The priority of the No 1 Document of the Chinese central government has changed from water conservancy investment in 2011 to agricultural science and technology in 2012. As key resources such as land, water and labor are becoming more scarce, the increase in productivity from investment in water conservancy and adoption of new technologies will be critical to producing adequate amount of and nutritious food for a more well-to-do and urban population in China. But for China, it is not a choice between water conservancy and technology. It needs both.

The government's priority to accelerate investment in water conservation and irrigation projects in 2011 was widely welcomed, for it was long overdue. The government must keep this momentum and increase investment in irrigation for small farmers. It is important that these investments generate higher water supply capacity and help minimize the harms caused by droughts and floods. The government should also set up an effective monitoring and evaluation system to evaluate the progress, results and impact of such investment.

China's agricultural technology is at the forefront of the world in terms of crop yield for major staples such as rice, wheat and corn. Indeed, China's agricultural sector has seen tremendous improvements in productivity in the last few decades. According to United Nations Food and Agriculture Organization estimates, rice and corn yields in China were almost two times higher in 2010 compared to 1980, while wheat yield was about three times higher. Now, China produces 50 percent more rice and wheat than the world average per unit of land.

But agricultural mechanization technologies, which have become more important as labor becomes scarcer still have much room for improvement. A shift from land-saving technologies to land- and labor-saving technologies is required. Water- and energy-saving technologies as well as environmental protection technologies also need to be improved. China can learn from advanced countries to push the frontiers of technology development in these areas.

Climate change will have a huge impact on China's agricultural sector. Agriculture will have to adapt to the changes in temperature and precipitation. Besides, extreme weather events like floods, droughts and storms are likely to become more frequent. And agriculture can be used to mitigate climate change by switching to low-carbon farming practices. For that, new policies, investments and technologies will be critical.

The adoption of agricultural technologies varies according to regions across China. Although many Chinese farmers have welcomed modern technologies, there are many others, particularly in the central and western regions, that continue to rely on traditional technologies. Research shows that while large numbers of small farmers in the northern and eastern regions have benefited by growing Bt cotton, for example, adoption rates have been much lower in the western region.

Similarly, there is evidence that agricultural research investment in the central and western regions is much lower compared to that in the eastern region. Therefore, the government has to pay more attention to less-developed regions, where farming has become unattractive and less productive.

It is particularly important that new agricultural technologies are low on cost and highly divisible to meet the needs of small farmers. Modern technologies must suit different contexts, too, and be able to coexist with traditional technologies.

In addition to the needs and priorities of small farmers, technological innovation must also consider other economic and cultural conditions such as local gender and diversity issues. And education campaigns to increase farmers' awareness about these new technologies and other public policies, such as technical assistance, finance and regulation, needed to accelerate the adoption of modern technologies must be put in place.

An International Food Policy Research Institute study shows that investment in agricultural research and development (R&D) has the largest impact on agricultural growth and second largest impact on poverty reduction. It is next only to rural education investment. But public investment in agricultural R&D in China is still below the desired level.

The government has to invest more and at a faster rate, in agricultural R&D, increasing it to at least 1 percent of agricultural gross domestic product in 2012, 1.5 percent in 2015 and 2 percent in 2020.

Also, the government should improve regulations, policies and incentives for the private sector to increase its investment in agricultural R&D. Chinese enterprises in the agricultural and food sectors have increased exponentially over the past decade, but their investment in R&D is still comparatively small. The protection of intellectual property rights, tax concessions and secured access to land for experiment are some of the policies that the government should consider continuing to improve the situation.

Moreover, China can also strengthen collaboration with international agricultural research systems such as the Consultative Group for International Agricultural Research and its supported agricultural research centers. The system is undergoing reform and has developed large research programs on rice, wheat, corn, climate change, forestry, nutrition and policy. There is a great potential for Chinese institutions to learn from and contribute to these programs.

The author is director-general of International Food Policy Research Institute.