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Organic Agriculture is Booming--Even in China
ORGANIC FOOD Cultivating Kinder Crops
Driven by fears of pesticide-poisoned foods, consumers are rushing to buy organic. China is cashing in on the trend, with greener produce
By Bruce Gilley/WUYUAN Issue cover-dated February 22, 2001
WHEN THE CRAZE for organic food hit Western countries in the mid-1990s, Wuyuan, a tea-growing county of 330,000 people high in the hills of northeastern Jiangxi province, was perfectly suited to benefit.
Here at the head of six different rivers, forests abound and the air is clean. Factories are banned and cancer rates are almost nil. White cranes from Siberia spend the winters here. Western scientists have found two other bird species in the remote county that were long thought extinct.
In 1997, the county's best-known product, its green tea, passed the stringent organic-food tests of the European Union and was certified for sale there. The same year, the county's monopoly green-tea producer, Wuyuan Green Tea, was renamed Wuyuan Organic Foods. Since then, the company has secured EU certification for organic mushrooms, fungus and Chinese medicine ingredients and is now seeking certification for chickens and sesame paste.
The company's exports to the West, still mostly tea, topped $3 million last year. That's not bad for a place whose most famous export until now was a Song dynasty scholar named Zhu Xi who coined the anti-capitalist slogan: "Focus on scholarship not on business."
"We were surprised when we realized that we had perfect conditions to grow organic foods," says Hong Peng, president of Wuyuan Organic Foods and a graduate of tea studies at nearby Zhejiang University."People began to say: 'Wuyuan's environmental protection is finally going to pay off'."
The rise of Wuyuan Organic comes against a backdrop of surging Western demand for organic foods and a nascent but quickly developing domestic market in China itself, driven by fears of unsafe foods.
Sales of organic foods by the country's 800 government-certified producers reached $4 billion last year, of which about $140 million comprised exports, both up 20% from a year earlier. While organic foods were seen as a foreign eccentricity until recently, a series of health scares in China over poisoned food sparked interest at home too. Specialized supermarkets in China's big cities now stock everything from organic soy sauce and lychees to delicacies such as organic pig face.
"The term 'organic food' is now part of everyone's vocabulary," says Shi Songkai of the semi-official China Organic Foods Research Centre.
With domestic demand for organic produce set to surge as consumers turn their backs on pollution-laced crops, every province in China is scrambling to find remaining patches of pristine countryside for organic farming. While unchecked growth has turned much of China's most fertile countryside into a toxic blight, some parts remain comparatively unscathed, especially in the mountainous regions of central provinces like Jiangxi.
The COFRC, set up by the Ministry of Agriculture in 1992 but now under state-owned food company China Seeds Corp., has established a certification scheme which closely mirrors the schemes in the EU and the United States to monitor products. As in Europe and the U.S. they check not only the soil, air and water quality to ensure the absence of toxins which can enter the food, but also production methods to ensure they are natural and not harmful to humans or the environment. So far, Japan recognizes the COFRC's standards and Germany and France are expected to follow this year.
TOXIC FOOD SCARES Situated in a remote mountainous county covering 3,000 square kilometres and with 59 farms under its ambit, Wuyuan Organic is ideally suited for organic production. Just as the county's idyllic surroundings keep its organic foods untarnished, growing bouts of negative publicity about nonorganic foods in China is helping sales too. Not a week goes by when the domestic media does not report some startling revelation about the toxicity of the country's regular foods.
A study of fruit and vegetables sold in Beijing revealed that 20% contained pesticide residues in excess of state standards, the China Youth Daily reported last year. The COFRC says that illegal pesticides continue to be sold widely, despite bans. News like this has sent consumers scurrying for organic labels.
Wuyuan's big break came last year when the Shanghai branch of the State Quality Inspection Bureau revealed the results of a study of 61 types of China's most famous teas. They showed that 19 of the teas did not meet the lowest quality standards for metal and other chemical contents, 13 of them because of high levels of lead. Most of the offenders--some of which contained nine times more lead than the maximum acceptable levels--came from producers around Zhejiang province's heavily polluted Western Lake. The most famous of those,Dragon Well tea produced by Western Lake Dragon Well Tea Co.,saw sales plummet as a result, according to mainland news reports.
But it helped Wuyuan Organic's sales. The Shanghai Tea Drinkers Association annual list of the country's 10 best teas, published in December, had Wuyuan's flagship Dazhang Mountain tea in the No. 3 spot, its first appearance on the prestigious list. Hong expects sales to double to around $6 million in the next two years, with most of the growth coming from the domestic tea market.
"The China Tea Association criticised the Inspection Bureau for releasing the report to the public. But I think they did the right thing in letting consumers know the truth," says Hong.
As other regions latch onto the organic boom, however, Wuyuan Organic will have to be nimble to prosper. Officials in neighbouring Zhejiang province, for example, haunted by the spectre of seeing their huge tea industry wiped out by damaging reports, have set up their own organic-foods certification scheme with government investment. While Zhejiang's scheme is not recognized by the EU, it could pose a threat to Wuyuan's near-monopoly of the organic-tea market.
Hong worries that if he doesn't move quickly, larger companies from other provinces will snare the domestic market in organic produce. One of his strategies is to branch out into other foods. He is now seeking COFRC certification for bamboo shoots, peaches and pears.
The company was due to exhibit at Germany's Biofach organic food fair, the world's biggest, for the fourth straight year in mid-February. Hong says sales there are modest, but the information he gains on consumer trends is invaluable. "We used to go there to sell. Now we go to learn," he says.
But keeping up with the food giants could be tough. While Wuyuan is a beautiful place to grow tea, it is four hours from the nearest airport and five from the provincial capital, Nanchang. "We're in a perfect place for production but not for marketing," says Hong.
To raise capital, the company is restructuring itself as a shareholding company, hoping eventually to list shares on a domestic market. But Hong says state banks and investors alike remain wary of putting money into such a nascent industry.
The company's best option may be to link up with one of the big domestic food groups that could give it the marketing network and capital to survive the competition. Fuzhou-based organic-fruit-and-vegetable producer Chaoda Modern Agriculture listed on the Hong Kong stock exchange in December, for example, in a sign of the growing clout of organic-food companies.
Either way, the company seems bound to be swallowed by carpet-baggers from either home or abroad. For now though, Wuyuan Organic is enjoying bumper profits as the global green wave washes into this remote corner of China.