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The fruits of Chinese innovation

China General Interest

Richard Fyers talks about agricultural innovation in China and about how foreign companies are becoming active providing technology and joint venturing in farming. He says the commercial and regulatory environment is challenging but the opportunities are big.

I used to be nervous eating unpeeled apples and pears grown in China. However, I have since discovered that in Chinese orchards, each fruit is grown in its own bag. This is removed to allow a blush to form only a week or two before harvest. This bag not only protects the fruit from any sprays or other contamination but it also produces a thin soft skin. When picked each apple is placed in a spongy plastic sleeve then later inspected at least twice before it reaches the consumer. This careful process is expensive compared with New Zealand production but the fruit is excellent. Vegetables grown in China are more problematic.

The solar powered so called “winter warm green house” was first developed by a Chinese farmer, Mr Wang Leyi in 1989. Without any heating apart from the sun, Chinese farmers are now growing summer crops like melons and tomatoes during the winter even when the outside temperature is minus 15 degrees centigrade. The warmhouses are so effective that there are now an estimated 1 million centered on Shandong province where they were originally developed. The average farmer has two warmhouses which may give him an income of up to $15,000 pa. The rapid geographic spread of warmhouses is typical of the transmission of innovative and profitable new agricultural technology, like the growth of kiwifruit farming spun out of Te Puke which remains a centre.

Shandong province now grows between 20 and 25% of the vegetables in China and it has the largest vegetable market in the world at Shouguang. The immaculate expressway to Shouguang passes directly over a tomb of hundreds of horses. Unlike the famous terracotta warriors, this was an army of real creatures made drunk then interred as tribute to a king. Until the emergence of the warmhouse, Shouguang market sold only cabbages during the winter season. Today it teems with buyers and sellers from all over China with up to 30,000 people visiting the market each trading day.

Annie Wei, a dynamic woman with a degree in floriculture from Beijing University says she started her nursery business near Shouguang in 2002 with US$10,000 of savings. She has 20,000 square metres of modern glasshouse growing seedling cucumbers, tomatoes and other vegetables for the warmhouse farmers. It is more efficient for her to grow plants from costly Israeli and Dutch seeds than it is for the farmers and less risky. She can produce up to 20 million seedlings each year for which local farmers may pay NZ 25 cents.

Since its invention the warmhouse has gone through many improvements. The current model is shaped like an aircraft hangar cut down the middle, with brick/ earth walls on the north, east and west sides and a plastic roof. Inside I stood on a path running the length of a plastered earth wall and looked into a one metre deep pit covering one mu (666 square metres). The excavated earth had been used to build the thick heat storing northern side of the house. Arches extend from the top of the heat storing wall to support the plastic roof at an angle of 23 degrees. The northern heat storing wall faces the sun at a slight angle to favour the trapping of afternoon heat. Straw is rolled down over the clear plastic roof to stop sun if it is too hot or to trap heat at night. The plant rows are north-south and there is channel irrigation also used to control temperature.

Annie said that nearly all vegetable growing in the region now took place in warmhouses with almost no vegetable growing in the open. Each village specialised in a particular crop, say, capsicums, and small local businesses in each village provided support services, for instance making cartons printed with local labels. Local dealers brought their trucks to each village and paid the farmers in cash for their produce though increasingly supermarkets have their own buyers.

In the nearby coastal city of Qingdao a laboratory run by English scientists is testing fresh produce for chemical residues. There are around 200 agricultural chemicals in common use in China and the scientists are finding residues in vegetables at problem levels.

Winter cold previously killed pests and diseases in Shandong province but the warmhouse has created a winter habitat. Diseases and pests are now so prolific that they cannot be controlled sufficiently for some crops to be grown outdoors. Agricultural chemical companies are blamed for failing to provide proper instructions or adequate training for the new warmhouse farmers. Farmers have not all learnt about waiting periods, changing chemicals or the right chemicals to use. They just pour them on. There are so many small farmers that some harvested vegetables are likely to have chemical residues above recommended levels. Multinationals sourcing vegetables in China are establishing their own farms so as to control food safety and this will improve local knowledge. Meanwhile government and the private sector like Hongmei Horticulture are training local farmers in the proper use of chemicals and other techniques to deal with pests and diseases.

China has only 7% of the world’s arable land. It is struggling to feed itself and imports of food are increasing at 35% year on year. Another 200 million farmers are expected to migrate to the cities over the next ten years. These people who are currently feeding themselves will in the future need to be fed. Despite continuing innovation and efficiency improvements, increasing farm production will be hard to achieve.

An English agronomist working in China informed me that it is cheaper to grow food in the UK than in China. Difficulties with food production in China include:

  • small farm size (average 0.1 hectare per family);
  • high farmland rent;
  • too much or too little water;
  • salinisation and low organic matter in soil;
  • pests and diseases.

In December 07, the Communist Party announced that rural land will remain collectively owned. Under the property law, farmers can own their houses but they may not own farmland. The collective may give farmers a right to use and manage farmland for a 30 year period which can be extended for another 30 years. The policy does allow farmers to transfer their land to other farmers and it is proposed to establish a market for the transfer of farmland management rights among farmers.

The large number of growers has driven innovation in vegetable production with new cultivation techniques and cultivars. Local government is encouraging the development of large scale farms. Foreign companies are becoming active providing technology and joint venturing in farming. The commercial and regulatory environment is challenging but the opportunities are big.

Richard Fyers is a partner in the law firm, Fyers Joyce, a director of the Australasian fresh produce company, Freshmax Pty Limited and deputy chairman of the New Zealand China Trade Association. He led an NZCTA Horticultural Trade Mission to Shandong in October 2007.