Organic produce cultivates a healthy profit margin, say producers on Shanghai island

Zhao Fenna, a farmer in her 50s, is doing a roaring trade in the market despite selling vegetables and other agricultural produce that are smaller, more expensive and less pristine than those of her rivals.

"That's because I am selling 'green', 'ecological' products from Chongming," she said.

Chongming county, the biggest offshore island and also the least industrialized region within the city limits of Shanghai, actively promotes its organic agricultural products.

"It turns out that our food, including cauliflowers, asparagus and organic rice, is highly popular in the market. Chongming has become the biggest vegetable source for Shanghai," said Zhao Qi, county head of Chongming.

Chongming white hyacinth beans, asparagus, crab field rice, sweet sorgo, sweet and crispy taro, gold melons, yams, goat meat and crabs also sell well in the market.

There are 175 outlets all over the city in which we can sell agricultural products grown on Chongming, Zhao said. The number will climb to 500 to 700 in three to five years.

In an era when food scandals strike from time to time, the business of producing safe food is full of opportunity.

"I expanded our production volume last year but now we can no longer meet the demand," said Song Yongjiu, manager of Qimao farmers' cooperative on Chongming island, which specializes in growing 'ecological' rice crops.

It is called 'ecological' because we use less pesticide and less fertilizer. Our formula was designed by professors at agriculture institutions, he said.

This cooperative produced more than 2,000 tons of rice last year. It sells at 8 yuan ($1.3) a kilogram, double that of ordinary rice.

Song said growing "pure organic" rice crops, which require no pesticides or chemical fertilizers, would be too costly for him.

"It is very hard to avoid plant diseases or pests. It is even harder to make money if you add in the expense of renting the land," he said.

But Song said he is committed to working with the professors to discover how to use as few chemicals as possible while at the same time achieving a high output.

"It is important to find the balance because consumers nowadays attach great importance to the source of food," he said.

Another specialized cooperative, Jianlu (which literally means "healthy and green"), also based in Chongming, produces 15,000 tons of high-quality "green" cauliflowers and 1,000 tons of asparagus annually, said its manager Zhao Shuyuan. It makes an annual profit of 10 million yuan by selling the products to the domestic market and exporting to South Korea and Southeast Asia.

Compared with farmers' cooperatives such as Qimao and Jianlu, organic farms such as Tony's Farm run an even more lucrative business.

It charges 9,980 yuan for an annual membership card, which is worth half a week's allocation of fresh, organic vegetables.

The company has rented a plot of 108 hectares in Chongming since late 2011 and began cultivating the soil and improving the water quality for a total investment of 250 million yuan.

Zhang Tonggui, founder of Tony's Farm, said revenue in Shanghai is expected to exceed 100 million yuan. His target is to bring the revenue up to 1 billion within five years.

Investors have been increasing input into the agriculture sector in recent years, especially in the high-end organic food production and deep-processing industries.

A report released by ChinaVenture Group showed the agriculture industry has become increasingly popular among investment institutions since 2010. A total of $887 million flooded into 22 venture capital and private equity funds in the last quarter of that year.

During the first three quarters of 2012, a total investment of $214 million poured into the agriculture sector from 37 PE/VC funds.

According to statistics released by Zhejiang Provincial Administration for Industry and Commerce, the average annual amount of money invested in agriculture by Zhejiang businessmen has exceeded 10 billion yuan over the past five years. The total amount reached 20 billion yuan last year.

But, on the other hand, questions have been constantly raised about whether China's "organic food" claims are trustworthy and how farmers can avoid polluted soil, air and water.

"There are at least 30 test bodies in China these days that are legally permitted to release certificates for 'organic food'. I am afraid some certifications we saw on the market are actually paid for with cash," said Cheng Cunwang, chairman of Tianyuan Zhengguo Bio-agriculture, an organization that promotes community-supported agriculture in China.

China's first standards for organic food were issued by the nation's environmental protection authority. But the Ministry of Agriculture and the General Administration of Quality Supervision, Inspection and Quarantine later also drew up standards for organic food.

"It is questionable how many of the organic certificates are reliable these days," he said.

Cheng himself is promoting community-supported agriculture in several cities across the country.

Before each planting season, community members sign a contract with farmers, sharing the benefits and risks with them and paying in advance for the produce of that season.

He said CSA fosters closer ties between community members and farmers. As a result, members' confidence in the food is based more on their understanding of the farm rather than certificates.

The Ministry of Agriculture revealed agriculture was the country's biggest water polluter as early as 2010, based on a two-year study.

Fertilizers and pesticides have played an important role in enhancing productivity but, in certain areas, improper use has had a grave impact on the environment, the study said.

"The point is that polluted water and a polluted environment make the crops harmful to health. It is necessary and urgent to encourage any attempts to change traditional farming methods through an emphasis on green agriculture," Cheng said.

xieyu@chinadaily.com.cn

(China Daily 02/04/2013 page15)