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China

March 02, 2009

Step Right Up! China Passes Food Safety Law

Pollution free food Xinhua reports that in the wake of numerous domestic and international tainted food scandals, China enacted a sweeping new Food Safety Law on Saturday.

Of course, announcing that a law has been passed in China doesn’t tell you what’s going to actually happen. First, the general language of the law needs to be turned into detailed implementation procedures. (In the words of Tom Waits from his song Step Right Up, “The large print giveth and the small print taketh away!”) And even when the right words are in place, there is still implementation. Despite the image of China as a totalitarian state, enforcement of central directives in the provinces has gotten more and more difficult following the devolution of many governance responsibilities to localities in the 1990s.

That being said, the country was in desperate need of a revision to its food safety law, which has not been updated since 1996. I excerpt its main provisions below, with commentary:

“…the State Council, or Cabinet, would set up a state-level food safety commission to oversee the entire food monitoring system, whose lack of efficiency has long been blamed for repeated scandals. Departments of health, agriculture, quality supervision, industry and commerce administration will shoulder different responsibilities.”

The requirement that a food safety commission be set up under the State Council is a response to the problem of overlapping, unclear or conflicting responsibilities for food safety among the relevant government agencies. It also shows how seriously the National People's Congress (NPC) regards the situation. The State Council oversees the provincial governments and all of the ministries, and commissions are set up under the Council only for major, cross-cutting issues for which overarching powers are needed. This one will have the authority to divide up resources and clarify responsibilities among the ten different ministries and agencies charged with ensuring food safety.

“The law stipulated a ban on all chemicals and materials other than authorized additives in food production, saying that ‘only those items proved to be safe and necessary in food production are allowed to be listed as food additives.'. . .Health authorities are responsible for assessing and approving food additives and regulating their usage.”

This sounds like progress, but the devil is in the details. Critics of the U.S. law on food additives, for instance, point out that many questionable chemicals were grandfathered in because they were already in use when the law passed, and that the burden of proof is always on those seeking to stop approval of new additives rather than on the food companies.

“Producers of edible farm products are required to abide by food safety standards when using pesticide, fertilizer, growth regulators, veterinary drugs, feedstuff and feed additives. They must also keep farming or breeding records.”

Stated in such general terms, this one is nearly impossible to interpret. Since “producers of edible farm products” includes almost all of China’s 300 million farmers, this could simply belike many of China’s lawsa regulation that sounds sweeping and strict but is unenforceable in practice. Worse, if record-keeping or sanitary requirements are onerous, enforcement of food safety regulations will be a huge additional burden for China’s beleaguered farmers, yet another mechanism for corrupt local governments to extract rents or control production.

“Offenders could face maximum fines which would be 10 times the value of sold products. If businesses are found producing or selling a substandard foodstuff, consumers can ask for financial compensation which is 10 times the price of the product. That's in addition to compensation for the harm the product causes to the consumer.”

This market-based approach to enforcement has precedent in China. In the 1990s, China passed a consumer protection law mandating that anyone who sold counterfeit goods should be compensated by the manufacturer at double the sale price. Uncovering fraud in order to claim compensation became a cottage industry, with some high-profile success stories such as Wang Hai, who was known (or dubbed himself!) as “China’s Ralph Nader.” But while Nader’s goal was to promote more effective government action on behalf of consumers, the Chinese government is essentially asking consumers to take over the job of law enforcement entirely. The law made no measurable dent in the spread of counterfeit goods, because there is little legal or administrative power to back up consumer grievances.

Perhaps the added incentive of a ten-fold compensation measure is in recognition of the earlier law’s weakness, and perhaps there will be stronger enforcement support for this measure, but unfortunately, China’s consumer rights movement still has a long way to go!

“To better protect consumer rights, the law bans food safety supervision and inspection agencies, food industry associations and consumers' associations from advertising food products.”

This is a response to the corrupt practices and conflicts of interest that plague the agencies and associations mentioned. (Imagine Consumer Reports or the FDA being paid by KFC to declare Extra Crispy a “heart-healthy” food!)

“Individuals or organizations are prohibited from advertising substandard food products. Those advertising such products would face joint liability for damages incurred.”

Permit me a short digression. Ultimate power in China has always been in the hands of the Communist Party, but there is also a legislature, the National People’s Congress (NPC). Despite acting as a rubber-stamp for Party decisions for most of its history, the NPC has in the past two decades grown if not independent then at least a bit more feisty. (Only a few laws have been defeated, but others have been withdrawn due to strong opposition from delegates.) It has also emerged as a forum for genuine debate over questions on which there is no consensus, and a place where new issues get raised.

This article prohibiting “individuals or organizations” from “advertising substandard food products” is an example of how public opinion gets expressed through the NPC in ways that would not otherwise be taken up by the government. It is clearly a direct response to the public outrage at celebrities such as actress Deng Jie who endorsed Sanlu Milk products that turned out to be contaminated with melamine.

The Bottom Line: Details, Teeth, Money

A lot will depend on how the law gets fleshed out, presumably by the new State Council Food Safety Commission. What does it mean to say that an additive must be “safe and necessary” to be approved for use? How will food safety standards be set throughout the supply chain, and by whom? Will the Commission or an agency under it have independent enforcement powers, or will these still fall to other agencies?

That one is BIG: enforcement. Laws are made centrally in China but enforced locally, and whether it’s because they’re in cahoots with local lawbreakers, lack capacity or disagree on principle, local leaders often simply don’t carry out Beijing’s orders. To counter the unwillingness of local governments to carry out environmental laws, the Chinese Ministry of Environment set up five regional enforcement offices in 2006. Is this the direction that food safety enforcement is moving?

If so, it will be very costly. In 2007, an industry consulting firm estimated that China will need to invest more than $100 billion by 2017 to build a modern food safety infrastructure. This was extrapolating demand growth that has subsequently slowed considerably, and is based on assumptions about what a “modern food system” should look like that I don’t agree withcentralized, highly processed, energy-intensivebut it gives a flavor for the magnitude of the investment that is needed.

Finally, let’s pull back from the new Food Safety Law itself for a second. Ultimately, China’s food safety problems are unintended consequences of a set of decisions the country’s leaders made about food production, technology, economic growth and China’s insertion into the global system. Those decisions have set the country on a path that is fundamentally unsustainable, and as the U.S. financial crisis has gone global, the wheels are starting to come off. It’s time for a more basic re-think of how and what to feed China.

Jim Harkness

January 28, 2009

Who Will Feed China. . .Again!

A press release from the University of Leeds last week announced a new study projecting that if current trends continue, China’s industrial growth and changing land use - combined with climate change - could threaten global food supplies.

"At the moment the Chinese government claims that China is 95% self sufficient in terms of grain supply," read the press release. "If China were to start importing just 5% of its grain (to make up a shortfall produced by low yields or change of land use to more profitable crops) the demand would hoover up the entire world's grain export. . .The pressure on grain availability for international grain markets could, in turn, have a huge knock-on effect. Poorer countries are particularly vulnerable, as demonstrated by the 2007-2008 food crisis.”

So why might China start importing more grain? The study points to decreasing harvests, increasing vulnerability to drought, low grain prices and the loss of high-quality farmland to urbanization. In fact, this is a message we’ve heard before. In 1995, Lester Brown published Who Will Feed China?, an entire book dedicated to the very topic of China’s demand for grain starving the rest of us. Here’s a good summary by the Worldwatch Institute.

Brown focused on the country’s growing population, loss of productive land to development, diminishing water supplies, rising demand for feedgrains as China’s diet became more meat-oriented, and the fact that---according to his calculations---China’s farmland productivity had peaked. He claimed that China would inevitably increase imports of grain, and that “China's rising food prices will become the world's rising food prices.”

Remembering the rather panicked response when Brown’s prediction was made (I was in China at the time, and some observers credited his book with an increase in government investment in agriculture the following year) and seeing the same basic hypothesis again being put forward ---15 years later---as a possible future scenario, the interesting question, it seems to me, is: “Why haven’t the Chinese starved us yet?”

Back in the 1990s, researchers from the scientific community did not take long to pounce on Brown’s methodology and assumptions, focusing on his serious underestimation of China’s arable land area. Not long after Who Will Feed China came out, remote sensing surveys revealed that China’s cultivated land area was 30-40 percent larger than Brown’s estimate. This underestimation led him to conclude incorrectly that there was little possibility for increasing productivity, (calculated as yield X area) and to over-estimate the relative severity of land losses from urbanization.

But from the perspective of agriculture and trade policy, there was another assumption in Who Will Feed China? that was just as dubious: the idea that China would fully integrate itself into the global food trade system, and buy large quantities of grain on world markets. The mainstream economics of the 1980s and 1990s told us that food was like any other tradable commodity, and therefore countries that had a comparative advantage in something other than food production should simply import food rather than growing it themselves. According to this logic, it is irrational and disruptive of the smooth operation of markets for governments to try to achieve food security through tariffs, subsidies or other policy measures. It was precisely in the name of eliminating “market distortions” that governments of developing countries were urged or forced by multilateral finance institutions and Western donors in the 1980s and 1990s to abandon subsidies for domestic food producers, open their markets to imports (even when those imports were being sold at below market prices), and sell off state-controlled grain reserves.

So, for example, among the 50 poorest countries on earth, between 1990 and 2005 net imports of rice increased by 124 percent, and those of wheat by 130 percent. (Over two-thirds of developing countries are now net food importers.) These countries, the ones who listened to the World Bank and IMF, are precisely the places where the food crisis has had the most devastating impacts. By contrast, China has experienced relatively small price increases, and no real food shortages. One important reason for this is the fact that China did not integrate itself into the global food system in the ways that many assumed they would. China’s history of famine---and famine-induced political turmoil---made a deep impression on the long memories of the country’s leaders. Despite having what is generally considered one of the more “open” economies on the planet in the manufacturing sector, China has maintained strong food security policies. These are not the loony, commune-level demands for self-sufficiency in grain that Mao decreed, but a sensible package of policy carrots and sticks: limits on the percentage of annual grain demand that can be imported, government grain storage, public support for ag research, subsidies for key farming inputs, preferential pricing for staple grains, and restrictions on the cultivation of biofuel feedstocks on arable land.

So although some of Lester Brown’s predictions did come true---China’s economy did grow rapidly, as people got wealthier their diets did change to include much more meat, more and more arable land continues to be swallowed up by urbanization----the massive imports of basic grains have not materialized, and China’s food security policies seem thusfar to have largely insulated it from the volatility of global grain markets. (Dr. Darryll Ray of the Agriculture Policy Analysis Center has written an interesting series of columns on this.)

But just because disaster hasn’t struck yet doesn’t mean it never will. The fact that Lester Brown had a few assumptions wrong doesn't change the validity of the basic argument that we live in a finite world and that the US is exporting a development model that is disastrously unsustainable. The vulnerabilities pointed out in the University of Leeds study are real as well, and their focus on climate change as a source of growing instability adds urgency to their findings. Meanwhile, there are economists in China who want to abandon the notion of domestic food security altogether, and the country's leadership seems confused on this issue. China’s demand for soya has skyrocketed in the past year, and there are large imports of many other non-staple products. The government seems to have burned through most of its grain stores. The gap between the incomes of farmers and city dwellers continues to grow, and the government’s chief response in 2008 was to promote land consolidation and pledge further support for unsustainable chemical and bioengineered agriculture. The government has assumed that the labor-intensive export manufacturing sector would absorb people fleeing the difficult lot of the farmer.  But the global economic slowdown means tens of millions of laid off workers who returned to their rural hometowns for Chinese New Year this week have little to celebrate.

Jim Harkness

October 06, 2008

No Gold Medal for Food Safety

In May, IATP published “U.S.-China Food Safety Agreement: Terms and Enforcement Capacity.” My paper summarized the views of U.S. Congressional investigators who doubted that the Chinese General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) could effectively implement and enforce the hundreds of pages of new food safety rules that followed the first round of melamine contamination of pet food last year, which sickened or killed an estimated 39,000 pets in the U.S. The profit and economic growth imperative of both industry and Chinese Party officials could veto inconvenient regulation when they deemed it necessary. Unhappily, the investigators were right. According to a September 29 article (sub required) in Food Chemical News, former FDA administrator William Hubbard said of the FDA-AQSIQ agreement analyzed in my paper, it “is not worth the paper that it’s written on.”

On September 25, the World Health Organization announced that more that 54,000 infants and young children had been treated for urinary problems and possible kidney stones that occurred as a result of consuming infant formula or dairy products laced with melamine. More than 14,000 have been hospitalized and at least three children have died from melamine poisoning. Chinese companies had added melamine to boost the protein content of milk that had been watered down. Melamine has many uses in the production of plastics, glues and other industrial products, but no uses of it are approved for food. 

Following the resignation of the head of China’s food safety agency, China Central Television reported that the government had received complaints about illness caused by Sanlu Group’s infant formula as early as December 2007. According to an excellent September 27 article in The New York Times, journalists who tried to report on the contamination incidents were censored by the government and the Communist Party, whose top priority was to hold a “harmonious” Olympic Games to enhance the prestige of the government and spur economic growth. Now China’s gold medal for holding “harmonious” Games has turned to dross.

Several Asian countries have banned the import of all Chinese products containing powdered milk. United States and European Union food safety officials are scrambling to determine whether their imported foods contain Chinese powdered milk, particularly in products consumed in Chinese immigrant communities. But as food safety inspectors sought to prevent more damage to human health, U.S. and Chinese trade officials met on September 18 to discuss relations between the two countries - a meeting U.S. Secretary of Commerce Carlos Gutierrez described as “a very robust session with very robust outcomes.” The trade officials had nothing to say about melamine, the mention of which would have disturbed their “harmonious” relationship. And China Central Television reported that all dairy products still on the shelves are safe.

Steve Suppan

September 10, 2008

China Meets Lou T Fisk

I wasn’t sure what to expect when I drove out to Western Minnesota to check in on Ms. Shi Yan. She has been working at the Earthrise Farm, an organic CSA (Community Supported Agriculture) farm, since early April, as part of IATP’s ongoing relationship with the School of Agriculture and Rural Development at People’s University in China. Shi Yan’s blog posts (read translated posts here) have been wonderful. She opens a window not only into the everyday life of a CSA farm but also into the heart of a young Chinese woman from a city of 20 million coming to the U.S. for the first time and finding herself on a farm. Reading the blog, it seemed that Shi Yan had fallen in love with this doubly foreign environment, but I had enough experience with farm work and Chinese politeness to worry that she might be having a harder time than she let on.

Lou_t_fisk_5Pulling into the driveway of Earthrise Farm around supper time, I was dismayed to see broken trees, damaged crops and big piles of brush and tree limbs scattered around the yard. A big storm had come through a few days before, with hail and 90 m.p.h. winds, and although no one was hurt, it clearly hit the farm hard. One casualty of the storm was Lou T Fisk (see right), the town mascot of Madison, MN. (pop. 1654). A Norwegian-American community worthy of A Prairie Home Companion, Madison calls itself the Lutefisk capitol of the world, and old timers still say, “Takk,” instead of, “Thanks.”

After exchanging greetings, Nick, one of the full-time farm managers at Earthrise, said, “We have just been dealing with downed trees and other storm damage for the past few days. Tomorrow’ll be the first time we can actually get back into the fields.”

Shi Yan came up and gave me a big, un-Chinese hug. She looked right at home in work clothes, with an armful of vegetables she had picked for supper. She was happy to see the Chinese ingredients I had brought from Minneapolis, but quickly put them aside and joined in with the meal preparation. I got an introduction to the farm from Nick and Joan (the other manager) over supper, and met the other intern, Emma.

Only after dinner, back at the small farmhouse where the interns sleep, was I able to talk with Shi Yan alone about her experience. And to my relief, she was just as excited about organic, community-supported agriculture in person as she had been in her blog posts. She spoke with admiration about the kindness and dedication of the Fernholz Sisters, founders of Earthrise; the hard-working Nick and Joan; and her friendships with her fellow interns, one of whom had already left for school. It has been a momentous summer back in China, with the tragedy of the Sichuan earthquake and the triumphant Olympic Games in Beijing, but thanks to the internet Shi Yan has been in touch with her boyfriend and family almost daily.

Above all, organic farming has been a revelation to her. She described her plans for managing a CSA farm on a plot of land owned by her university in Beijing’s northern suburbs, how she would use student labor and get organic certification and sell vegetables on campus. And she asked about visiting farmers’ markets and grocery co-ops when she comes to Minneapolis on her way back to China, in October.

Weeding_5 When I asked what she liked most about working at Earthrise, she beamed and said, “Weeding.” 

It was wonderful to see how Shi Yan has taken to rural Minnesotan life, and how the people of Chippewa County have taken to her. Thanks to the rarity of Chinese nationals in those parts, and a long profile of her in the local paper, Shi Yan is a bit of a local celebrity, but she is also clearly well-liked by those who have met her.  When we visited another farm, a local Fair Trade coffeeshop or a County Board meeting, people already knew her and there were always hugs all around.

Pakistani_farmer In tiny Rogers, MN (pop. 194), Shi Yan met a kindred spirit, a Pakistani-American gardener raising the Asian vegetable bitter gourd (see right).

As we weeded the storm-damaged pumpkins and carrots at the farm, Shi Yan would look up and wave at every pickup that rumbled past. (And they’d wave back.) This last point might not sound odd to most readers, but take my word for it: it’s not standard operating procedure in China. Social relationships there are more formalized, and there is a much sharper distinction between people you have a relationship with and strangers. (Hence the incredibly strong Chinese family unit and gracious spirit of hospitality to guests on one hand and the regular spectacle of shoving matches or fights between strangers waiting at ticket windows or bus stops on the other.)

Intellectually, Shi Yan is getting more focused on the comparative research that she will take back with her, honing in on the aspects of her American sustainable farming experience that are and are not relevant to small farmers back home in China. But her summer as a Minnesota farmer has also been a wonderful cultural exchange that I think neither she nor the people of Chippewa County will soon forget.

Jim Harkness

August 21, 2008

U.S. Sustainable Agriculture Through Chinese Eyes

“You should tell more people around the world about America’s non-mainstream agriculture and food system. Then they won’t hate you so much!” This was the blunt advice I got from Professor Wen Tiejun, as I bade him farewell at the Minneapolis airport in September 2006. Wen, an old acquaintance and influential advisor to the Chinese leadership on agricultural issues, had stopped in Minnesota for a few days on his way to give a lecture at Harvard University. During his visits with IATP staff and his lecture at the University of Minnesota’s Hubert Humphrey Institute of Public Affairs, he had been surprised at how many people seemed to agree with his harsh critique of U.S. industrial agriculture and the policies that support it. He was even more surprised when I took him to visit The Wedge, America’s largest grocery co-operative, and several Community Supported Agriculture farms. Where was the McDonald’s and KFC, the junk food? Where were the massive government subsidies and terrible environmental damage? The emergence of a fairer and more sustainable way of growing and selling food within the home of globalized industrial agriculture (Cargill is based in Minnesota, after all) was a bit of a shock to this champion of China’s small, family farmers.

At first glance, farming in China and the U.S. seem to have nothing in common. China has about 300 million farms, the U.S. only 2 million. The average farm size in the U.S. is about 450 acres, and it’s not uncommon for a farmer to have a million dollars or more tied up in machinery. A typical farm in China covers only about one acre, and family members do much of the cultivation by hand. And although China’s communes were broken up over 25 years ago, ownership of farmland remains in the hands of village governments or the State. But despite these huge differences, a closer look reveals similar challenges facing farmers in both countries. In both places:

  • farmers are losing their land or getting stuck in contract arrangements that make them effectively hired hands on their own farms;
  • supply chains are getting longer and more complex, cutting into farmers’ profits and endangering food safety;
  • over-dependence on chemical inputs and a narrowing range of hybrid seed varieties is poisoning the environment, threatening human health and taking more and more control of the food system out of the hands of the people who grow or eat food and putting it under the control of corporations.

To foster greater understanding between Americans and Chinese about the farming systems in each country, and share some of Minnesota’s experience with sustainable agriculture, we decided to invite a student from Professor Wen’s School of Agriculture and Rural Development to spend a season on an American farm. The School, part of People’s University, was involved in experiments with rural cooperatives, and following Wen’s visit to IATP had worked to develop pioneering Community Supported Agriculture and consumer food co-operative projects. To gain a better understanding of how a working CSA operates, incoming doctoral candidate Shi Yan arrived in Minnesota in the second week of April 2008 to start a 5-month internship at the Earthrise Farm.

Ms. Shi has been blogging in Chinese about her experiences at Earthrise, a small CSA farm run by two Catholic nuns near the Minnesota-South Dakota border, since the day she arrived. We present translated selections from her blog entries to date, and will upload subsequent entries until the end of her sojourn, which she wryly refers to as a contemporary twist on the Cultural Revolution movement to send educated youths to the countryside.

(Ed. note: this entry was written by IATP President Jim Harkness)

Ben Lilliston

July 28, 2008

Are India and China the Bad Guys?

The WTO media coverage over the past few days has been scathing for India and China. "U.S. slams China, India for putting Doha round into 'gravest jeopardy'" was the headline in the International Herald Tribune. "US: China, India threaten Doha round of WTO talks" read the Associated Press. "India blocking WTO talks - diplomatic sources" was the headline in Forbes. And "China throws up barrier to Doha agreement" was the headline in the British daily, the Guardian. So, are India and China the bad guys? Are they trying to destroy the Doha negotiations?

One of the big questions coming into this ministerial meeting was the extent to which big developing countries like China, India and Brazil, would be prepared to open their markets to imports from around the world. The Doha talks are now sticking on this. Brazil has accepted the deal on the table. China and India are unhappy at the extent to which they are being asked to expose their agricultural and manufacturing producers to outside competition. The U.S. has attacked both countries for putting the talks into the "gravest jeopardy" since the Doha Round started seven years ago. Other exporting agricultural countries like Uruguay and Paraguay also spoke out against these developing countries trying to retain policy flexibility to protect their markets.

Are India and China's positions legitimate?

Before I answer these questions, a few facts and figures. First, both India and China are still poor countries. India ranks 128 out of 177 countries and China ranks 81 out of 177 countries in the UN's Human Development Index. According to the UNDP, 16 percent of Chinese people and 34.7 percent of Indians live below the poverty line. Furthermore, there are massive income inqualities between rural and urban populations and between the rich and poor in both countries.

I think the concerns of China and India deserve attention at the WTO. Both countries have serious and legitimate food security concerns and an enormous number of livelihoods to protect. Supporting and building strong rural communities and decent employment is vital if both countries are to meet the development challenges ahead.

As importantly, it is not just China and India who are concerned about the effect of import surges on their manufacturing and agriculture sectors. They are supported by over half the WTO membership who share these concerns. It's hard to see how blasting other countries in the media is going to change that.

Carin Smaller

June 09, 2008

Water, Water Everywhere - Part 2

IATP President Jim Harkness is blogging from China through June 14. (Due to internet access problems, Jim sent this blog via e-mail. I am posting it for him - Ben)

Of course, most of Shanghai’s (and China’s) water pollution is not as dramatic as a waste dump at the edge of a water source protection area. But runoff from agriculture is a major form of “non-point source” pollution. The highly intensive vegetable farming practiced here (often in plastic greenhouses, see below) exhausts the soil quickly, so huge amounts of fertilizer are used. And because appearance is so important for these crops, pesticide use is also high.

HoophousesThese are also thirsty crops, so irrigation is nearly universal. The state has traditionally organized irrigation. Much of the land around Shanghai was coastal marsh before being reclaimed for farming and urban development. Now it’s crisscrossed with canals. (See the Shanghai Co-op Watergate below)

Aquaculture requires even more water than vegetable production. With seafood-loving Shanghai nearby, this is a popular activity here. It's also highly polluting. Shanghai_coop_watergate

In my field visit with WWF Shanghai staff, we met a local entrepreneur who claims he will change all that. Allen Qian (in the red shirt below) has a background in fisheries and engineering. He claims to have developed a “green” production system for shrimp and other seafood, using no artificial growth stimulants and returning clean water to the canals that drain the site of his proposed development.

Mr_qian_and_canalThere was an aquaculture expert along with us, so I confess I couldn’t follow all the details of their technical discussion of waste disposal and stocking rates and water treatment, but construction was clearly moving right along. Mr. Qian pointed out several areas that will be artificial wetlands designed to filter organic waste from water as it flows through them. His enthusiasm about developing environmentally-sound production systems (there will also be “ecological” rice production at an adjacent site) was encouraging, given the rest of what we saw that day (see a more typical Shanghai Aquaculture site below).

Aquaculture_shanghaiWhat surprised me the most, however, was the degree to which his costs were being covered by the government. The infrastructure had all been built and maintained by local government, including roads and of course the canal system. His financing will be with a concessionary government loan, which is technically going to a co-operative that Mr. Qian is forming with locals. The land will be rented at a very generous rate from the local village government. And as we were going down the list of costs, I eventually got to the most important factor in his production operation, the priceless substance without which agriculture and aquaculture are unimaginable.

“Water? Oh, that’s free.”

Ben Lilliston

June 07, 2008

Water, Water Everywhere

IATP President Jim Harkness is blogging from China through June 14. (Due to internet access problems, Jim sent this blog via e-mail. I am posting it for him - Ben)

My last job before joining IATP was at WWF China, (no, not the wrestling federation!) so while I was in Shanghai for the organic conference I gave WWF’s Shanghai office a call. After the obligatory evening of gossip and reminiscence, they offered to take me to the field with them for a day. The Shanghai office of WWF is very focused on water issues. I was interested to learn that they are looking at land use in the areas surrounding Shanghai’s drinking water source in the upper reaches of the Huangpu River. It had not occurred to me that the water source might be nearby, but they assured me that there are intake stations within an hour drive of the city center.

Sure enough, I found myself in front of the map shown below, which shows the borders and main features of the Upper Huangpu River Drinking Water Source Protected Area. This is where 80 percent of the water for Shanghai’s 20 million inhabitants comes from.

Map_2 The sign is on the edge of the Protected Area, next to a bridge over a stream that flows into the Huangpu. The view downstream shows floating garbage and green scum that indicates high levels of organic pollutants.

2 Turning around after taking the last picture, I was entranced by this large, cheerful image of a green and prosperous Shanghai. The slogan is “Together Building a Civilized Home, Together Creating a Beautiful Future.” Note the clear water gushing from the fountain!

3_2

Behind the billboard, though, the scene was somewhat different.

I wanted some more pictures of the dump, but the potent blend of chemical and biological odors made it impossible to stand nearby for more than a minute.

4

Yesterday, China’s Environment Ministry released their estimates of pollution discharges nationwide. Some indicators actually declined for the first time, but the overall picture continues to worsen. Some digging into the Chinese reports shows that rural pollution in particular shows no sign of lessening, as more pesticides and chemical fertilizers run off of fields and massive volumes of animal waste are discharged from factory farms directly into waterways. 

Which brings us back to the challenge China faces in feeding its people. In their attempt to keep farm production ahead of population growth, China’s leaders borrowed the chemical-intensive agricultural approach of American industrial agriculture, instead of seeking to upgrade an indigenous farming system that had persisted for thousands of years. If they had known then the impact this approach would have on their land, water and farmers, I wonder whether they would have still made the same choice.

Ben Lilliston

June 06, 2008

China’s Biggest Organic Store?

IATP President Jim Harkness is blogging from China through June 14. (Due to internet access problems, Jim sent this blog via e-mail. I am posting it for him - Ben)

Last fall when I was in China, I saw an item in the paper announcing the opening of the country’s biggest “organic food store” in Tianjin, with over 800 square meters of space. Well, that’s not exactly huge, but I figured that if it’s the biggest in a country of 1.4 billion, then it might be a better place than an organic exhibition to learn about how ordinary people feel about this sector. More specifically, I wanted to see for myself the price difference between organic and conventional foods in China.

With a population of around 15 million, Tianjin is another one of those gigantic Chinese cities that no one outside of the country has ever heard of. (In fact, there are over 180 cities here with over 1 million residents.) I was surprised to learn that the Yi Nong Da Supermarket was not located downtown, but in a “Development Zone” called Binhai, about 50 kilometers from the city center. This industrial suburb turned out to be huge though, with a million or so inhabitants, and the store seemed right in place in a commercial street adjacent to some high-density housing.

StoreDespite the name on the sign, however, it took a while to find any organic food in the store. About four-fifths of the floor space was dedicated to instant noodles, Snickers, toothpaste and Chinese convenience store fare like shredded squid (regular, BBQ or Cool Ranch). Along the back wall, the produce section had a sign proclaiming, “Fresh Organic Vegetables,” but for 20 minutes or so none of the few customers ventured anywhere nearby. Finally, a construction worker came in and made a bee line for the bananas. I asked if they were organic bananas and he said they were.

Me:  Why are you buying them?

Him: They taste good.

Me: Aren’t they expensive?

Him: No.

Customer_3Now we’re getting somewhere! If ordinary workers are willing to pay extra for organic food, then maybe there is hope for the domestic market. I followed up with questions about how often he shops here, whether his co-workers buy these products, etc, carefully recording his answers until a clerk came over and said, “The bananas aren’t organic.” In fact, when I started actually checking the labels I found that none of the produce was organic! The fruit was conventional and the vegetables were “Pollution Free” (wugonghai), a uniquely Chinese designation that seems to mean that no more than the recommended amounts of pesticides have been applied.

Since I didn’t have any organic products for my price comparison, I jotted down the prices of some pollution-free veggies. They seemed fairly reasonable, certainly not three times the cost of ordinary vegetables, but in my hour at the store I didn’t see anyone purchase even these less expensive products. The store manager said that usually there are more customers, and that about 20 percent of their customers buy pollution-free food regularly. To assure quality, Yi Ning grows its own vegetables on “bases” in several different provinces, but she said that it’s tough for them to compete because being in the suburbs, they have many vegetable farmers right nearby who claim that their goods are also pollution-free. I asked why she thinks more people don’t grow 100 percent organic, and she said: “If you don’t use fertilizers, they (vegetables) grow very slowly. Since people want to earn money quickly, they feel like they have to use some pesticides and fertilizers.”

VegetablesFrom Yinong, I went to a nearby Tesco, one of the several big box stores competing in China’s retail market. The results of my survey are shown below. (The unit is Chinese yuan per kilogram, and there currently about 7 yuan in a U.S. dollar.)

YiNong pollution free

Tesco Conventional

Tesco pollution Free

eggplant

8.60

5.60

16.00

cucumber

12.00

1.36

16.00

tomato

9.60

3.80

13.00

potato

6.40

2.50

12.00

ginger

8.0

4.16

No one seemed to be buying pollution-free veggies in Tesco either, but given their huge mark-up compared to both conventional and Yi Nong pollution free, it wasn’t too surprising. Despite not being a cost comparison with certified organics, this survey showed that the price differentials for “healthier” food are indeed much greater than the 20-30 percent found in U.S. or European markets. And the studious avoidance of these products by shoppers in both stores made it clear that the price difference is indeed a huge barrier to the development of a domestic organic market in China.

SkippyOn my way out of Tesco, I passed people lined up to taste little spoonfuls of Skippy peanut butter being dispensed by a young woman in a mini-skirt, and was reminded of another big challenge for organics in China: marketing. At the BioFach exhibition, more than one vendor had complained that most people have no idea what organic means, so of course they aren’t willing to pay more for it.

Ben Lilliston

June 04, 2008

Lessons from China on the Food Crisis

IATP President Jim Harkness is blogging from China through June 14. Due to internet access problems, Jim sent this blog via e-mail. I am posting it for him - Ben

Yesterday, IATP and the Rural Development Institute (RDI) of the Chinese Academy of Social Sciences held a workshop on agriculture and trade. Daryll Ray of the University of Tennessee’s Agricultural Policy Analysis Center and Li Guoqiang of RDI gave excellent presentations, followed by a lengthy and animated discussion that continued through lunch and into the afternoon. Daryll presented a history of U.S. farm policy, and laid out the basic economics of why certain policies succeed and others fail. Central to his argument is the notion that agricultural markets have a strong tendency to fail, and therefore require government action to buffer against volatility and guarantee food security.  He also used USDA data (with a strong disclaimer concerning its accuracy) to show that contrary to conventional wisdom, China’s increased demand for meat has not been a significant driver of the global food price crisis. He makes the same argument in a policy brief that you can find here.

The short version is this: meat consumption his indeed increased a lot in recent years, but instead of importing more grain (or meat) China has been releasing grain from its massive reserves onto national markets. China’s grain market, including its feed market, is therefore effectively insulated from international price fluctuations.

This is, of course, precisely the kind of “market-distorting government intervention” that the World Bank and IMF have argued against for decades. My friend Yoke Ling Chee of the Third World Network said after the workshop that she was sorry it wasn’t a panel at the World Food Crisis Summit in Rome. Instead, the world is being treated to the spectacle of World Bank President Robert Zoellick blaming poor country export bans for skyrocketing prices, bans put into place as a desperate measure in the face of a crisis the Bank helped create.

IATP's Carin Smaller is blogging from the Rome meeting this week on all the happenings at the food crisis summit.

Ben Lilliston

June 01, 2008

When the Going Gets Tough...

IATP President Jim Harkness is blogging from China through June 14.

One of the big questions surrounding organic agriculture, wherever it is being discussed, is authenticity. And the farther away the food is coming from, the more questions are going to be raised. So who do we trust and how do we verify? There are clearly very different opinions, and some institutional tensions, even among the outwardly friendly participants at BioFach - the major organic conference I am attending in China.

Organic_milkThe exhibition and conference are organized by a German company, NürnbergMesse, and the focus of much of the discussion is on exporting organics to Europe. But as I mentioned yesterday, more and more Chinese products are being turned away by EU customs inspectors. To turn this situation around and increase trust in Chinese products, Mr. Chuk Ng of Naturz Organics urged producers to pay more attention to farm management and exporters to improve transparency along the whole supply chain. 

A senior official from the China Organic Food Certification Center (COFCC) had a different idea. He suggested to the audience that China and ASEAN (Association of Southeast Asian Nations) should negotiate as a trading bloc to force Europe to recognize national standards in Asia as equivalent to EU organic standards. (I couldn’t help but think of a saying my friend Tom Nelson has painted on the wall of his bar in La Pointe, Wisconsin: “When the Going Gets Tough, Lower Your Standards!”) The mood was not improved by the next speaker, a German trade lawyer who explained in painstaking detail a set of new EU regulations (EC no. 83412007) that are likely to add more layers of cost and complexity to the export process.

But not all of the tension was between the Chinese and Europeans. Within China there is also continuing friction between the competing centers of organic certification, the Environment Ministry’s Organic Food Development Center (OFDC) and COFCC, which is affiliated with the Ministry of Agriculture. In the simplest terms, OFDC’s starting point is food safety and environmental health, whereas COFCC’s focus is on “scaling up” and promoting exports. In his remarks at the workshop, Dr. Li Xianjuan of COFCC stressed the fact that they are now certifying more enterprises than any other agency, and barely mentioned OFDC, which is affiliated with IFOAM (the International Federation of Organic Movements) and has a better reputation internationally.

Biofach_confYu Kaijing of the OFDC then gave a talk entitled, “The Validity of Organic Certification in China,” in which he repeatedly charged that “the economic interests of some certifying bodies” are in conflict with their mission, which should be promoting ecological agriculture and food safety. And while he didn't actually nod toward the COFCC guys and waggle his eyebrows up and down, it was pretty clear who he had in mind.

Jim Harkness

May 29, 2008

Organic Food in China

IATP President Jim Harkness is blogging from China through June 14.

After a restful overnight train ride down to Shanghai from Beijing, I was able to check into my hotel and still make it to the opening of the BioFach China 2008 International Organic Trade Fair and Conference.

There are over 300 exhibitors and the organizers expect 10,000 or more people to attend. The crowd today was mostly Chinese, many of them organic producers and people considering converting to organic. Lots of people were simply enjoying the free samples of organic everything: rice, dumplings, honey, walnuts, pork, corn on the cob, milk, tea, fruit and vegetables. Admission was free as long as you filled out a registration form and a variety of non-organic entrepreneurs clearly saw this as an opportunity. Three different men offered me fake Rolexes inside the exhibition! I kept expecting to see knockoff “Organic” brand vegetables for sale. I also met people from as far away as Fiji, Trinidad and Ghana--all of them from government import inspection agencies.

The vast majority of products being exhibited were Chinese-grown and intended for export, but speakers at a workshop being held concurrently with the exhibition pointed out that this is a less and less promising area. No one talked explicitly about the food safety scandals of the past year, but Mr. Chuk Ng of Naturz Organics pointed out that more and more products are being turned back by customs agents in Europe. Mr. Li Xianjun of the China Organic Food Certification Center (COFCC) noted that organics are a shrinking percentage of China’s agriculture exports. Ong Kung Wai, representing IFOAM (International Federation of Organic Movements), said that only 3 percent of all global organic sales are currently outside of Europe and North America (and most of that is probably in Japan). He urged producers in China to focus on “growing” the domestic organic market.

We at IATP also see the potential for organic agriculture in China to help feed their domestic market. Government support for both organic food and food safety are currently almost entirely focused on exports, leaving 1.4 billion Chinese consumers with a deeply compromised and unsustainable food supply. Surveys have consistently shown that China’s urban middle class is concerned about the safety and quality of their food supply and willing to pay more for food they can trust. But an exhibitor, Thomas Lin from Garden Citi Inc, explained to me that the term “organic” is unfamiliar in China, and there is rampant counterfeiting of “green foods.” One of the speakers in the workshop said that there is also a much larger price premium for organics in China than in the West. Here organics are generally three times as expensive as equivalent conventionally-grown products. In the U.S., the difference is closer to 25 percent.

Why is there such a great difference in price? Are there obstacles for organic agriculture in China? Or subsidies supporting conventional agriculture that make it so much cheaper? Tune in again…

Jim Harkness

May 28, 2008

The Mandate of Heaven

IATP President Jim Harkness is blogging from China through June 14.

I was welcomed back to Beijing yesterday by an official “severe air pollution” warning from the city government. Skies have been a sickening yellowish gray, as dust from a sand storm mixes with the city’s smog before covering every surface indoor and out with a thin film of grime. Such storms are common in Beijing in March, but this one is unusually late. On my last trip to China, in April, I got stuck in a typhoon in Hong Kong and was told that they aren’t supposed to hit until July. And January saw the biggest blizzard disaster in decades strand tens of millions of people trying to make their way home for the Chinese New Year.

Of course, these are minor breaches of the natural order compared to the Sichuan earthquake, but all manner of disruptions (including the violence in Tibet and this spring’s stockmarket crash in Shanghai) are assessed here for their cosmic significance. The unanimous judgment of fortune tellers and text-messagers in China is that 2008 is shaping up as the most “inauspicious” year in memory.

I will be blogging from China from now until June 14. On this trip I am lecturing at the Central Party School of the Chinese Communist Party, attending a major organic convention in Shanghai, meeting with rural development experts in Yunnan Province and co-hosting a workshop on U.S. and Chinese agriculture issues with economist Daryll Ray. So stay tuned.

What could possibly go wrong?

Jim Harkness

January 16, 2008

Local Company Makes Good, But How About Local Farmers?

The Financial Times today published a profile of Chinese dairy giant Yili. While it might be unfair to describe the piece as “fawning,” let’s just say it’s surprising that such a long story cites only one source aside from the company itself, and quotes no one other than the company’s CEO, Mr. Pan Gang. The reader gets a touching tale of how a collective dairy factory in Inner Mongolia worked its way to national prominence despite the tremendous challenge of having to deal with huge numbers of small, backward farmers. We hear how fiercely competitive the dairy market is, with Yili the only “purely” Chinese firm vying for market share with a host of foreign and joint venture rivals. And we feel Mr. Pan’s anger about tax breaks the Chinese government gives to foreign dairy firms, who turn around and use that advantage to undersell local companies. 

The real picture is a bit less heroic and more complex. Despite its complaints about the unfair advantages of its international competitors, Yili has always had lots of government support. Its expansion to now buying milk from a million farmers (!!!) has depended on those top-down sweetheart deals with local officials that the farmers in Yunnan were complaining about last week. (I was expecting a more critical take on this from an article titled “Chinese Dairies Milk The Local Advantages.”) And even if they weren’t being rounded up for Yili by local government, farmers would have few alternatives for their milk. Yili and Mengniu, another Inner Mongolia-based giant, have over 55% of the Chinese market, and probably a much higher percentage in the Northeast. Economists tell us that the definition of “oligopoly” is when the top four firms in any industry control over 40% of the market. Recent food safety scandals are speeding up the process, Pan says, since nervous consumers are sticking with big brands and this is driving out smaller players.

Yili’s earning for the first three quarters of 2007 reached 14.8 billion RMB. (about $2 billion) A Reuters story tells us that as of the end of the Third Quarter, 40% of China’s dairy farmers were losing money and some were having to kill their cows. Welcome to Modern Farming!

Jim Harkness

January 10, 2008

The Monkey's Paw

Last night I had dinner at the Irish Embassy in Beijing. The occasion was the departure of Joseph Kahn, the New York Times bureau chief (and Irish citizen), who is moving to New York to work as Deputy Foreign Editor for the paper. I have known Joe since the early 1990s, and China’s loss is my gain, since his couch will now be added to my list of free places to stay in Manhattan.

Joe won a Pulitzer Prize for his reporting on the growing gap between rich and poor in China, but I think some of his best work was a recent series of reports on the environmental cost of China’s Rise.

A longer piece on the same topic by Jacques Leslie (which quotes yours truly) is the cover story in the current edition of Mother Jones.

For China, the neoliberal growth model adopted over the past quarter-century has been like the Monkey’s Paw in W.W. Jacobs’ classic, spooky short story of the same name. The story tells of a poor but happy family that comes into possession of a magical charm, the monkey’s paw, which will grant them three wishes. The father wishes for 200 dollars and his wish is granted, but not in the way he expected. The next day, a man from the factory where their only son works comes to the door and informs them that their son has been caught in machinery and killed. He gives them 200 dollars as compensation for the death.

China’s “reform and opening” (their shorthand for the market reforms instituted since the early 1980s) has likewise been a mixed experience when viewed in any but the narrowest economic terms. Overall growth has been spectacular, and contrary to the charges of many external critics, the Chinese people have also gained much greater freedom than they ever had before in a variety of areas: employment, residence, privacy, even basic things like movement and marriage which had been heavily controlled under Mao. But the economic benefits have been distributed very unequally---the gap grows wider day by day---and the new freedoms have limited meaning for the country’s poor. Material gains are also mitigated by corruption, crime, resurgent prostitution and drug use, and widely felt social anomie and insecurity. The terrible environmental cost of China’s growth is certainly the most jarring example of a seeming social advance turning into a nightmare.

Recent pronouncements by the Chinese leadership about focusing on the quality rather than just the quantity of growth are encouraging. The State Environmental Protection Administration has been given new powers, and friends tell me that it will be upgraded to ministry status in the next few years. The old rhetoric about “letting some get rich first” has been replaced by a new concern for the disadvantaged. Elimination of the agricultural tax and more funding for schools and health care in rural areas are certainly steps in the right direction.

But none of this addresses the basic problem of a system that pushes growth without limits and makes society and nature bear the cost, while allowing the benefits to flow to the wealthiest. And that’s where the analogy with the Monkey’s Paw breaks down. The evil charm’s spell brought both fortune and sorrow to the same family, but neoliberal economics distributes profits and pain very unevenly. But the good news is China doesn’t have to choose between impoverished Maoist isolation and a toxic world that looks like the set of Blade Runner. The challenge for IATP and for the world is: What can we do to help them make a better choice?

Jim Harkness

January 07, 2008

What the Farmers Said....

(Below is the second in a series written from China by IATP President Jim Harkness. ed note)

As promised, today I report back on what local farmers said when we talked to them after our visit to Chennong Agriculture Company HQ in Yunnan Province. (To be on the safe side, even though I'm sure it wouldn't be an issue, I have omitted farmers' names.)

Walking_tractorThe area around Kunming, including Chenggong, has a lot of intensive vegetable cultivation. This probably both contributed to and was then bolstered further by the growth of Chennong Company, and the company is now a leading source of seedlings for local farmers whether they sell the produce to the company or not. This area has a mild winter, but temperatures do dip below freezing at night, and winter is also fairly dry. Hoop houses---simple, temporary greenhouses made by stretching clear plastic sheeting over a bamboo frame---permit cultivation year round, with up to six harvests over 12 months.

After our visit to the Chennong facilities was complete (and we had sampled the local cuisine) we decided to stick around and talk to some farmers. A young day laborer volunteered to be our guide. She was not from the area, but had lived there for some time doing construction, and had gotten to know many local farmers.

Day_laborer_3She was a good example of the mixed blessings of development in China. I noticed she had a shiny new mobile phone, which she modestly said had only cost a few hundred RMB. She bought it when she and her husband were getting regular work at a good rate, up to 20 RMB a day. But his foot was run over by a truck on the work site and the small cash payment the boss gave them couldn’t cover his hospital bill, which was over 10,000 RMB. So he took their baby and went back to their hometown in the poor, northeast corner of the province, to recuperate at his parents’ home. Shortly after he left, work at the site was suspended, so she was left with no income and nothing to do, and therefore happy to show us around. (We insisted on paying her for her trouble when we left, but she put up a big fight, saying we were friends and she didn’t want us to think she was doing it to get paid.)

Spinach_farmers_1We first met these men preparing to load a big basketload of spinach onto a tractor to take to market. They told us they grow a dozen or more varieties of vegetables for sale in local markets. They’re hoping to get 1 RMB per kilo for this spinach.

Inside their hoop house, the women of the family picked spinach and carried it out to the road on their backs in wicker baskets.

Spinach_farmers_2They buy their seedlings from Chennong, and speak highly of the 100 percent survival rates and high productivity. When they grew their vegetables from seeds, farmers could never have harvested five or six crops a year as they can with Chennong’s seedlings. They sometimes sell to the company as well, but they aren’t enthusiastic about agribusiness. They-----in fact all the farmers we spoke to----laughed at the idea of a floor price or a contract. “Even if you have a contract that specifies a price, it doesn’t say how much they have to buy, or that they have to buy anything at all.” When prices are low, Chennong’s buyers pick only the very highest quality produce---often a tiny proportion of the crop. So even if they offer a floor price for what they buy, the farmers are still stuck with the bulk of their crop.

There were other complaints. Chennong, they told us, uses its influence with local government to get preferential access to valuable land. (As another farmer put it, “They see a piece of land they like, and then they go and find the officials, who get it for them.”) And their processing facilities have polluted local waterways. “We used to be able to catch shrimp and fish in the ditches, but there’s nothing left alive now.”

Farmer_wang_1Down another row of hoop houses a husband-wife team, friends of our guide, were picking a different green vegetable (I think it’s sometimes called Shanghai bok choy in English). They said prices vary tremendously during the year, from as low as 5 fen (100 fen = 1 RMB) to as high as one RMB per kg. They raised six hoop houses worth of vegetables in 2007 that they didn’t even bother to pick because the price was so low.

Like so many farmers the world over, their biggest problem is low prices combined with growing costs. In a good year, they can sell 10,000 RMB worth of veggies, but inputs such as fertilizer, pesticides and plastic sheeting for their hoop houses add up to 6-7000 RMB. The farmers complained that inputs now cost ten times what they did 20 years ago, a rise not matched by increases in food prices. They also have to pay a variety of taxes and fees. The national Agricultural Tax was officially scrapped with great fanfare several years ago in order to help reduce the economic burden of farmers, but a variety of fees are either still being levied or have been added at the local level.

An added concern in Chenggong is organized crime. Local gangsters started charging the truck drivers who delivered vegetables from field to market 50 to 100 RMB per load, so most have stopped coming. When farmers load up their little tractors and take their own produce to market, they are often waylaid on the way and forced to sell their load to gangsters at below the market price.

Jim Harkness

January 06, 2008

Chinese agribusiness: a visit to Chennong Corporation

One of the big dilemmas of Chinese agriculture is the issue of scale. Traditional farming was mostly carried out by individual households on very small plots of land. After the Communists took power in 1949, there was land reform and a popular mutual aid and cooperative movement, but the Mao gradually moved rural China toward a system that organized all agricultural production into large communes and state farms. Politically, communes were a radically egalitarian form of social organization, but they also followed a logic of economies of scale, permitting more mechanization, larger-scale irrigation, etc.
Following Mao's death in 1976, Deng Xiaoping dismantled the collective system and returned to household farming. By allowing farmers to market an increasing share of their harvest and keep the profits instead of handing it all over to the state, the new system spurred a rapid growth in productivity and rural incomes. Over time, however, farm profits have dwindled, and now China's 700 million farmers have more and more in common with their great-grandparents: they are economically weak, disorganized, lack technical support, have little access to credit, and don't even own the land they farm. (The state is now their landlord.) The issue of scale is once again a concern, but China's particular combination of authoritarian and neo-liberal ideology preclude either bottom-up or top-down collectivization. Instead, the government has promoted the "Company Plus Household" model of contract farming.
I had a chance this week to learn firsthand about the new role of private agribusiness firms in rural China when I was invited to visit Chennong, one of the biggest growers and exporters of vegetables in Southwestern Yunnan Province. (I own a small apartment in Kunming, the provincial capital, and came to town partly for work and partly to visit friends and take a break from a climate-change-defying Minnesota winter.)
Chennong's headquarters is located outside of Chenggong, a town about 25 kilometers south of Kunming. I went with a friend, Ms. Wu Yusong, who runs the World Wildlife Fund Yunnan program. We were greeted by a Ms. Liu, who showed us around the company's facilities and gave us some pamphlets describing the company's history and operations. The pamphlets had nice pictures, but no financial information, so I was left trying to piece things together by triangulating their info and what Ms. Liu told us with what I could find on the web, with somewhat confusing results. According to their own materials, Chennong now produces over 100,000 tons of vegetables a year, and according to a quote of the founder, Mr. Li Yunsuo, that I found on the web they export over 40% of their production. But the Chinese-language Business Yellow Pages says they only do USD4-7 million a year in export business, which would make them very cheap veggies! (it also lists McDonalds and KFC among their custonmers)
Let's just say that within Yunnan, Chennong is considered a well-known medium to large agribusiness. Li Yunsuo, a local agricultural technician, started the company in 1992,with a 5000 RMB loan from the local bank, and they now employ over 1,200 staff and grow crops on over 60,000 mu (about 10,000 acres) of land.

I asked Ms. Liu about the whole Company Plus Household system, and whether this is how Chennong gets its vegetables. She explained that they don’t have their own farms, nor for the most part do they contract with individual farmers. Their original approach was to work with farmers directly. The company provided free seeds and inputs for the first crop, to guarantee a profit for the farmers and overcome any doubts they might have about converting from grain or tobacco to vegetable farming. In return, the farmers signed contracts committing them to sell their crops to Chennong. The contract sets a floor price: if the market price at harvest time is higher then the company pays 80 percent of the higher price, and if the market price is lower then the company still pays the agreed-upon floor price. Ms. Liu explained that whereas the government used to promote this type of “company plus rural household” contract farming, Chennong found that farmers would often break their contract with the company when the market price of their crops rose above the guaranteed price. They also found that it was hard to guarantee supply and quality, especially for meeting the demands of export markets.
To deal with these problems, they have established “bases” around the province where they grow vegetables on large, contiguous areas covering the fields of many farmers under a single contract signed with the local government. “Large” is of course a relative term. Ms. Liu told us that a base must cover at least 100 mu, (1 acre = 6 mu) but most are much larger, a thousand mu or more. In a country where the average farm is only a half an acre in size, this counts as large. And keep in mind, too, that this is highly intensive horticulture, producing four or five crops per year on a given piece of land. Because the base is a single area instead of a large number of scattered holdings, it is easier to provide technical support and supervision. And because the local government is the contractee, it takes responsibility for making sure the farmers do what they’re supposed to. The production base system reduces the company’s risk and increases its control to such a degree that Chennong has fewer and fewer contracts with individual farmers outside of this system.
Chennong_processing_center3
Because land costs are high in the areas around Kunming, Chennong's bases are farther afield, and we weren't able to visit any of them, but our host took us to see they company's processing facility and nursery.
Chennpong_processing_center2
The processing facility includes cooling, quick-freezing, clean, sorting and packaging. Workers earn anything from a few hundred up to a thousand RMB per month, not a great wage by urban standards but far more than most farmers. They live in a shiny new dormitory which we also saw (from the outside).
Chennong_processing_center1
We also visited the food safety lab. The lab is staffed by three people; two are university graduates and the third has a master’s degree in food science. They focus on testing for biological contaminants, since the government’s export product inspection station will test for pesticide residues. They showed us their equipment, which to a layperson’s eyes looked very impressive and included an Agilent gas chromatography machine. Outside the lab a sign proclaimed that the company had successfully been granted ISO9000 and HACCP food safety certification.

Chennong_food_safety_lab2

I couldn't help but wonder, though, if these three people could do all the necessary testing for a company producing 100,000 tons of vegetables a year!

Chennong_greenhouse1

Chennong produces all of its own seedlings, selling many to local farmers in Chenggong and shipping the rest to its bases around the province.

Chennong_greenhouse2

The company got Green Food certification for some if its products, but found it too expensive (about 12,000 RMB to get certified) to be cost effective. This greenhouse worker was ladling chemical fertilizers into the floating beds in which they grow their seedlings.

Kunming_food1

After our tour was finished, we took Ms. Liu to lunch, which was excellent. She confessed that although she likes their products, she doesn’t eat them: too expensive. And she said that even though their bases are far away, many local farmers buy their seeds or sell their vegetables to Chennong.

Tomorrow: What did the farmers have to say?

Jim Harkness

October 02, 2007

China and Africa

I head home today, after a productive trip. I spent the past couple of days at a conference on China's relationship with Africa. Some interesting related papers can be found at the web site of the Center for Chinese Studies of Stellenbosch University, South Africa. There was a fascinating lineup of participants: current and former ambassadors from China to African countries and vice versa, social scientists, businesspeople, China Exim bank officials, Foreign Ministry types and reps from African (but not Chinese for some reason) NGOs. The guiding assumption of the conference seemed to be that increasing Chinese trade and investment in Africa would be a good thing, and I took pains to remind participants that this is not at all a given. Most of the attention and concern about China in Africa has focused on minerals (including petroleum) and big dams, and though this meeting was much richer and more nuanced (with a lot of interesting discussion of the role of very small Chinese entrepreneurs and firms acting completely under the radar of official Chinese presence), I was still surprised at the lack of attention to agriculture. Clearly there's work to be done on this issue, especially as the "biofuels boom" hits Africa, and the threat of agricultural land (and precious water resources) being swallowed up by fuel crops for export. China has wisely restricted use of food-producing land for biofuels production. I wonder if they might consider applying this same wise policy in Africa?

Sam Fromartz wrote and asked what I have been eating, so let me end this China Trip blog with a few food pictures!

KitchenThese are from a bustling Shanxi restaurant, representing one of the regional cuisines that you don't see much abroad. People in Shanxi love dark, thick vinegar, mutton, and noodles in all shapes and sizes. The tube-shaped noodles the woman is making will be steamed, then diners dip them into a vinegary sauce before eating. The big pancakes are eaten plan as the bread course at the end of the meal.


Shanxi_3

Noodles

Jim Harkness

September 27, 2007

Start-up challenges of a Chinese food co-op

(Ed. note: IATP's President, Jim Harkness, is blogging from China as he meets with experts on China's food and farm system)


The meeting I blogged about on Saturday on the Guoren food co-op had left me pretty confused, so I was glad when professor He invited me to visit their store and give some feedback. Why had they chosen to link consumer and producer co-ops? How could they function as a delivery service and have two stores with 79 members spread all over Beijing - an enormous city of 18 million?

Traffic_2

It took over an hour by cab to get from my friend Elizabeth’s apartment in the center of town up to Tiantong Yuan, a massive residential district in the far north. Traffic in Beijing somehow manages to get worse despite already being almost at a standstill during rush hour. Soon the cars will travel only in reverse…


Tiantong Yuan consists of over 100 30-story apartment blocks, packed into a few square kilometers of northern Beijing. Over 300,000 people live there, a population of about the size of St. Paul, MN. (OK, some of us think of that as a major city!)


As you can see from the picture, all that was planned and built were apartment blocks, with some small open spaces in between. There is no commercial area. As a result, entrepreneurial residents have turned first-floor apartments into little bodegas to provide for basic needs. This is a huge, middle class “food desert” due to bad urban planning, rather than long-term urban decay.

Tiantong_yuan

The address of the co-op store was one of those first floor apartments. Professor He was held up in traffic, so Zhang Chao, the marketing manager of the co-op, showed us around. He explained that the co-op does want to build a base in a specific community, instead of having its members spread all over the city. The immediate neighborhood has over 60,000 residents, all of whom face the same lack of access to fresh food. So the strategy started to make more sense to me, until I saw the actual items for sale. The co-op has its own little bodega, with liquor and toilet paper and instant noodles. And then they have their co-op members’ store, a single room with shelves of dry goods on two walls. But there’s no fresh food! The store sells dry noodles and various organic grains (millet, rice, wheat flour), but most products are higher-priced cooking ingredients or medicinal products.


This is where the problem of the producer/consumer link comes in. Guoren needs to sell what its producer members grow, and what wasn’t clear in Saturday's meeting was that none of the producers are near Beijing. They are all farming co-ops around China that have been set up in recent years as part of an effort to revive co-operative farming on a non-coerced basis. So the basic idea of setting up a co-op to meet the food needs of a community has gotten lost in the mix, and instead of cabbage and carrots they’re selling dried fungus and diced deer penis.

Coop_store

The good news is that they were aware of this problem, in part because of the meeting last Saturday. Professor He arrived and explained that they now plan to separate the functions of the co-op. So Zhang Chao will run a domestic fair trade company to market goods from the co-ops in Beijing, and separately the consumers’ co-op will build a membership based on selling food that its members want to buy. The idea behind the fair trade company is interesting. There is so little trust of the different labeling systems for healthy or organic food in China that professor He thinks it may be possible to build a different type of brand around farming co-ops. She wants consumers to think of food that comes from co-ops as trustworthy, fair and healthy. In this way, the dozens of new co-ops will have a market advantage, and through the fair trade company it will be possible to guarantee and gradually raise environmental standards on the farms.


It’s important to note that for now, these organic food co-ops are as small and tangential in relation to mainstream organic in China as organic agriculture in the U.S. was in relation to conventional agriculture 10 years ago. A staggering 8.6 million hectares of land is under organic cultivation in China (as opposed to 2.2 million in the US), and although much is consumed domestically, a large proportion also goes to foreign markets. There are serious doubts about the quality and safety of the food being exported under the organic label because of the weakness of the certification system here. Produce is almost entirely bound for nearby markets in Japan and Korea, but more durable commodity crops such as soy go to the U.S. (You’ve probably had some if you’ve bought Silk, a popular brand of soy milk.)


The people and places I’m visiting on this trip are important because they represent the beginning of a domestic backlash against industrial export agriculture in China. I think we need to do all we can to help them, for our sake as well as theirs.

Jim Harkness

September 26, 2007

Food is Good for Everyone

(Ed. note: IATP's President, Jim Harkness, is blogging from China as he meets with experts on China's food and farm system)

On the way to the DeRunWu Organic and Natural farm near Beijing, we stopped to make a few deliveries to nearby customers. The northern suburbs of Beijing, dusty villages and cornfields less than a decade ago, are quickly being covered by sprawling, gated residential compounds. Initially built to re-create the American suburban experience for expat families, these pricey developments are increasingly occupied by China’s own growing middle and upper classes. These people are Ji’s market (the owner of DeRunWu), but they’re also the biggest threat to his business. Suburban sprawl is driving up land rents so quickly that it has become his biggest expense, and Ji’s having trouble finding farmland near enough to the city for easy next-day delivery. He pointed out large plots of fallow farmland that have been bought by speculators and left idle as they wait for the price to rise. As we wandered the well-groomed but sterile streets of the Yosemite Villas looking for the right address, we pondered the ironies of “green consumption.”

Farmers_gardensJust before we reached the farm, we passed a row of very productive-looking gardens. “This is where farmers grow the food that they eat. They use some chemical fertilizers, but no pesticides: they only use those on the crops they sell.”

Then it was on to the farm, which consists of a row of five greenhouses and the strips of ground between them. The greenhouses were built with financial support from the local government, which gave farmers free building materials, seedlings and fertilizer as part of a plan to develop the area as a strawberry production zone for the city of Beijing. But as the laws of supply and demand would have it, the price of strawberries crashed when the whole district began growing them, and many farmers turned to other crops or simply abandoned the greenhouses. Mr. Ji has a long-term lease on his farm from the local town government, and hired local farmers and an agronomy technician to work for him.

Farm_1In the winter, the metal frame will be covered with plastic sheets, and during the coldest months, straw mats as well. Aside from a few vegetables like tomatoes and eggplants, they can grow produce right through the winter at this latitude.

Instead of chemical fertilizers, the farm uses sheep dung and worm waste. (A sack of 50 kg of worm poop, costs 400 Chinese yuan per ton.) They also take spoiled or worm-eaten vegetables and make a sort of liquid goop that is spread on the fields.

Mr. Ji gets advice from agronomy professors at Beijing Agricultural University and is also constantly experimenting. On our way to the farm, he spoke animatedly on his cell phone about the new type of sawdust they are spreading on the soil this year, and how it holds in moisture and promotes a healthy community of worms and microorganisms.

ToadThere were lots of white and yellow butterflies on the farm, as well as this fat toad, which Ji pointed out as a sign of ecological health.

Mr. Ji has his own ideas about controlling pests: he doesn’t. Non-chemical treatments that other organic farmers use, such as chilli peppers, are not allowed on his farm. And his workers aren’t even allowed to kill bugs with their hands! He calls this radically non-interventionist form of farming “ecological organic,” to distinguish it from plain old organic.

As a result, the crops I saw looked pretty scraggly. It was also Monday, so crops had just been picked clean for delivery, and that probably explained the lack of yummy fresh, photogenic vegetables.

TomatoJi did find me a juicy, meaty tomato, which I had already eaten half of before I thought to document it!

Ji has installed a solar shower for the locals who work the farm. Perhaps because the crops had just been picked that morning, the workers weren’t around when we visited. Ji said they take a long lunch back in their village nearby. Labor costs are another major expense for the farm, but there are plenty of willing workers. What with the small sizes of their fields, North China’s arid climate and the disastrous schemes of local government, villagers are happy to become salaried employees like in the collective era and let DeRunWu take on the risks.

After our farm visit, Ji picked up his wife and they gave me a lift back into town. They were going to see “The Future of Food,” a documentary about industrial agriculture that we showed at IATP last fall! The library at the Sino-Japanese Environmental Training Center had just ordered a copy, and a dozen or so people were gathering to watch it together.

Just before I hopped out, I asked what subject Ji had gotten his PhD in. “Nano-Materials,” he answered. To which his wife added, “for guided missiles. He made weapons.” We were all silent for a moment and then Ji said, “Arms are only beneficial to some people, but food is good for everyone.”

Jim Harkness