China’s Organic Industry is Making its Mark

The breathtaking economic boom and the huge growth rates of the People’s Republic of China conceal the fact that China is still an emerging country characterised by agriculture. Side by side with the economic revolution a social revolution is underway, as can be seen for example in rapid urbanisation. At the same time, this enormous country is faced with daunting environmental problems. The Chinese State is reacting and trying to change the direction in which the country is going, and it clearly regards organic agriculture as a possible way forward.

Picture: Small-scale agriculture plays a major role in China

Both the ecological and the economic benefits of organic agriculture have been recognised by individual entrepreneurs, companies and the State, that is now getting heavily involved. At a conference in the middle of June 2007 in Xiamen in southern China, Ma Aguio, the head of food security and food quality in China’s Ministry of Agriculture, declared that China wanted to raise the proportion of pollution-free agricultural products (Greenfood) and organic produce to 35 % by 2010. He said it was necessary to promote all three aspects  in order to meet the increasing demand for healthy food and at the same time to incentivise agriculture to make improvements.

The Five-Year-Plan, that has been running since 2006, also contains measures to achieve the same objective. What this means for ecological production was spelled out by Guo Chunmin at the press conference at BioFach China at the end of May (picture, fifth from right). The deputy director of COFCC, the state-run China Organic Food Certification Center, said he was very optimistic regarding the market development for organics. Bearing in mind the current 0.2 % market share of organics, he said that the People’s Republic was aiming at 8 % in eight to ten years, and he maintained that this was not unrealistic in view of the improving image of organic food and an annual growth rate of 30%. At the moment, most organic raw materials produced in China go for export, although the internal market is now beginning to establish itself.

From the government’s point of view it is an achievement to be able to provide a growing volume of pollution-free food. According to official statistics, more than 23.000 agricultural products are on sale as pollution-free, and that really is an achievement in a country where food scandals are a common occurrence. We may well find a label on fresh milk stating ‘antibiotics-free’ (picture) off-putting, but in China it is a statement of quality. Many  foreigners and the Chinese who can afford it buy imported goods because they simply do not trust Chinese products.  This is why  in the stores of western companies like Carrefour the shelves are stacked full of imported brands, although in smaller shops that go in for high value goods and also sell organics (for example, City Shop and Lohao City ) you can find both conventional and organic imports).

Competing with organics is the well established and quite well known Green Food Label (picture). Greenfood  is often lumped together with certified organic produce, whereas in fact it simply means that the regulations  prescribed by the World Food Organisation FAO have been adhered to and  monitored by the state Green Food Development Center. These regulations restrict or prohibit the input of pesticides. According to official data, around 13.000 certified Greenfood items, produced by about 4600 Chinese farms and firms, are on the market.

Organic products, that are produced in compliance with the rules and regulations and have been inspected by a certification body, have been receiving  a state  logo (picture: small, round emblem). The use of synthetic chemical fertilisers, pesticides and genetically modified organisms is banned in the case of organic products, and a conversion period of several years applies. The regulations draw on the EU Organic Regulation, guidelines operating in the USA and Japan and the standards of IFOAM, the worldwide umbrella organisation of organic agriculture. But the fact is that organic standards are not well enough established and Greenfood is frequently regarded as a preliminary stage for organic production.

It is also true, however, that many regions of China that have not developed intensive agriculture practise extensive and natural husbandry that makes them ideal for conversion to organic production. Small-scale farming, that plays a very important role in China, is another factor in favour of the principles of organic agriculture. A range of international companies and consulting organisations have been operating in China for years, and structures and long-term cooperation with producers have been set up. The country has its own pioneers who are convinced by organic agriculture and spread the word. What is more, the state is increasingly interested in forcing the pace of organic agriculture, and  consequently  it promotes activities and projects. (Picture: vegetables on sale at Carrefour)

Many private and semi-state initiatives have been operating in some cases for many years and have already acquired organic know-how in cropping as well as in marketing. An example is Organic Farm (Beijing Organic Farm Development Co Ltd). The company, that was founded in 1995, claims to be the biggest supplier of OFCC-certified products (Organic Food Certification Center) in the whole of China.  The co-founder Chen Conghong (on the right in the picture) undertakes the marketing for various member farms, such as the Liu Min Ying Farm 25 km south east of Beijing. This farm was founded as early as 1982 as the first eco-village in China, and five years later it was selected by the UN as one of 500 model projects worldwide. Organic vegetables and grain from Organic Farm are on sale in over 80 stores belonging to Auchan, Carrefour, Wal Mart, Vanguard, Pacific Shopping, Parkson and WuMart. Organic Farm is in the process of creating a box scheme.

Farms in the vicinity of  Shanghai, with its million inhabitants, have also converted to organic. One of these is Shanghai Organics, that grows vegetables, including asparagus, squashes and lettuce on around 10 ha. The conversion phase began in 1998, and the whole plot has been  certified organic since 2001. It supplies not only big supermarket chains like Auchan and Carrefour but also Chinese chain stores. As well as cropping and harvesting, the company employs 150 people to pack the vegetables (picture), and it also takes charge of deliveries itself. Customers have also been supplied direct for the last six months thanks to a box scheme. The deputy director of Shanghai Organics David Wong is confident when it comes to the rapid expansion of organics in the market: “In five to six years organic goods will be everywhere.” The company has taken a big step in this direction by delivering to customers’ homes.

China’s small farmers are very significant in the production process when we consider that, according to the data of the International Research Institute for Food Policy (IFPRI) referring mainly to China, about 200 million agricultural holdings (over 80%) are classed as small farms. Many of these small farmers provide for their families on less than half a hectare of land. The tea project Suzhou - Tree Mountain Village - is an example of a small farmers’ cooperative that has converted in the last three years from integrated cropping to organic farming. The Tea Cooperative - Suzhou Dongshan Tea Company - is located west of Shanghai and belongs geographically to the town of Suzhou (around 2.2 million inhabitants). The surrounding region, that has about four million inhabitants, is prosperous and agricultural in character.

The conversion of the more than 500 tea growers began in 2004. They crop about 18 ha of land in hilly countryside round Suzhou (picture). A central collection and preparation facility processes the green tea harvest that currently amounts to 7 tons. For the farmers cultivating a small tea garden  - frequently plus mixed cropping with fruit trees, fruit bushes or bamboo - certification of their products has brought an improvement to their standard of living. According to the head of the cooperative, the price of organic green tea is three times that of tea with the Greenfood label. He says that the average income of the tea growers has developed very satisfactorily and is now the equivalent of 1600 - 2000 euros per annum. Even the Suzhou district’s official homepage draws attention to the local move towards organic agriculture. According to the website, 272 agricultural holdings have received organic certification, although here too no distinction is made when referring to Greenfood and organic.

Comment: eager to learn for the great leap forward

The Chinese are said to have a great business sense. They certainly have the ability to imitate products, but they also have an instinct for what the market demands.  The organic market demands quality but now volume as well, requirements that are making themselves felt more and more on account of the boom in demand and the stagnating number of organic farms in the west. The last point is in China’s favour because, as far as volume is concerned, this agricultural country, with vast unused tracts of land and different climate zones, has the potential and the right conditions to enable it to become a supplier of raw materials.  In fact, this is already happening: most of the sunflower seeds and pumpkin seeds on our wholemeal bread come from China. There are certainly more opportunities, and the range of products could be much wider.

As far as quality is concerned, there is still a lot to be learned. And yet, as an observer, you have the feeling that the Chinese are ready and willing to catch up quickly, especially in view of the fact that the State has now recognised the signs and is putting its weight behind developments. Organic agriculture provides the State with multiple benefits. As well as helping to solve the urgent environmental problems, organics keep happy the growing number of health-conscious consumers who are suspicious of conventional products, and the marketing of eco-goods is of benefit to the economy. This is true of both exporting and the domestic market which is beginning to emerge and is producing some interesting business models. Despite the poor image that goods from the People’s Republic of China often have, we ought to give the country a chance to prove itself in the eco-sector - with quality and volume.

30.08.2007