MANILA, Dec. 2 (Xinhua) -- More than half a million rural households will benefit from an 83 million-U.S. dollar loan by the Asian Development Bank (ADB) to improve farming technology and practices in three Chinese provinces, the lender said on Tuesday.

    Many of the poor people in Gansu, Henan and Shandong depend on agriculture for livelihood. The average rural household income is only two-third of the national average, and the farm sizes are small, each averaging only 0.28 hectare.

    Besides, farmers have limited access to markets and technology to diversify into higher-value crops.

    To help address the problems, the project will introduce high-value crops, improved farm and livestock management, advanced farm technologies, and better cultivation practices in some 120,000 hectares of land in the three provinces. Around 600,000 farm households are expected to benefit from the project, the Manila-based bank said in a statement.

    Under the project, about 29 partnerships will be developed between private enterprises and farmers through contract-farming arrangements to strengthen farm productivity, food production, and processing capacity to take advantage of growing domestic and overseas markets.

    "Contract farming is a relatively new concept in the country," said Raymond Renfro, economist of ADB's East Asia Department. Through this concept, loan proceeds go directly to the private farm enterprises or agro enterprises, which in turn will work directly with farmers.

    "The farmers get a higher price since the agro-enterprises share their profits by buying the product at higher prices," Renfro said.

    "The farmers do not have to purchase inputs for farming. Instead, the agro-enterprises buy the inputs in advance and deduct the costs of inputs when it's time to pay the farmers," he added.

    By moving away from traditional low-yielding and low-value food crops, farmers will be assured of better prices for their outputs. Their partnerships with private enterprises will provide a guaranteed price at harvest time, pushing the average farm income higher by about 15 percent to 25 percent, ADB said.

    The project will focus on boosting production of wheat, corn, cotton seed, and other related products such as oil cake, vegetables, and grapes for wine and juices.