient use of straw resources for the purpose of cleaner sky, cleaner

countryside and reduction of CO2 emissions. A series of relevant regulations (laws)

policies and administrative measures have been enacted and issued by the Chinese

government via its different Departments or local governments at different levels to

encourage the development and application of relevant technologies on the one hand,

and to prohibit direct burning in the field. However, the direct burning of crop

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residues in the field is still a serious issue across China, perhaps contributing 20% to

severe air pollution according to some expert estimates.1

It seems that there is a long way to go to full use of local straw resources due to the

following factors. The first is the cost of collection and transportation of crop residues

given that small-scale farmers may lack labour (due to rural-urban migration) or

interests (due to the change of household energy pattern to coal, electricity or other

energy) whilst local farmer cooperatives which are specialised in straw resource use

may not have such capacities (machines) or can bear the cost. Secondly, although there

has been increasing coverage in public media and government propaganda about the

development and advantages of many new technologies specialising in straw resource

utilisation, these are still constrained. On the one hand, there are limits on the supply

of appropriate or mature technologies to farmers or their families to use, and on the

other, there are dishonest or irresponsible advertisements which persuade rural

consumers to purchase immature technologies or products, leading to heavy losses by

farmers.

Thirdly, some of the government’s policies are not fit for local circumstances. For

instance, the Ministry of Finance issued the Interim Subsidies for Straw Energy

Utilization in October 2008 which offered a government financial subsidy of 150 yuan

per ton of straw resource utilisation to those enterprises with a registered capital of 10

million yuan or above and the capacity of 10,000 tons or more of straw resource

utilisation annually. In reality, however, the vast majority of enterprises specialised in

straw resource utilisation are small or medium firms which are below the thresholds of

government requests. As a result, some companies abuse government policies by using

false invoices, accounting, and sales to claim government subsidies.2 Another example

is a provincial government which issued a plan to promote improved biomass stoves

among 1.3 million rural households during the period from 2014 to 2016 with

government subsidies of 150 yuan per ton straw briquette up to 3 ton per household.

The implementation of such a policy, however, faces many challenges including the

shortage of straw briquettes in the market caused by the high cost for straw collection.

The dilemma facing the Chinese government in promoting clean technology for

biomass resources can be understood from two case studies in straw utilisation which

form the rest of this paper.

1See a media report online in Chinese: "Is straw burning in wild the first factor contributing to the severe

air pollution across China recently?" http://news.xinhuanet.com/house/sjz/2015-10-21/c_1116893007.htm,

accessed on 29/1/2016. 2such policy has been terminated in 2014.

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4. Research framework and fieldwork method

The dilemma facing the Chinese government described in the previous section calls for

a new approach to reveal the interplay between FID and government intervention. In

this regard, straw-utilisation technology (SUT) development and diffusion offers a

good example to illustrate various roles of government intervention in FID.

To understand the relationship between FID and government intervention in the field

of SUT development and diffusion, fieldwork was carried out by the second author of

this paper during the period from 2009 to 2014. This involved participatory observation

in different locations in Hebei (Huanhua and Handan Municipality) and Hunan

(Changde Municipality), and in-depth interviews with farmer innovators, innovation

brokers/facilitators, government officials and rural householders. During the period,

we revisited the sites many times to learn about the latest progress in technological

advances, and invited farmer innovators to visit the university to share their

experience with researchers and students. The Centre for Innovation and

Entrepreneurship Studies, part of Tianjin University of Finance and Economics, also

provided financial support for Mr. Liu Gongquan and Mr. Yu Bo, two key farmer

innovators of this paper to visit India and exchange their experience with their

counterparts there.

Based upon the above experiences, we would like to propose a framework for the

purpose of data analysis. Bearing in mind the nature of on-going development of both

technological system and government policies in the field of rural clean energy, we

assume the following important elements for us to understand SUT development and

diffusion in China.

Innovator's exploration. Innovators here are one or a group of persons who are leading

local technological learning, testing, modification or reinvention to ensure the

appropriation of a new technology to local environments. Depending upon the

maturity of the new technology and other factors, the process of the innovator's

exploration may begin from personal curiosity without any external funding support.

Innovation platform (IP) here refers to any channel, means, or organisational

arrangements which provide vital help for innovator(s) to disseminate new ideas,

technologies, and products widely, and to communicate with and get access to vital

resources and opportunities. For FID, IP is an important bridge for innovators to link

with government agencies and relevant stakeholders to gain their support. Taking into

account various costs (materials, time and energy), expected economic return, and

many risks or uncertainties in both technology and the market, IP plays a key role in

facilitating the exchange and mutual benefits between innovators and interested users.

So the IP could be traditional family support networking, or informal business

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partnership with local entrepreneurs or agricultural company, or formal farmer

cooperative.

Government intervention here refers broadly to all actions or policies taken by local

government agencies which influence the development and diffusion of farmer

innovation in local areas. In particular, it denotes those means or measures (e.g.,

administrative, propaganda, financial subsidy and government project) taken by local

government which influence innovator's exploration, the formatting and function of

innovation platforms, and adoption of new technology by rural holders.

Farmers' response here denotes the attitudes and decision making of rural householders

in adopting or rejecting the new technology. In addition to the maturity of new

technology itself, many factors may influence farmers' response, such as trust in new

technology and in innovators, the strength of government intervention, costs and

benefits, etc.

In relation to the theme of this paper, we would like to draw attention to two on-going

changes: 1) increasing diversity among rural households in terms of livelihood

systems, living standards, and migration profiles, resulting in a decline of free labour

for participating in and contributing to the government projects; and, 2) a decline in the

dependency on traditional energy sources such as biomass resources due to the

increase of rural incomes and diversity of household energy consumption (e.g.,

electricity, coal, solar power). Nonetheless, farmers' response provides an objective

reference for the success or failure of government intervention.

SUT system here refers to all technical conditions, measures and methods which

support core technological principles and devices for better use of local straw

resources. For this paper, the SUT system contains two core technologies: 1)the semi-

gasified stove which is associated with briquetting, collecting, drying and storing straw

technologies or conditions; and, 2) straw mushroom cultivation. The terms of the SUT

system here is emphasised on the interconnections and interactions between a new

core technology and local support technologies or conditions, which can be measured

by technological appropriateness (fitting to local ecological, economic and cultural

environments), maturity (reliability, duration, affordability), and interfaces (with local

skills and production or infrastructure conditions).

Bringing together the above elements or considerations, an analytical framework for

government intervention in FID can be illustrated (see Figure 1 below). Herein,

different elements of intervention are cast in different positions, representing on the

one hand their roles in the process of SUT development and diffusion, and, on the

other, the interconnections and interactions between the elements through different

channels or mechanisms.

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Figure 1: Government intervention in farmer innovation diffusion (FID)

A number of hypotheses can be drawn from the framework shown in Figure 1:

H1: Multiple factors are related to the development and diffusion of SUT. In other

words, anyone of the above elements could impede the development of SUT and

adoption of farmers at various extents;

H2: Partnership between innovators and other stakeholders via IP is vital to

understanding the development and diffusion of SUT systems. This hypothesis

suggests that the development and adoption of SUT should not be viewed narrowly as

a technical process made by professionals or farmer innovators, but broadly as a

process of interconnection, interaction and cooperation between farmer innovator(s)

and other key stakeholders. In other words, the development and diffusion of SUT is a

process of IP building to cope with both opportunities and challenges.

H3: FID is a self-organising process which involves interconnections and interactions

between SUT, innovators, farmer households and local IP (or innovation brokers,

intermediates, facilitators). In this process, farmers' reaction to and adoption of SUT are

dependent upon not only the maturity and appropriateness of SUT, but also the needs

of rural holders which are influenced by the changes of demographic profiles,

livelihood systems and rural-urban migration, etc. The more diverse the needs of rural

households in terms of energy and livelihood systems, the more important is the

development of IP to foster the self-organising process described in H2.

H4: There are at least two types of government intervention for the

development/diffusion of SUT:

T1: Government intervention with FID: government dominates the whole process in

which government use farmer innovators, change agents, and other means for the

purpose of improving its intervention and services with an ignorance of the complexity

and diversity among rural households;

Innovator's exploration

Innovation platform

Government intervention

Farmers response

SUT system

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T2: Government intervention embedding FID: government interventions become a part of

FID and self-organising process alongside participation from other stakeholders. This

process is initiated and dominated by farmer innovator(s) and their business partners

with increasing attractiveness to rural householders due to the nature of mutual

benefits to both environments and household income growth.

The framework and hypotheses above provide a base for us to prepare narratives of

two stories in the next section as well as to discuss subsequently the findings of this

research.

5. Narratives of two SUT cases

Two representative cases below neatly reflect the uneven process of straw utilisation

technology development and farmer innovation diffusion in China, as well as the

interaction between innovative farmers, government officials, entrepreneurs and other

stakeholders. Names appearing in this section are real and the narratives are based

upon extensive fieldwork. Observation and publication consent had been obtained by

the authors in advance. 3

5.1 Liu Yongquan and his semi-gasified stove for cooking and heating

Mr. Liu Yongquan, a farmer innovator has experienced an uneven process in the

development and diffusion of biomass stove for cooking and heating since the late

1990s. This process involves the communication and interaction between Mr. Liu, local

government agencies, private companies and rural households in Huanhua

Municipality of Hebei Province.

The story began in the late 1990s when the technological development of the straw

gasified stove had attracted the increasing attention of the public in China due partly to

the soaring awareness of the public in environmental protection and partly due to the

propaganda and exaggerated persuasion via the public media. As one of numerous

Chinese youths who desired for the better use of rural straw resources for both

personal fortune and the improvement of rural environments at the time, Mr. Liu was

3 Around 2010, the research team from the Tianjin University of Finance and Economics obtained the

information about the progress of the straw gasified stove made by Mr LIU Yongquan. It was followed by

a field trip led by the second author to Huanghua County (later changed to Municipality) in Hebei

Province to learn more details about technological modification and diffusion. The resultant report

included interview transcripts with Mr. Liu and his innovation team members, local government officials

and entrepreneurs, as well as villagers who participated in the government pilot project aimed at diffusing

Mr. Liu's innovation. A follow-up visit was arranged to Huanghua County in 2012 in order to study the

progress in technical improvement and innovation diffusion. It was associated with a participation in a

national exhibition of biomass stoves which allowed us to better understand the latest development of

biomass stove market and compare the difference between Mr. Liu’s and other similar stoves.

Subsequently, Mr. Liu was invited to visit Tianjin University of Finance and Economics, and give a guest

lecture to university students about rural innovation and entrepreneurship.

14

attracted by an advertisement about the success of the straw gasified stove developed

in the lab of Tsinghua, a leading university in China. So Mr. Liu and his two village

friends paid for themselves to see a demonstration at the campus and purchased a

copy of the stove description to build a stove in his home. Soon, Mr. Liu and his

colleagues realised that the new technology did not work as well as the media and

agent claimed. Rather, there were many technical deficiencies including: difficulty of

ignition, the needs for special feedstock size, smoke and tar odour, as well as a fire too

weak for cooking. Similar to many other innovators, this was a starting point for Mr.

Liu to explore how to improve the stove.

The discourse on technological improvement and maturity turned out much more

extensive than Mr. Liu thought. To begin, he spent five years on technological

experiment and improvement, which cost almost all of his family savings without any

external support. From 2003 to 2005, he took the advice of his distant relative who was

a university graduate, and published details of his improved gasified stove via the

internet in order to gain external financial support for his exploration. This resulted in

a large number of orders nationwide despite the immature technology. The popularity

of Mr. Liu's stove drew the attention of a senior official in the county government who

came to Mr. Liu to show interest and support in various ways, including financial

sponsorship for the technological improvement. Introduced by the local government,

Mr. Liu set up a cooperation with a local company in order to promote and

disseminate the improved gasified stove on a larger scale. These efforts had to stop in

2008 due to so many complaints and dissatisfaction from users.

Having recognised the intrinsic deficiency existing in the gasified stove, Mr. Liu

changed the principle of the design from full to semi-gasification, leading to another

flurry of government efforts to promote and disseminate the new version of the stove

from 2009 to 2011. The new version met with mixed results from farmers: the

application of the semi-gasified stove depended upon the supply of briquette straw (a

relevant innovation in associated technologies for straw collection, store, drying, and

briquetting) and, in addition, a technical issue remained with the tar and odor unless

the stove was used continuously through the night.

The motivation and commitment of Mr. Liu to the research and development of

biomass stove cannot be separated from the local government's support. Similar to

numerous grassroots innovators in this area, Mr. Liu's initial interests in the improved

stove was induced by a number of government policies such as "new countryside

construction", which emphasises the improvement of rural environment, hygienic

standard and infrastructure conditions, as well as rural clean energy. Both policies

("new countryside construction" and “rural clean energy”) are related to the full use of

local straw resources, which is largely dependent upon the improvement of the

biomass stove. Learning of the technological progress made by Mr. Liu in 2003, the

15

government officials from Huanghua Municipality Bureau of Agriculture made initial

contact with Mr. Liu, followed by a series of encouragement and support measures.

This support included accessing and applying to relevant government funding,

introducing external experts for advice, taking Mr. Liu on study tours or training

courses, and preparing and submitting a national IP application (2006). Meanwhile, the

government used local media, such as television, newspapers and other propaganda

means to promote his achievements as the model of rural innovation to encourage the

development of rural entrepreneurship and dissemination of the improved stoves.

Based upon the above technological progress, the Agricultural Bureau of Huanghua

Municipality had successfully received provincial government funding under the

programme of the "new countryside construction" fund in early 2006. This resulted in a

local government intervention plan with the aim of encouraging up to 1,000 rural

households to buy the improved stove with a government subsidy of 200 yuan (about

20% less than market price). Having seen the success of the new version of the semi-

gasified stove in 2009, Huanghua Municipality government made a prompt decision to

support the diffusion of up to 10,000 stoves with a governmental financial subsidy of

200 yuan in 2010 and 2011.

In response to the opportunities from both the local government subsidy policies and

the nationwide increasing potential of the clean energy market, a number of companies

approached Mr. Liu for joint technological development and production. The first

partnership between Mr. Liu and a local company (Company A) was established in

early 2006 to deliver the government plan of 1000 gasified stoves. Intermediated by

local government, Mr. Liu joined Company A as a technology shareholder (20% of the

share) plus a basic wage whilst the local government provided a capital investment of

120,000 yuan to the company for the purchase of equipment such as presses, shears,

etc. for production. The cooperation was terminated in late 2006 as a large number of

users called for refunds due to deficiencies in the stoves. Learning the lessons from the

gasified stove project, Mr. Liu changed direction towards a semi-gasified stove, and

established a joint company (Company B) with a local entrepreneur in order to

continue his technological development and catch the new opportunities created by

governments at different levels.

The technological breakthrough in the stove design and business partnership in stove

production, however, did not guarantee the success of the government intervention

project to diffuse 10,000 semi-gasified stoves in Huanghua Municipality. This can be

seen from a case of Zhao village, one of 20 pilot villages selected by the government for

demonstration. With a total of 199 households and 872 people by 2009, 124 households

(over 60% of the villagers) bought the stoves. The biggest problem of the project,

according our interviews with villagers, was the briquetting machine. This was partly

because the machine manufacturers were familiar with animal feed briquetting rather

16

than straw briquetting - the latter requiring more pressure than the former - and partly

because there was not a proper system in place for maintaining, using and managing

the briquetting machine. In practice, the briquetting machine was put in the corner of

the village elementary school while farmers simply brought over their own straw to

press straw briquettes for free. As a result, the machines often malfunctioned and

broke down due to the technical deficiency of the machine, unskilled operation and the

lack of necessary protection against rain, wind and snow. One year later, the

briquetting machine was taken away and the villagers switched to burning coal.

Despite problems in the straw briquetting machine, participants in Zhao Village highly

appreciated Mr. Liu's innovation. During the period of the pilot project, in fact,

villagers used straw and coal interchangeably: burning straw briquettes during the day

and coal at night. They felt that the semi-gasified stove was better than the traditional

coal stove in terms of efficiency and clean environment and felt it could save half of

coal consumption throughout the winter when straw briquettes and coal were used in

combination.

5.2 Straw mushroom cultivation (SMC)

Mr. Gao Dedian, is a farmer innovator in Hongyun Village, part of Dingcheng Distract

in Changde City of Hunan Province. The story of his technological exploration in

Straw Mushroom Cultivation (SMC) can be traced back to 1981 when he attended a

training organised by the Hunan Academy of Agricultural Sciences focusing on

mushroom cultivation plantation techniques. Once he returned to the village, he

quickly found a number of problems: 1) there was no local supply of raw cotton

residues for mushroom cultivation; 2) there was no easy means of cottonseed hull

disinfection; 3) it was too expense for farmers to establish a sterile seed chamber; and 4)

the decline of mushroom production if the seed package was in continuous use.

Since then, Mr. Gao explored and developed an approach by using straw and other

local materials as a substitute for the cottonseed hull in mushroom cultivation. He tried

to use dried earthworm dirt, ash, rice and sugar, gypsum instead of conventional

chemical materials(e.g. dihydrogen phosphate, dipotassium phosphate, magnesium

sulphate) for mushroom seed production. He successfully developed a full-opening

edible fungus inoculation, at almost no cost, with an inoculation rate more than 10

times faster than the traditional process. Furthermore, the fruiting bag was abandoned

in Mr. Gao's solution, replaced by directly planting mushroom species on the

farmland, leading to a simulated natural environment of wild mushroom growing with

more flowers, and larger and higher yields when compared with traditional mushroom

production. The result of his exploration alongside indigenous technical advance was

awarded a national invention patent in 2002.

17

The diffusion of Mr. Gao's innovation was accompanied by the development of

production organisation. At the beginning, Mr. Gao produced mushrooms on his own

land. His success in SMC was recognised and highly appreciated by a group of senior

officers from Changde Municipality and Dingchen District who were visiting Gao's

village in 1996. Alongside the popularity in the public media, local government

agencies including District Technology Bureau and Agriculture Bureau advised him to

apply for the national patent and establish Hongyun Mushroom Bacteria Workshop, a

family business for mushroom sales and technology demonstration to his neighbours

and other farmers nearby. Based upon the success of running the Workshop, Mr. Gao

enlarged his business by renting 35 mu wasteland from the village in 2000 and

established Hongfa Mushroom Cultivation Base, a registered company specialised in

mushroom production and sales, as well as SMC training and diffusion. Under a

shareholder system, a total of 10 local householders joined initially and the

membership gradually increased to share the technology, raw materials and markets.

In 2002, the local government (Dingcheng District Bureau of Agriculture)

recommended Mr. Gao set up a Dingcheng Mushroom Cultivation Institute, for the

purpose of access relevant government funding and diffusing his SMC technology to

the local technological market which was established by the Chinese government to

promote and regulate the trade of agricultural products via the government's "science

and technology trade license".

In response to the issue of the "Farmer Cooperatives Law" nation-wide in 2008, Mr.

Gao established a Xin-Yuan Mushroom Cultivation Cooperative for mushroom

research, cultivation, processing, and sales. It was founded with a total of 128 core

members within the local community and more than 300 associate members in the

region of Changde Municipality. In 2008, the Changde municipal government decided

to set up a Mushroom Production Association, and Mr. Gao was appointed as vice

president due to his reputation in SMC innovation. The mission of the Association was

to advise the municipal government on the strategy and policy in large scale

mushroom production and the diffusion of SMC across all counties within the

Municipality. In reflection to the government for instance, Dingcheng District

government decided to invest300 million yuan in 2013 to build a base for the

Association to promote the diffusion of SMC.

In addition to his production base and organisational channel, another important

channel for the diffusion of Gao's was a series of training courses organised by local

government. Having seen the success of Gao's innovation, the local government

(District Agriculture Bureau)approached him to run a monthly training course for local

farmers who were interested in his SMC technology. Each course lasted a duration of

one week for tens of participants to learn knowledge and techniques. This cooperation

with the Agricultural Bureau for joint training courses lasted for over six years and

18

each participant paid a fee of over hundreds yuan to cover the costs of venue,

materials, teaching and organisation. The long duration of the training course, based

upon a share of costs between the government and participants, indicates both the

value of Gao's innovation and also effectiveness of FID via training.

In addition to cooperation with the government to recruit trainees, Mr. Gao had

experience of running similar training courses in cooperation with a research institute

for two years, and, later on, by himself via advertising training courses in relevant

magazines and on social media. According to unofficial statistics, more than 5,000

people from 20 provinces attended his training courses over the past decade. For Mr.

Gao, those trainees were not merely students who gained benefits from his training

course, but also collaborators and partners in the technological development because

they are kept close communication by discussing any new technological issues and

sharing their experiences with him.

Since 2012, Mr. Gao was appointed by local government to the title of government

agricultural technology adviser (or consultant) in order to provide technological

support to rural communities for government projects in agricultural development and

innovation. This role gave Mr. Gao a new opportunity to disseminate his knowledge

and expertise to local farmers in a large scale and direct way. In Huayuanxi village for

instance, Mr. Gao helped a vegetable cooperative to cope with a severe disease in

mushroom production by suggesting a replacing chemical pesticide with a biological

method which had been successful without any pollution or side effect on land and

products. In addition, he helped three local chopsticks factories to alleviate pollution

issues by developing a method of using bamboo shavings for mushroom cultivation.

He has successfully discovered a way to use the stripped shell of lotus for mushroom

production, the success of which innovation has increased the local price of lotus shell

from 800 yuan per ton to more than 2000 yuan a ton.

The above case exemplifies successful interaction and cooperation between Mr. Gao

and local government via the establishment and development of innovation platforms

for farmer technological learning and innovation diffusion. Unlike the short-term

government intervention, this case presents a novel model of FID via government

which contains a numbers of elements: long term cooperation between government

and farmer innovators; capacity building for mushroom technology research,

production and demonstration; training courses available for interested and committed

farmers who are happy to bear training costs; as well as cooperative innovation

networks of farmer innovators across the country.

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6. Discussion

Although the two stories described in the previous section are different in many

respects, they share many common elements which influence the success or failure of

government intervention on FID. Applying the framework shown in Figure 1, research

findings and theoretic implications can be summarised as follows.

Firstly, it is confirmed that among many factors or conditions influencing the results of

government intervention, the most important one is the appropriateness, maturity and

interfaces of straw utilisation technology (SUT), a new technology introduced in rural

China. In the case of the semi-gasified stove, the unevenness of the development and

diffusion of SUT can be analysed from the following perspectives. Appropriateness here

is related to households need(for cooking and heating in north China), supply (labour

costs for collecting and storing straw) and market competitive advantage (against

alternative sources such as coal, electricity and solar power). The term maturity can be

seen from not only the short-term and the process of replacement of the original

gasified stove by the semi-gasified model, but also that two technical faults remained

(tar and odor throughout night). It is not less important that interface remained an issue

between the semi-gasified stove and other auxiliary machinery such as the straw

briquetting machine. Applying the same principles to the case of straw mushroom

cultivation (SMC), a series of small scale experiments and demonstrations made by the

innovator (Mr. Gao) show not only the maturity of the new technology against local

ecological-agricultural resource environments, the appropriateness with household

needs and local market conditions for commercialised mushroom production, but also

interfaces with local agricultural technological and organisational conditions. The above

findings confirm our previous research findings (Wu, 2003; Wu and Zhang, 2013) that a

precondition of successful government intervention is a good understanding of the

nature and features of the new technology. It seems that a more robust procedure must

take place for government intervention to ensure that systematic (or wholeness),

appropriateness, maturity and interface of the new technology, including farmer

innovation, are fully taken into account.

Secondly, the success of government intervention in FID is not merely dependent upon

the exploration of individual innovators, but also the establishment and development

of proper innovation platforms (IPs) which are able to support the wide dissemination

of innovation information on the one hand, and provide proper interfaces with

markets or potential users on the other. In the case of the semi-gasified stove, the IP can

be found from the development of partnership or joint ventures between Mr. Liu and

local entrepreneurs who were interested in the potential of cleaning technology market

and also government financial support. Unsurprisingly, the immaturity of technology

and also heavy dependency upon government financial subsidies meant there was not

20

a sound IP established between Mr. Liu and potential users. This has constrained the

development and diffusion of the technology. In the case of SMC, the technological

development and diffusion was accompanied by an evolution of IPs from family

workshop, shareholder company, mushroom cooperative, to the municipal mushroom

association. Despite different formats and scale, both cases suggest the importance of

partnerships or mechanisms between innovators and other stakeholders to jointly

respond to opportunities and challenges. Furthermore, the government could play a

positive role in fostering the establishment and development of IPs, even if the new

technology is at an immature stage. This is because government engagement with

innovator(s) and other stakeholders can lead to an acceleration of technological

development and maturity if the technology is appropriate to local environments or

conditions.

Thirdly, the maturity of the new technology, government intervention and the

establishment of IPs may not be enough to guarantee participation and wide adoption

by farmers because there are many other factors which may influence rural

households' decision making. The case of the semi-gasified stove seems to suggest that

the decline of coal prices and the growth of household income are two important

factors which had negative impact on the adoption of the semi-gasified stove for the

purpose of household cooking and heating, leading to a broken link between innovator

and farmers. This is in contrast to the case of SMC which attracted more farmers to join

the commercialised mushroom production and enhance their competitive market

capacity via joining the IP. In this regard, successful FID can be viewed as a

communication and self-organising process between innovators, rural households and

local IP (or innovation brokers, intermediates, facilitators). This finding matches our

previous research (Wu, 2003) that the success or failure of government intervention is

largely dependent upon whether government respects, understands and takes proper

actions to use and provide support to the self-organising innovation processes by

farmers.

Finally, in relation to all of the above factors, the two cases presented above seem to

confirm that there are different types of government intervention with different

consequences. Government intervention with FID can be drawn from the case of the semi-

gasified stove in which innovator's exploration was found, encouraged and then

driven by government intervention as part of government new countryside

construction or rural environment protection programme. As a result, FID became the

means to achieve government targets (or public interests) in which less attention is

paid to the interests of innovators, local farmers and development of IPs. Differently,

government intervention embedding FID can be illustrated from the case of SMC in which

the government invention led to partnerships and positive circulation between

innovator (Mr. Gao), IPs and local farmers towards continuous improvement, diffusion

21

and scaling up of innovation. In comparison to the government intervention for

scientific agricultural innovation diffusion (e.g. green revolution technologies),

government intervention with FID offers a space for farmer innovators and other

stakeholders to participate and contribute to government projects. As we argued in

another study (Wu and Zhang, 2013), the involvement of farmer innovators cannot

secure the success of government intervention due to the nature of government-

dominated projects in terms of their short duration and large scale. In this sense,

government intervention embedding FID sheds new light on rural development and

agricultural innovation in which governments become participants and facilitators to

encourage and support farmers' own innovative exploration, networking and scaling-

up.

7. Conclusions

Based upon the narrative and analysis of two cases of straw utilisation technology

(SUT) development and diffusion - the semi-gasified stove and straw mushroom

cultivation - a number of conclusions can be drawn about government intervention for

farmer innovation diffusion(FID).

Firstly, FID as a process technological learning and adoption of new or improved

technologies made by farmer innovators in local or other places can, in principle, be

multiplied and/or accelerated via government intervention. However, the success or

failure of government intervention is dependent upon many factors or conditions,

ranging from the features of the technological system, communication and cooperation

between innovators and key stakeholders, and interfaces with local resources, markets

and needs of rural householders. Secondly, among many factors influencing or

determining the success or failure of government intervention, the most important one

is the appropriateness and maturity of the technology, followed by the establishment

and development of a proper innovation platform (IP)for communication, interaction

and cooperation between innovators, rural users and other stakeholders.

Thirdly, two types of government intervention have been identified with different

conditions and consequences. One is government intervention with FID in which FID

is encouraged and used by local government agencies as the means to promote

government projects. Compared to conventionally agricultural extension, this model

gives more space for farmer innovators and other grassroots stakeholders to

participate, but does not alter government domination, which may conflict with the

longer process of IP building, and diversity of interests and needs from local users. A

second government intervention is embedded FID, in which the government agencies

are participants and facilitators of farmer innovation diffusion, leading to the

acceleration and scaling-up of the circulation between innovators, IPs and local users.

Compared to the government intervention with FID, the discourse of this model may

22

take longer time to ensure learning from and benefits to rural users, but is more

sustainable because the whole process is initiated, controlled or dominated by farmer

innovators and their network building.

Finally, further research is needed to verify, on the one hand, the two types of

government intervention in other areas of agricultural production and innovation in

China and beyond, and on the other, the evolution of government intervention and

factors behind it.

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