Demonstration of Agro-Industry Innovation Through Science And

Funded by the FundedFunded by the People's Republic of China People’sPeople's RepublicRepublic of of China China

FINAL PROJECT REPORT FINAL PROJECT REPORT FINAL PROJECT REPORTDemonstration of Agro-industry Innovation Demonstration of Agro-industry Innovationthrough Science and Technology in Fujian through Science andDemonstration Technology inProvince ofFujian Agro-industry Innovation Province through Science and Technology in Fujian Province, China

From June 2015 to May 2018PTC/AGR/FSN June 2015 – May 2018

PTC/AGR/FSN June 2015 – May 2018

1 DISCLAIMER

This document has been produced without formal United Nations editing. The designations employed and the presentation of the material in this document do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations Industrial Development Organization (UNIDO) concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries, or its economic system or degree of development. Designations such as “developed”, “industrialized” and “developing” are intended for statistical convenience and do not necessarily express a judgment about the stage reached by a particular country or area in the development process. Mention of firm names or commercial products does not constitute an endorsement by UNIDO. The selection of projects to illustrate UNIDO's engagement aims at demonstrating their geographic and thematic variety and scope and is not endorsed by UNIDO. CONTENT

EXECUTIVE SUMMARY...... 4

1. PROJECT DESCRIPTION...... 6

2. KEY PARTNER – THEIR ROLES AND ACHIEVEMENTS...... 7 2.1 Fujian Provincial S&T Exchange Center with Foreign Countries (FSTEC)...... 7 2.2 Fujian Shenliu Health Food Co., Ltd., focusing on Spirulina...... 8 2.3 Fujian Xianzhilou Biological Science & Technology Co., Ltd., focusing on Lingzhi...... 12 2.4 Fujian Shenghe Modern Agriculture Co., Ltd., focusing on reclamation of saline land...... 17

3. PROGRAMME STEERING COMMITTEE: MANAGEMENT, MONITORING AND EVALUATION...... 22 3.1 2016 PSC Meeting...... 22 3.2 2017 PSC Meeting...... 22 3.3 2018 PSC Closing Meeting...... 22

4. SUSTAINABILITY...... 23

5. ACHIEVEMENTS...... 24

6. LESSONS LEARNED...... 26 EXECUTIVE SUMMARY

Embracing the philosophy that science and technology strengthens the modernization of agriculture, and facilitates inclusive and sustainable industrial development and economic growth, the project targets and contributes to creating employment opportunities, alleviating poverty through increasing productivity, reducing environmental pollution, applying proper technology, improving management efficiency at both farm and enterprise level, and showcasing the lead agriculture enterprises’ models of best practice.

Through knowledge transfer, and technical and managerial capacity building to the lead agriculture enterprises, further information and knowledge dissemination via demonstration bases enables other actors along the target value chains – namely vegetables on saline land, spirulina and Lingzhi mushroom – to access to knowledge, technical know-how and best practices, etc. The institutionalization of the demonstration bases guarantees sustainable knowledge transfer of scientific and technological innovations that are applicable to various agro value chain actors participating in the improvement of technical and management capacities, so as to continuously create job, to better and more ecologically utilize resources, and to strengthen opportunities to enter the markets at wider scales. Graphic 1 shows the approach applied.

Graphic 1: Knowledge transfer through demonstration bases

THE PROJECT WORKED WITH: THREE LEAD AGRICULTURE ENTERPRISES, namely Fujian Shenliu Health Food Co., Ltd., Fujian Xianzhilou Biological Science and Technology Co., Ltd., and Fujian Shenghe Modern Agriculture Co., Ltd. To access advanced cultivation and processing technologies; To increase productivity and management efficiency; To explore and enter new markets; and To establish demonstration bases around the lead agriculture enterprises for knowledge transfer and skills upgrading.

4 And PROVINCIAL AND LOCAL GOVERNMENTS: To assist in the adoption of necessary industrial policy frameworks and instruments; To support the development of the targeted value chains in the province; and To release guidance and facilitate the development of new local and regional markets as well as entering international markets.

THE PROJECT TARGETED AND LINKED: The lead agriculture enterprises and local farmers; Practitioners participating in the demonstration bases for cultivation, processing and trade; Relevant industrial associations, academia and educational institutions; Local and provincial governmental authorities that support the development and promotion of the related agro value chains; and End consumers.

THE PROJECT ORGANIZED AND FACILITATED IN TOTAL 31 VARIOUS PROJECT ACTIVITIES: 10 technical trainings 4 technical study tours 8 industrial conferences and technical seminars 4 market promotion activities 1 baseline survey 1 technical exercise for improving irrigation and fertilization 3 annual PSC meetings.

THE THREE COMPANIES IN THE THREE YEARS OF THE PROJECT IMPLEMENTATION ACHIEVED: 561,882 square meters of land newly-utilized for cultivation (breeding) 65 new domestic and international markets explored 32 patents applied and 30 obtained 12 new varieties of products developed in cooperation with domestic and international universities and R&D institutions An increase of CNY 26,000 in the average annual income of the farmers 1,278 employees, including 490 men and 788 women trained 297 jobs, including 72 for men, 200 for women and 25 for the disabled, created locally approximately CNY 560 million (equivalent to USD 90.3 million) output value created and tax amounting about CNY 33 million (equivalent to USD 5.32 million) paid.

5 PROJECT DESCRIPTION

FACT SHEET O THROUGH SCIENCE AND TECHNOLOGY IN FUJIAN PROVINCE”

Project starting date June 2015

Project end date May 2018

Project inputs USD 442,478, excluding 13% support cost

Donor China International Center for Economic and Technical Exchanges (CICETE)

Fujian Provincial Science and Technology Exchange Center with Foreign Countries (FSTEC)

Counterparts Lead agriculture enterprises: Fujian Shenliu Health Food Co., Ltd. Fujian Xianzhilou Biological Science and Technology Co., Ltd. Fujian Shenghe Modern Agriculture Co., Ltd.

Counterparts inputs USD 1,490,000 ($1,000,000 co-financing from the three enterprises and as per the project $490,000 cost sharing from FSTEC) document

Total input of the USD 1,990,000 project

Graphic 2: Project description

6 2. KEY PARTNER – THEIR ROLES AND ACHIEVEMENTS

2.1 FUJIAN PROVINCIAL S&T EXCHANGE CENTER WITH FOREIGN COUNTRIES (FSTEC)

FSTEC is a public institution directly affiliated to the Fujian Provincial Department of Science and Technology. As the Managing and Implementing Office of the project “Demonstration of Agro- industry Innovation through Science and Technology in Fujian Province”, FSTEC has been involved in the management throughout the entire process of project application, implementation and finalization. Picture 1: The Programme Steering Committee at work

As implementing the project, FSTEC directly participated in the organization of more than 20 project activities with remarkable results, building on technical training, market promotion activities,in- country trainings, international technical study tours, industrial exchange seminars etc. In addition, the launching ceremony, annual Programme Steering Committee meetings and project closing ceremony were also organized by FSTEC to ensure the smooth implementation of the project.

During the project activities, FSTEC fulfilled the project commitments and provided necessary facilities and logistical support, as well as served as bridging body between UNIDO, the enterprises as well as scientific bodies and provided administrative and technical support. FSTEC continuously monitored the project progress and kept close communication with the UNIDO project team to timely report the progress and achievements of the project and coordinate project activities. FSTEC actively communicated with the enterprises to identify their needs and provided technical guidance to the enterprises. In addition, by fully utilizing its resource and network in the area of science and technology, FSTEC proactively helped the enterprises to establish linkages with advanced scientific research institutions, domestic and international lead enterprises, and promoted international exchanges and cooperation for the enterprises.

FSTEC’s role in the project is significant: it highlighted the advantages of scientific and technological knowledge transfer, and guided the industrial upgrading to support the enterprises to achieve their envisaged project results. Throughout the implementation of the Project, FSTEC maintained good cooperation with UNIDO and the enterprises, collected valuable experience in international exchanges and cooperation, and laid a solid foundation for the future international exchange and cooperation.

7 2.2 FUJIAN SHENLIU HEALTH FOOD CO., LTD., FOCUSING ON SPIRULINA

Spirulina (Arthrospira platensis) is a naturally occurring blue-green micro-algae growing and thriving in warm water alkaline lakes. Wild grown spirulina sustains flamingos in the East African Rift Valley lakes and has the strength and ability to survive the conditions where other algae cannot grow. As one of earliest life forms, the single celled organism turns sunlight into micronutrient life energy. Spirulina cultivation relies on four major preconditions: tropical weather, sunshine intensity, pure water resource and environment without pollution.

Picture 2: A traditional production base fulfilling the four requirements

As an aquatic plant it does not contribute to environmental pollution. As a product of nutrient digestion Spirulina produces Oxygen. Especially regarding water use, land occupation and energy consumption, Spirulina is rather efficient compared with traditional terrestrial crops.

Spirulina contains 60% easily digestible vegetable protein, and extremely high concentrations of beta carotene, vitamin B-12, iron and trace minerals, and the rare essential fatty acid GLA – Gamma- Linolenic Acid. It has a balanced spectrum of amino acids, cleansing chlorophyll, and the blue pigment, phytocyanin. Spirulina is suitable for human consumption as a dietary supplement as well as food and as animal feed. Spirulina has also the potential for integration with rural organic waste treatment processes to improve both environmental conditions and energy transfer efficiencies.

The demand and market for Spirulina products in China has been growing continuously, allowing for a prosperous production and processing industry. Outside of China, the demand is growing as well, but the global Spirulina market remains short in supply. Spirulina cultivation reveals great potential to serve sustainable industrial development, especially as small-scale crop to contribute to nutrition enhancement, livelihood development and environmental protection.

The Fujian Shenliu Health Food Co., Ltd., through the project created the “Demonstration Base of Cultivation and Processing Technology of Spirulina” and implemented the Project activities as tabled on the next page:

8 ACTIVITIES CONDUCTED WITH THE DONOR FUNDING

SEMINAR ON CULTIVATION AND PROCESSING TECHNOLOGY, AND INDUSTRIALIZATION OF SPIRULINA Addressing latest S&T achievements, market, and development strategy of industrialization; 50 participants from government, private sector and academia.

STUDY TOUR FOR PROJECT IMPACT AND TECHNICAL COOPERATION FOR SPIRULINA, and visited Institute of Molecular Biotechnology of the Austria Academy of Sciences (IMBA); LP Health Products Company; Vienna Institute of Bio Technology (VIBT) of BOKU; UNIDO HQs.

MARKET PROMOTION FOR SCIENTIFIC RESEARCH ACHIEVEMENTS OF SPIRULINA, in course of the 11th China International (Xiamen) Seafood Expo Demonstrated and promoted spirulina R&D achievements in recent years; Disseminated nutrition and health care efficacy of spirulina to consumers; Expanded marketing impacts; Signed cooperation agreements.

TRAINING ON STANDARD OPERATIONAL RULES 60 employees trained, including 50 female; Operational capacity of the employees improved.

ATTENDING THE 12TH CHINA (FUZHOU) INTERNATIONAL FISHERIES EXPO Demonstrated and promoted products and scientific research achievements of spirulina; Improved brand awareness of the enterprise; Facilitated the development of spirulina industry in Fujian.

TRAINING ON MARKETING SKILL PROMOTION AND JOB QUALIFICATION Capacity building to personnel on marketing; Improved skills and knowledge transfer on products, sales and marketing for in-service qualification; 20 people trained including 10 female; 16 jobs created including 9 for female.

TRAINING ON STANDARD OF SPIRULINA BREEDING TECHNOLOGY Addressed the preparation of nutrient solution, pest control and standardized harvesting etc.; Skills of trainees improved to apply the acquired knowledge to practical production; 60 people trained including 20 female.

TRAINING ON MARKETING MANAGEMENT Knowledge transfer for management oriented towards key skills to build marketing team; 20 trainees attended. 9 RESULTS ACHIEVED

ECONOMIC BENEFIT: Fujian Shenliu Health Food Co., Ltd. has built a new spirulina breeding base covering 100,000 square meters and new intelligent temperature-controlled spirulina breeding greenhouses, allowing going beyond the traditional mode of production and spirulina breeding all year around. The annual production volume is increased from 1 ton of spirulina powder per mu (667 m2) to 2 tons of wall-broken spirulina powder per mu, with economic benefit increased by 20% - 30%.

TECHNOLOGICAL INNOVATION PRODUCTS: Spirulina polysaccharide, spirulina high nutrition protein powder, fluorescence phycocyanin and β-carotene products have been developed, increasing the value added by 100-200%. Through the establishment of 10 Spirulina Demonstration Centers throughout China, the foundation of Spirulina industrial development has been secured and the dissemination groups have been expanded. As a result, the sales revenue increased by 30-50%.

Picture 3: The new intelligent temperature-controlled spirulina breeding greenhouse

SOCIAL BENEFIT: 85 new employees have been newly recruited, including 60 women and 5 disabled. Cooperation with 30 farmers has also been developed to standardize breeding – the increase of the output per mu contributed to the farmers’ income growth. The neighboring farmers’ annual income has also increased by CNY 30,000 (USD 4,683). Poverty alleviation sites have been established to help farmers and residents. The income of directly involved farmers tripled from CNY 1,000 (USD 156) to CNY 3,000 (USD 468) per month and the monthly income of residents also has risen from CNY 2,000 (USD 312) to CNY 5,000 (USD 781). Through construction of “Green Factory” and “Sightseeing Factory”, the company created favorable conditions for local tourism development, women employment growth, absorbed the surplus labor force in rural areas, and established proper foundation for the poor households to alleviate poverty.

10 PROMOTING FOOD SAFETY AND ENVIRONMENTAL SOLUTIONS: the continuous technological innovation and achievement transfer materialized in the improvement of utilized technology and products. Original producing equipment was upgraded allowing the manufacturing of products meeting the market demands. The aseptic production workshop of 2,800 square meters was reconstructed and a spirulina goat milk powder production line was built. Utilizing purified air and sterile cleanliness is standard in the GMP based production halls. A new epoxy resin floor of 2,500 square meters has been built and the quality of the water treatment equipment has been improved from drinking water to pharmaceutical grade purified water, which additionally contributed to food safety. Picture 4: Updated manufacturing equipment for spirulina products

Through the construction of the second-generation intelligent temperature-controlled breeding greenhouses and algal fluid collection and circulation system, the full-cycle with zero-emissions has been achieved by solving the problem of eutrophication of water body and reducing the discharge of wastewater. 60% of water has been saved and the environmental protection has been improved to promote the construction of environmentally friendly industry.

THE DEMONSTRATION AND DISSEMINATION OF SPIRULINA BREEDING AND PRODUCTION: through trainings on breeding, processing, seed production, marketing and product safety, promotion and demonstration of the results was achieved. The concluded trainings raised unified scientific and technical norms and rule of standardization of the operation, enabled employees to be better involved in the production process, improved the operational capacities, and helped the farmers master the basic spirulina breeding technologies by applying science based breeding. Thus continuous income growth of the breeders is secured.

The adoption of new technologies attracted enterprises from other provinces in China to visit Shenliu Company for learning. The intelligent temperature-controlled sunlight greenhouse showcased advanced technology in China with high promotional effect for other enterprises in the spirulina industry.

IMPROVEMENT OF THE WOMEN’S EMPLOYMENT: technological innovation and training contributed to reducing labor intensity and encourage more women to participate in breeding, harvesting, cleaning, dehydrating, processing and packaging processes. More than 60 women have been employed additionally based on the project achievements.

11 Picture 5: Production workshop for spirulina products

Chen Mingren, Spirulina breeder in Shadun, Shunchang County, Fujian Province: I have been breeding spirulina for many years. I had no technology Picture 7: Lingzhi cultivation base when I first started breeding. The low yield of spirulina and the poor quality led to selling at unsatisfying, sometimes even compromised price. The cooperation with Shenliu Company brought good algae seedlings and guidance on-site with standardized breeding techniques. The output of spirulina powder per mu (667 m2) raised from 800 kg to 1,000 kg and the income per mu is increased by CNY 6,000 (USD 937). Now we master the technologies, have good seedlings and are equipped to enter the market. The spirulina powder will be supplied to Shenliu Company with the price no lower than on the market and our enthusiasm for breeding spirulina is pretty high.

2.3 FUJIAN XIANZHILOU BIOLOGICAL SCIENCE & TECHNOLOGY CO., LTD., FOCUSING ON LINGZHI

Lingzhi had a long history for medical use in China, Japan and other Asian countries and enjoyed high respect as medicinal fungus to promote health and longevity. Its rare natural availability could majorly be located in densely wooded forests with high humidity and dim lighting, which also explained its cherishment and high expense.

12 The artificial cultivation methods of Lingzhi fungus was successfully invented only in the 1970s, followed by the rapid development of mass production since the 1980s. Decades of industrialization qualifies Lingzhi and related products to be widely used as both medical treatment and food sustaining health. Its cultivation requires intensive labor and agro-industrial activities, which is promised by remarkable economic and social impact to generate income and provide employment also to women and youth (particularly in the rural areas of developing countries); as well as outstanding environmental functions: livestock wastes, agricultural crop residues and agro-industrial by-products could be utilized as foundation for growing mushrooms. Picture 6: Lingzhi cultivation methods

The Fujian Province is supporting the cultivation and processing of high-end edible mushroom for years. The Fujian Xianzhilou Biological Science & Technology Co., Ltd. established the “Demonstration base of cultivation and processing technology of edible fungi”.

The activities supported and implemented by the Project are summarized below:

Picture 7: Lingzhi cultivation base

ACTIVITIES CONDUCTED WITH THE DONOR FUNDING

MARKET PROMOTION FOR SCIENTIFIC RESEARCH ACHIEVEMENTS OF EDIBLE AND MEDICINAL FUNGI Presented S&T achievements and R&D products of edible and medicinal fungi in recent years; Targeted product demonstration and promotion, dissemination of scientific health preserving knowledge, and improvement of the enterprise branding; Addressed marketing and development strategy of industrialization; 50 participants from government, private sector and academia participated; The role of lead enterprise was exerted.

TRAINING ON THE STANDARD OF CULTIVATION AND COLLECTION OF ORGANIC LINGZHI Delivered knowledge and technology of standardizing Lingzhi cultivation, collection and processing; Produced the training material on “New Technology of Spore Powder Collection of Bagging Cultivated Lingzhi”; Directly benefited 152 trainees to apply the techniques in future work; Created 80 jobs, including 30 for women.

13 TRAINING FOR CUSTOMERS OF XIANZHILOU LINGZHI CULTIVATION & VISITING PRODUCTION BASE Received 70 international customers from the Philippines, Thailand, Malaysia, Canada, USA, Hong Kong, Singapore, Mexico, Honduras and other countries and regions; Visited Lingzhi greenhouses and exposed to the knowledge of Lingzhi cultivation and collection process and the healthcare efficacy of Lingzhi; Helpful for the brand promotion and exploration of international market.

ATTENDING THE ANNUAL CONFERENCE ON CHINA EDIBLE FUNGI INDUSTRY AND CHINA EDIBLE FUNGI EXPO Approximately 1,000 participants including national and international scholars, invited guests, member guests, student representatives and enterprise representatives etc. were present; Discussed issues on development of edible fungi industry; Published the proceedings of the conference as training and knowledge transfer material

CO-SPONSORING THE INTERNATIONAL CONFERENCE ON GANODERMA RESEARCH Co-organizing organizations: • International Society on Ganoderma Research (ISGR) • United Nations Industrial Development Organization (UNIDO) • China Edible Fungi Association • Fuzhou Municipal People’s Government • • Ganoherb Group • Fujian Provincial Science and Technology Exchange Center (FSTEC) • Edible Fungi Association of Fujian Province • Edible Fungi Association of Fuzhou • Fujian Provincial Society for Microbiology Medicinal Fungi Committee Rich in content and innovative in form, composed of activities including opening ceremony, academic seminar, Lingzhi concert and field visit etc.; Over 800 national and international experts, scholars and enterprise representatives attended the opening ceremony; Facilitated the development of ganoderma industry through sharing technical achievements of R&D and industrial application on ganoderma; Promoted the efficiency, social effect and health preserving culture of ganoderma; Strengthened international S&T cooperation in the ganoderma industry of Fujian Province.

CONFERENCE OF FUJIAN PROVINCIAL PHARMACOLOGY SOCIETY Co-organizers: • Fujian Provincial Pharmacology Society • Fujian Provincial Pharmaceutical Association Applied Pharmacology Committee • Fujian Ganoherb Group • Fujian Provincial Key Laboratory on Natural Medicine and Pharmacology Over 100 experts and representatives from universities, hospitals, research institutions and drug manufacturing enterprises participated the seminar; 5 conference reports and 62 pieces of abstract of academic thesis collected and published.

14 SPONSORING THE FIRST INTERNATIONAL LINGZHI CULTURE FESTIVAL Co-organizers • Fujian Xianzhilou Company and other institutions • China Association of Edible Fungi • FSTEC Conducted activities including Lingzhi Culture & Health Preserving Tours, “Impression of Lingzhi” International Photography Competition, Book release “Healing with Lingzhi” etc.; Promoted the knowledge of modern ganoderma and its better and scientific application.

TRAINING ON SAFETY KNOWLEDGE FOR THE ENTERPRISE Familiarized the enterprise staff with necessary emergency operations and emergency drill; Further enhanced the precaution consciousness and emergency escaping capability; 64 people were trained including 36 women.

PARTICIPATION IN THE SUPPLY SIDE WEST EXHIBITION Participation in the specialized international supplier exhibition of phytoextraction in Las Vegas, USA; Explored overseas buyers and business negotiations with more than 20 merchants in different regions to identify demand and trend of health care products on the North • American Market; 3 foreign merchants expressed interest in further cooperation.

PARTICIPATION IN THE 2ND REPRESENTATIVE CONFERENCE & 5TH ACADEMIC SEMINAR OF FUJIAN PROVINCIAL PHARMACOLOGY SOCIETY Well-known domestic and international experts and scholars delivered academic reports and shared the R&D achievements. Xianzhilou, as the lead enterprise in the field of China edible and medicinal Fungi industry, was invited for sharing the R&D achievements. Utilizing the opportunity, more than 170 participants working in the pharmacological area in China exchanged views.

PARTICIPATION IN THE 13TH CROSS-STRAIT ACADEMIC EXCHANGE FORUM ON TRADITIONAL CHINESE MEDICINE Co-organizer • Fujian Xianzhilou Biological Science and Technology Corporation • Fujian Medical University • University of Arizona, America More than 200 experts and scholars in the area gathered and 16 special invited experts delivered academic reports; Academic exchange vigorously promoted the development of ganoderma and other traditional Chinese medicines.

15 INTERNATIONAL LINGZHI CULTURE FESTIVAL Co-organizers • Xianzhilou Company • The People’s Government of Pucheng County • The Institute of Medicinal Plant Development of Chinese Academy of Medical Sciences • China Edible Fungi Association • Fujian University of Traditional Chinese Medicine • Nanping Huarongshan Industrial Park Witnessed by more than 500 participants including domestic and foreign experts and employees involved in ganoderma industry, cultural celebrities, and reporters from more than 20 national, provincial and municipal mainstream media; Two-month innovative cultural activities including tours to organic ganoderma base, ganoderma culture and art show, poetry competition, paper-cutting competition, summit forum, food tasting.

RESULTS ACHIEVED

COOPERATION WITH ACADEMIA: the academic exchange and cultural promotion activities connected national and international scientific research and business management to promote the cooperation between academia and industry and reflect scientific results in industrial development.

BRAND PROMOTION AND MARKET EXPLORATION: in 2016 “XIANZHILOU and LOGO” was awarded the title of China Famous Trademark by the State Administration for Industry and Commerce, having recognized the impact of the Xianzhilou Brand in China. Domestic markets were newly explored in 4 provinces i.e. Heilongjiang, Qinghai, Xinjiang and Guangxi (in the forms of retail stores or special counters). New cooperation has been established with 26 distributors in various provinces located in the North China, East China, South China and Northwest China; new international markets were also explored in 7 countries (UK, India, Austria, Czech Republic, United Arab Emirates, South Africa and Bahrain); and online platform on American Amazon was developed. Picture 8: Lingzhi product

PROJECT PROMOTION AND TECHNOLOGY IMPROVEMENT: 7 cooperation agreements were signed with domestic and foreign institutes to carry out the research on pharmacology and product R&D of Ganoderma; 8 products such as Ganoderma Spore Oil Extract Soft Capsule have been newly developed; 16 national patents were newly applied for, including 13 patents for invention and 3 patents for utility models; 16 granted patents were achieved including 7 patents for invention; 3 patents for utility models and 6 patents for appearance design. Xianzhilou participated in the formulation of the industrial standard “General Rules on the Inspection of Exported Picture 9: Lingzhi product

16 Health Tea” and the group standard of “International Business Standard of Ganoderma Extract” – both are promulgated and implemented.

Through technological improvement and achievements transfer, the annual production efficiency has increased by Picture 10: Lingzhi producing base 5.94% and the annual production volume by 12.6%. During the project implementation, in total 4,500 mu (3,001,500 m2) of rural land circulation was completed, the business model of “company + farmers (cooperatives) + poverty-stricken households” was adopted, and the operation mode of “business guidance + government support + implementation by cooperatives + income increase for poor households” has been implemented to more than 300 poor households and increased the income of CNY 15,000 (about USD 2,342) per household.

TALENT TRAINING: in total 722 employees were trained, including 413 women, accounting for 57.2% among the total trainees; 152 were employed, of which 98 were women, accounting for 64.5% among the total.

Chen Zhangfu, Ganoderma grower in Shuangkeng Village, Fuling Town, Pucheng County, Fujian Province): I used to be an ordinary Ganoderma grower and didn’t employ modern technologies. The harvest heavily depended on the weather. When it came to lucky year, the annual income could reach CNY 10,000, but when met with a year with bad weather, we could only earn CNY 3,000 to CNY 5,000 per year and hardly cover the cost. The cooperation with Xianzhilou Company improved the situation. We are provided with technologies and purchase orders, paid higher than market price, through which the annual income could reach around CNY 25,000, several times more than before. What matters most is that the problem of poor harvest would not concern us anymore.

Picture 8: Lingzhi product 2.4 FUJIAN SHENGHE MODERN AGRICULTURE CO., LTD., FOCUSING ON RECLAMATION OF SALINE LAND

Saline land refers to soils with high salt content and pH value bigger than 9. Growing plants, especially food or feed crops on saline land is rather difficult. UNESCO and FAO statistics indicate the world coverage of saline land summing up to 954.38 million hectares, most of which is associated with the accumulation of carbonates in soil, thus generally resulting in high degree of alkalization barely for plants to survive. The distribution of saline soil is determined by soil type and climate change, and could be divided into coastal saline area, plain saline area, desert and desert grassland saline area, and grassland saline area. All types of saline soils are formed under certain natural conditions, mainly due to the redistribution of various highly soluble salts in horizontal and vertical direction. Due to the theory that poor water status may underlies forming saline land, the emphasis of reclamation, should

17 be placed on improving water status of the soils, generally into a few steps: 1. salt-removing, salt leaching and salt content reduction in soul; 2. cultivating salt-tolerant plants to improve soil fertility; and 3. planting crops. Specific improvement measures could include drainage and irrigation, desalting for improvement, rice cultivation, improvement of soil fertility, soil leveling and chemical improvement.

Saline land reclamation may provide solution to environment degradation, population expansion Picture 11: saline land to be improved for cultivation and food crisis, and benefit human community well-beings and socio-economic development through driving local employment and establishing value chain oriented industrial advancement. The successful reclamation and utilization of saline land can change land conditions, qualify the soil quality proper for cultivation, promote land use efficiency and value added, and contribute to environment improvement.

The Fujian Shenghe Modern Agriculture Co., Ltd., established the “Demonstration base of cultivation and processing of cash crops on reclaimed saline land” through the project, and built on three models of reclamation based on a soil survey: Utilizing saline land by planting crops with high salinity tolerance; land fill; and soilless plant production.

Project activities are summarized as below:

ACTIVITIES CONDUCTED WITH THE DONOR FUNDING

TRAINING ON CULTIVATION TECHNOLOGY AND VEGETABLE MANAGEMENT 6 trainers from Fujian Provincial Academy of Agriculture Science, Fujian Agriculture and Forestry University, Institution of Fuqing Plant Protection and Quarantine, Fuqing Modern Agriculture Development Agency and Fuqing Agro-products Quality and Safety Agency delivered lectures in the training of trainers exercise; Training of management skills for managers and technical staff; Key points of vegetable cultivation and production for new farm staff; Improved the level of technical management and production efficiency of the trainees; more than 80 persons trained; 60 new jobs created, including 45 for women.

CONDUCTING THE SOIL BASELINE SURVEY The baseline survey for Shenghe Company has been carried out and completed by Minjiang University; Provided the basis for different techniques to be applied for the saline land reclamation by Shenghe Company; Beneficial for Shenghe Company to improve the applied technology level and upgrade business.

18 STUDY TOUR FOR ADVANCED TECHNOLOGY OF VEGETABLE CULTIVATION AND PROCESSING Organized by FSTEC, the management and technical staff from the Shenghe Company and experts from the relevant institutions in Fujian carried out a study tour to Hainan Runda Modern Agriculture Co., Ltd. (Demonstration Base of Modern Agriculture and Exhibition Center of Tropical Facility Agricultural Technology) in Lingshui County, Hainan Province and Sanya Science & Technology Academy for Crop Winter Multiplication (STA); Knowledge transfer on soilless vegetable substrate cultivation, post-harvest processing, cold chain storage and intensive breeding production system; Cooperation agreement reached on new variety introduction; Discussed the topics on saline land reclamation and introduction of saline alkali resistant vegetable strains with STA.

TRAINING ON VEGETABLE MANAGEMENT AND PRODUCT PACKAGING Three technical experts in Fujian Province were invited for training for the newly recruited employees; Improved the cultivation and production level, and vegetable management capability of the new employees; Initiated the involvement of rural labor; Received 60 trainees in total, including 31 female.

STUDY TOUR FOR ADVANCED VEGETABLE CULTIVATION AND BREEDING TECHNOLOGY Participated the 7th Chinese Greenhouse Vegetable Varieties Exhibition (Shouguang) and the 18th China (Shouguang) International Vegetable SciTech Fair; Technical exchange activities with vegetable breeding and cultivation enterprises in Shouguang and Qingdao, and with Academy of Agricultural Science in Qingdao and Yantai; Knowledge transfer on the latest technologies of vegetable breeding and cultivation; Promoted the cooperation between Shenghe Company and Rijk Zwaan Company on introducing new varieties.

TRAINING ON PRODUCTION TECHNOLOGIES AND VEGETABLE MANAGEMENT Local experts were invited to give lectures on Standard on Prevention and Control of Water and Soil Erosion, and Knowledge on Safe Production and Management of Greenhouses for Vegetable in Summer; Improved production technologies and vegetable management capability of the employees; Received in total 63 trainees, including 27 women; Created 31 jobs, including 23 for women.

19 DEMONSTRATION OF PROJECT ACHIEVEMENTS, AND TECHNICAL COOPERATION AND EXCHANGES Study tour to Israel, the Netherlands and Vienna; Started to cooperate with universities and companies abroad; Knowledge transfer of international advanced technologies in the agriculture area, such as cultivation, irrigation and biotechnologies; Explored more cooperation channels; Beneficial to further upgrading the technology and industrialization level.

FERTILIZATION MANAGEMENT OF SALINE-ALKALI SOIL, AND PLANNING AND DESIGN OF INTERNET OF THINGS OF SHENGHE COMPANY Upon the result of the baseline survey conducted in the base of Shenghe Company, measures taken including under-mulching-drip irrigation, deep tillage, scarification and organic fertilization treatment to improve the coastal saline soil; The further promotion of the demonstration effect of Shenghe Company will explore: (1) to carry out saline-alkali soil reclamation and fertilization management in the test field to improve the production volume; (2) to organize academic seminar on reclamation and management of saline-alkali land for facilitating saline-alkali land reclamation and industrial upgrading of Shenghe Company; (3) to use the technology of Internet of Things to design the environmental monitoring system for the base to provide scientific basis for irrigation and fertilization; Undertaken by Department of Geography of the Minjiang University.

RESULTS ACHIEVED

8 activities including 3 trainings, 2 in-country trainings, 1 international study tour, 1 baseline survey and 1 reclamation plan were conducted, benefiting in total 246 trainees (including 197 women), and creating 60 jobs (including 42 for women and 12 for the disabled).

Shenghe carried out various training activities and effectively improved the production technologies and vegetable management skills of its employees as well as of neighboring farmers. The capacity of technical management and efficiency of cultivation and production was apparently strengthened with sustainability. Long-term partnership with Fujian Agriculture and Forestry University, Fujian Provincial Academy of Agricultural Sciences and other institutes has also been established.

TECHNICAL IMPROVEMENT: the production and processing capacity of the company was effectively improved. The newly-added cultivation area was 226,682 m2 and the growth rate of annual output value reached 5.2%, with the production efficiency increased by 10.6%. The annual production volume increased from Picture 12: Vegetables growing on the land reclaimed by project activities

20 31,657 tons to 35,623 tons, showing an increase of 12%. About 18,667 m2 of saline land was reclaimed and 3 varieties of alkali resistant crops were introduced. The market channels were further expanded and the annual sales volume was increased by 3,966 tons. Domestic markets were newly explored including Shouguang in Shandong Province, Changsha in Hunan Province and Zhengzhou in Henan Province.

TECHNICAL UPGRADING: The establishment of the demonstration base stimulates the employment of neighboring farmers and increased their income. The average income of the neighboring farmers rises by CNY 19,000 (USD 2,966) per year. In addition, several modern facilities have been constructed, including a modern vegetable picking and packaging room, two numerical control breeding greenhouses, two vegetable fresh-keeping storehouses and an integration of water and fertilizer irrigation facility, which further improved the market competitiveness of the products. Picture 13: Caring for the vegetables growing on the land reclaimed by project activities Shenghe used to follow traditional production methods. The Project exposed the company to international contacts/network and latest technologies. A one-year fellowship for the son of the owner at the Wageningen University, the Netherlands was agreed upon. Through the active communication with domestic and international institutes and enterprises, Shenghe will continue endeavoring to contribute to the industrial modernization.

CHEN Gongzhong, Farmer of Shapu Base, Shenghe Modern Agriculture Company: During the project implementation, more scientific methods for production with the help of Shenghe Company have been applied. The quality and output of the products grown on the same land area was greatly improved. The output per mu in the years before the project intervention was only 7-8 tons – and now it could reach 10-11 tons, with the quality also greatly improved. The average length of the pepper variety was only 10-15 cm, and now it can reach an average of 20-25cm. Our family has higher annual income from around CNY 80,000 (in equivalent to USD 12,488) to around CNY 100,000 (in equivalent to USD 15,610). I am aware of and happy to embrace the importance of science and technology as our income increased through technological advances, and with advanced technologies we could have less input but more output.

21 3. PROGRAMME STEERING COMMITTEE: MANAGEMENT, MONITORING AND EVALUATION

3.1 2016 PSC MEETING On 29 June - 1 July, 2016, the annual Programme Steering Committee (PSC) meeting was held in Fuzhou. Besides successful organization of the PSC meeting, a meeting on food safety cooperation was also organized by FSTEC between UNIDO official and responsible officials from relevant department of Fujian Provincial Food and Drug Administration and Fujian Provincial Department of Agriculture. UNIDO project manager paid visit to the Xianzhilou Company and the cultivation & production base of organic Lingzhi in Pucheng County for evaluation.

3.2 2017 PSC MEETING On 1-5 July, 2017, the second annual PSC meeting was held. UNIDO project manager was also invited to attend the 12th China (Fuzhou) International Fisheries Expo and the launching ceremony of the First International Lingzhi Culture Festival. Field visits were carried out to Wangsong Group and Fuzhou Orient Tea Development Company.

3.3 2018 PSC CLOSING MEETING The last and also closing meeting of the PSC was held on 21 May 2018 at the premises of the Fujian Xianzhilou Biological Science & Technology Co., Ltd. The NPD provided an overall summary of the project activities, and the results were supported by the reports of the participating companies.

The representatives of CICETE as well as the local authorities expressed their appreciation on the project achievements and also the fact that the project was implemented according to the original timeline. In course or the meeting, Picture 14: the PSC closing meeting in May 2018 the Project promotional film was presented.

All the documents mentioned are available on the UNIDO Open Data Platform, which is a transparency initiative and providing details on all ongoing programmes and projects.

The representative of the local authorities as well as FSTEC utilized the presence of CICETE representatives to discuss the next pipeline for the Fujian province.

22 4. SUSTAINABILITY

The sustainability of the project is very much depending on the maturity of the involved enterprises. It is to be stated that though the level of maturity of the involved enterprises varies very much with the Fujian Xianzhilou Biological Science & Technology Co., Ltd. and the Fujian Shenliu Health Food Co., Ltd., as very mature enterprises with a clear strategy to master the future, while the Fujian Shenghe Modern Agriculture Co., Ltd. found its way into a successful and economic viable enterprise in the course of the project and drawbacks might more likely occur than with the two other key participants. The commitment of the incoming owner generation will be crucial.

Nevertheless, the high level of own investments is showing trust in their future success and should be supported by the local authorities and institutions. Growing vegetables on saline land could be a very viable business sector in the province and a source of high job opportunities for the rural poor in the future. The potential of demonstration and encouragement of future entrepreneurs is high and should be continued also after the project end. For the other two companies with their very specific product coverage the expansion into new jobs might be limited but their entrepreneurial strength and market strategies are reliable sources for sustainability.

For all the three enterprises, their high level of own investments is a strong signal for their willingness to stay in the business. The expansion of Shenliu to the local tourism sector is an interesting but challenging endeavor which needs special attention.

Another sign for successful sustainability is the acceptance of the implementation strategy which built on local available knowledge and expertise by all three enterprises throughout the project cycle. UNIDO intervened as facilitator but not at all as executor of solutions. It was possible to keep the ownership with the receiving enterprises. No external solutions were imposed to the participants. On the contrary UNIDO tried to respond to the needs expressed by the enterprises.

FSTEC played an important role by linking to appropriate local and international resources utilizing their strong network as center for international exchange of science and technology. This should be offered to and utilized by the participating enterprises beyond the project lifetime. The project clearly shows that ownership by the recipients and the facilitating role of the development partner can be the source of success for projects.

The high level of commitment by the participating enterprises is documented by the level of own financial investments exceeding by far the original commitment by the companies. The investment figure by the Fujian Xianzhilou Biological Science & Technology Co., Ltd. is much higher than reported as the investments under execution are not reported as project related. This might be an issue of competition and management secrets, a normal behavior of enterprises competing at the international level.

The impact and cooperation built in the project is very likely to sustain. The monitoring activities along the project also showed that the investment of the Government of China through CICETE at an amount of USD 500,000 triggered an increase of tax volume paid by the participating enterprises of around USD 5.3 million. A factor above 1:10 which shows the high potential of development assistance in case the project partners are pulling and pushing in the same and accepted direction.

23 PROJECT COUNTERPARTS BUDGET COMMITMENTS EXPENDITURE EXPENDITURE

FSTEC 490,000 498,845

Shenliu 400,000 194,361 5,239,057

Xianzhilou 400,000 146,603 878,282

Shenghe 200,000 151,590 782,973

Others 7,446

TOTAL 500,000 1,490,000 500,000 7,399,157

Graphic 3: Financial delivery in the project framework, as of the reports provided by the enterprises and FSTEC, the commitment made at the time of the project development by USD 7,399,157.

5. ACHIEVEMENTS

THE THREE COMPANIES IN THE THREE YEARS OF THE PROJECT IMPLEMENTATION ACHIEVED: 561,882 square meters of land newly utilized for cultivation (breeding) 65 new domestic and international markets explored 12 new varieties of products developed in cooperation with domestic and international universities and R&D institutions An increase of CNY 26,000 for the neighboring farmers’ annual average income observed 1278 employees, including 490 men and 788 women trained 297 jobs, including 72 for men, 200 for women and 25 for the disabled, created for the local Output value approximately CNY 560 million (equivalent to USD 90.3 million) created and tax amounting about CNY 33 million (equivalent to USD 5.32 million) paid The average annual output value and the average production efficiency of the three companies increased by 14% and 16% respectively

24 FUJIAN SHENLIU HEALTH FOOD CO., LTD. ACHIEVED IN THE PROJECT:

1 new production line of spirulina goat milk powder established. 4 New products developed through independent innovation and research on deep processing technology of spirulina Established the poverty alleviation sites in rural areas for poverty reduction and enabled the income of directly involved farmers tripled Established 7 space spirulina exhibition centers and 1 green factory integrated with ecology, sightseeing and to urism The newly built closed-type spirulina breeding greenhouse allows the year-round breeding and -10% Facilitated the income increase of the neighboring household by CNY 30,000

FUJIAN XIANZHILOU BIOLOGICAL SCIENCE & TECHNOLOGY CO., LTD. ACHIEVED IN THE PROJECT:

8 products have been newly developed The new adopted business model motivated more than 300 poverished households and increased the average annual income per household by CNY 15,000 (equivalent to USD 2,264) 7 cooperation agreements with domestic and foreign institutes signed to carry out pharmacological research and product development for Ganoderma lucidum New cooperation with 26 distributors in China achieved and international market opened in seven countries. In addition, the online platform on Amazon.com explored Planning to further invest CNY 190 million (equivalent to USD 28.7 million) to develop 6 production lines for tablets, capsules and powders, and to reach the annual production capacity of CNY 800 million (equivalent to USD 120.8 million)

FUJIAN SHENGHE MODERN AGRICULTURE CO., LTD. ACHIEVED IN THE PROJECT:

Built 1 new vegetable packaging workshop, 2 intensive seedling greenhouses, 2 vegetable freezers and 1 automated water and fertilizer integration facility Reclaimed saline-alkali land of 18,667 m2, introduced 3 varieties of alkaliresistant crops and increased annual production volume by 12% Contributed to an average annual increase growth of neighboring farmers by CNY 19,000 (equivalent to USD 2868.4) Annual sales volumn increased by 3,966 tons 3 new agricultural product trading markets developed in Shandong, Hunan and Henan Province

25 6. LESSONS LEARNED

The Project implementation facilitated the improvement of product quality, scientific and technological R&D capabilities, management development and market exploration of the three lead agriculture enterprises in Fujian Province. Through the establishment of demonstration bases in lead agriculture enterprises, the knowledge transfer promoted the value chain development for Ganoderma lucidum, spirulina and economic crops on saline-alkali land, as well as contributing to job creation, economic development, poverty reduction, environmental protection and sustainable development of the agricultural industry in Fujian Province.

The sustainable impact of the Project aims to fruitful deliverables and solid cooperation. The achievements of the Project appreciated the efforts and service to international cooperation regarding science and technology to better meet the local circumstances and requirements. The involvement of strong local entities and advanced expertise proved to be important for ensuring successful deliveries. UNIDO facilitated in screening local expertise to be accepted by the beneficiaries and achieve project objectives.

26 United Nations Industrial Development Organization Vienna International Centre P.O. Box 300, Vienna, Austria

Fujian Provincial Science and Technology Exchange Center with Foreign Countries 7 Hudong Road, Gulou District Fuzhou, Fujian Province, China

Fujian Shenliu Health Food Co., Ltd. Shenliu Biopark Zone, Shadun Village Shunchang County, Fujian Province, China

Fujian Xianzhilou Biological Science and Technology Co., Ltd. 9 Building, the First Phase of Haixi Innovation Park, High-tech Zone Shangjie Town, Minhou District, Fuzhou, Fujian Province, China

Fujian Shenghe Modern Agriculture Co., Ltd. 47 Xiling Village, Shapu Town Fuqing, Fujian Province, China

Food Systems and Nutrition Division Department of Agri-Business United Nations Industrial Development Organization Vienna International Centre P.O. Box 300, Vienna, Austria

Vienna International Centre · P.O. Box 300 · 1400 Vienna · Austria Tel.: (+43-1) 26026-o · E-mail: [email protected] www.unido.org

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