In a ceremony July 26, plans for China’s first “vegetable factory” were unveiled. The vignette is a good example of China’s emphasis on high technology and the cozy relationship between government and business. Moreover, the incongruous the pairing of “factory farming” and organic agriculture is out of step with the Western organic agriculture movement. Products from projects like this are ending up in your “organic” food products, undermining the whole concept and prompting a turn toward “local” food.
Beijing Zhonghuan Yida Horticulture Sci-tech Ltd. Co and Shenyang Liangma Group LLC signed an agreement to create China’s first “vegetable factory” in Xiaohan village. According to the agreement, Shenyang Liangma will invest 200 million yuan to build the factory and Beijing Zhonghuan will supply advanced technologies over a ten-year period.
At the ceremony, Mr. Liu, vice-president of the Academy said the institute is looking for ways to disseminate its research accomplishments through partnership with provincial governments and companies. The Academy plans to have a long-term multi-faceted involvement in the project and will encourage other institutes to contribute.
The project sounds like something from a Star Trek episode. A multi-level large-scale “vegetable factory” will be built in Xiaohan village that will produce “green” and “organic” vegetables in “three dimensions(?).” I'm not quite sure what a vegetable factory is, but there is at least one Chinese book on "factory-ization" of nurseries.
The factory covers 40,000 square meters with a technology demonstration area, production demonstration area and a facilities area. It will have a 10,000 square meter cold storage warehouse. The factory will have temperature, humidity, and light, carbon dioxide and nutrient solutions release under precision computer control. Production is increased by 5-10-fold using these methods. After the factory is built, it will be capable of supplying 830,000 kg of “green,” organic, and healthy vegetables, 350,000 kg of “green” fruit, 500,000 flower seedlings, 200,000 boxes of flowers, 100,000 kg of fresh water fish, with annual sales of 54.69 million yuan and profits of 13.6 million yuan.
The factory is supported by technology supplied by the Beijing Zhonghuan Yida Horticulture Sci-tech Ltd. Co., a hi-tech enterprise started by the China Academy of Agricultural Sciences Horticulture Environmental Engineering Research Center. After many years of research and development, its research results in “plant factories,” greenhouse energy conservation, LED plant solar energy and soil-free cultivation are taking a leading place in China. Some of the technology achievements surpass international level. Some techniques have been spread to the U.S., Holland and over 700 units in China.
Wednesday, July 29, 2009
Sunday, July 26, 2009
Dairy Industry Melamine Aftermath
China's dairy industry is still reeling from the aftermath of last year's "Sanlu" melamine milk powder adulteration incident. The government has been busy trying to rectify the industry. Each province and county is doing its own thing with general guidance from the central government, but there are common themes.
One major thrust is to eliminate competition among milk collection stations. In Inner Mongolia, raw milk supply has been carved up into territories, and each processing company is assigned a territory; they can't buy outside their territory--a monopsony. For example, Helin village in Inner Mongolia used to have 2 milk stations affiliated with Yili Company, 3 affiliated with Mengniu Co., and 3 bulk milk collection points. when milk was in short supply, companies would compete for supplies from these stations. Now everyone in Helin village sells to 2 of the Mengniu stations. A third station is being reorganized; the others have been closed down. Both Mengniu and Yili have to pay the same price--2.4 yuan/kg. In Helin's county, the number of stations has been reduced from 274 to 219 and each village sells to only one company. The reasoning is that a company will be more willing to invest in a local milk collection station if it can be assured of maintaining the village as a milk supplier.
Milk stations must be directly managed by a particular company or have a fixed supply relationship with a company. Company representatives must be posted at the station to monitor milk tanks and fix a seal on each milk truck. Milk is tested by a third party, which appears to be the county branch of the technical supervision bureau.
Another strategy is to stabilize the price of milk. In Heilongjiang, the province sets a province-wide reference price for milk based on various data, and local commissions decide on a price band for their area. In Fuyu county, they claim to have kept the milk price in a range of 2.20-2.45 yuan/kg despite a steep drop in demand since 2008. Many regions are paying subsidies to processors so they'll keep buying milk at a healthy price. In Bazhou, a region of Xinjiang, the subsidy was raised from 0.1 yuan/kg to .2 yuan/kg this spring and expanded from 1 company to three.
Farmers are required or strongly encouraged to keep their cows in a "standardized livestock production zone" instead of keeping them in their backyard. Xingtang County in Hebei Province built 120 of these zones and claims that 96% of dairy cattle are now in the zones.
There are lots of little subsidies, mostly given by local authorities. Fuyu County reported a long list, including 12 million yuan for construction of new milk stations:
Loans for building new milk stations;
Subsidies for culling diseased cows;
Subsidies for village veterinary technicians' salaries;
Subsidy of 2 yuan per artificial insemination
Provision of idle land, well-drilling, and tree saplings for newly-built dairy farms of 100 head or more;
Subsidies for constructing storage facilities for silage;
Annual financial awards for individuals in the industry.
Changji City in Xinjiang has been allocating 3 million yuan annually for dairy industry subsidies since 2002, but increased the amount to 10 million yuan in 2009. The loans are for building new milk stations and related water, electricity and road construction, buying cattle, building animal housing in production zones, purchasing milking equipment, and artificial insemination.
News reports indicate that the industry is still in serious trouble in some places. In Nanchong, a poor area in Sichuan Province, a report on an investigation of dairy farms from the local statistical bureau said farms' milk sales were down 30-50%, costs had gone up, and policy support had not arrived. Bazhou in Xinjiang reported a new round of subsidies to address the industry's serious problems there: 1 million yuan for artificial insemination, 970,000 yuan for replacement heifer subsidies, 4 million yuan for livestock production bases, and 10 million yuan for machinery purchases. Bazhou is also increasing the subsidy for school milk to 1 yuan per package per student per day.
One major thrust is to eliminate competition among milk collection stations. In Inner Mongolia, raw milk supply has been carved up into territories, and each processing company is assigned a territory; they can't buy outside their territory--a monopsony. For example, Helin village in Inner Mongolia used to have 2 milk stations affiliated with Yili Company, 3 affiliated with Mengniu Co., and 3 bulk milk collection points. when milk was in short supply, companies would compete for supplies from these stations. Now everyone in Helin village sells to 2 of the Mengniu stations. A third station is being reorganized; the others have been closed down. Both Mengniu and Yili have to pay the same price--2.4 yuan/kg. In Helin's county, the number of stations has been reduced from 274 to 219 and each village sells to only one company. The reasoning is that a company will be more willing to invest in a local milk collection station if it can be assured of maintaining the village as a milk supplier.
Milk stations must be directly managed by a particular company or have a fixed supply relationship with a company. Company representatives must be posted at the station to monitor milk tanks and fix a seal on each milk truck. Milk is tested by a third party, which appears to be the county branch of the technical supervision bureau.
Another strategy is to stabilize the price of milk. In Heilongjiang, the province sets a province-wide reference price for milk based on various data, and local commissions decide on a price band for their area. In Fuyu county, they claim to have kept the milk price in a range of 2.20-2.45 yuan/kg despite a steep drop in demand since 2008. Many regions are paying subsidies to processors so they'll keep buying milk at a healthy price. In Bazhou, a region of Xinjiang, the subsidy was raised from 0.1 yuan/kg to .2 yuan/kg this spring and expanded from 1 company to three.
Farmers are required or strongly encouraged to keep their cows in a "standardized livestock production zone" instead of keeping them in their backyard. Xingtang County in Hebei Province built 120 of these zones and claims that 96% of dairy cattle are now in the zones.
There are lots of little subsidies, mostly given by local authorities. Fuyu County reported a long list, including 12 million yuan for construction of new milk stations:
Loans for building new milk stations;
Subsidies for culling diseased cows;
Subsidies for village veterinary technicians' salaries;
Subsidy of 2 yuan per artificial insemination
Provision of idle land, well-drilling, and tree saplings for newly-built dairy farms of 100 head or more;
Subsidies for constructing storage facilities for silage;
Annual financial awards for individuals in the industry.
Changji City in Xinjiang has been allocating 3 million yuan annually for dairy industry subsidies since 2002, but increased the amount to 10 million yuan in 2009. The loans are for building new milk stations and related water, electricity and road construction, buying cattle, building animal housing in production zones, purchasing milking equipment, and artificial insemination.
News reports indicate that the industry is still in serious trouble in some places. In Nanchong, a poor area in Sichuan Province, a report on an investigation of dairy farms from the local statistical bureau said farms' milk sales were down 30-50%, costs had gone up, and policy support had not arrived. Bazhou in Xinjiang reported a new round of subsidies to address the industry's serious problems there: 1 million yuan for artificial insemination, 970,000 yuan for replacement heifer subsidies, 4 million yuan for livestock production bases, and 10 million yuan for machinery purchases. Bazhou is also increasing the subsidy for school milk to 1 yuan per package per student per day.
Sunday, July 19, 2009
Pooling land as investment capital in Chongqing
A pilot program in Chongqing municipality in southwest China combines two new directions in restructuring Chinese agriculture: land transfers and cooperatives.
Last October, a big meeting of China’s communist party encouraged leaders to explore new ways of transferring land between farmers. China is also emphasizing farmer cooperatives as a way to expand the scale of farm production while maintaining the collective ownership of farmland. Chongqing municipality has been singled out as a pilot area to try out innovative arrangements for forming cooperatives using land use rights as investment capital.
In 2007, authorities in Chongqing began allowing farmers’ land use rights to be pooled and used as investment capital in an agricultural company (cash, physical assets, intellectual property, and other assets could also be used.) Now the emphasis is on forming “farmer professional cooperatives” in this manner and changing companies already established in this manner into cooperatives. A 2007 document from Chongqing announced that companies could by formed by the new mode of using land use rights as investment, but regulations on cooperative registration issued by Chongqing this month say companies, partnerships, or other non-cooperative entities cannot be formed.
A Farmers Daily article reports that 36 cooperatives in the pilot program using land use rights as investment capital have been formed in 10 districts of Chongqing since last year. The coops have put together 65,000 mu of land (about 10,700 acres) with a value of 50 million yuan, roughly $7.3 million. That comes to about $685 per acre. The land use rights account for a third of the cooperatives’ assets.
Farmers have long-term contractual rights to use rural land for agricultural production, but they don’t have individual ownership rights. The land is owned by the village “collective.” New land transfer schemes have to stay within tight boundaries: farmers have to participate voluntarily, land cannot be changed from agricultural to other uses, only use rights are used, collective ownership is unchanged, and farmers cannot lose access to their land. When a cooperative is dissolved, the use rights must be returned to the contract household. If a cooperative wants to put up a factory, warehouse or other building it has to find some land that has already been designated as nonagricultural; it can’t build on farmland.
China’s cooperatives are small. An example is the “pollution free” (wu gong hai) vegetable cooperative of Little Rock village in the Wanzhou District. It has 110 members who have pooled 1200 mu (198 acres) of land that is under unified management. The value of the land is based on 3 years “benefits” (gross revenues?). The first batch of vegetables from the cooperative is now going to market.
China is taking tentative steps toward expanding an ownership society. Making urban households property owners through housing reforms in the 1990s gave the economy a huge boost and created huge wealth in the cities. This program operates within tight strictures, but it looks like a positive step for farmers.
Last October, a big meeting of China’s communist party encouraged leaders to explore new ways of transferring land between farmers. China is also emphasizing farmer cooperatives as a way to expand the scale of farm production while maintaining the collective ownership of farmland. Chongqing municipality has been singled out as a pilot area to try out innovative arrangements for forming cooperatives using land use rights as investment capital.
In 2007, authorities in Chongqing began allowing farmers’ land use rights to be pooled and used as investment capital in an agricultural company (cash, physical assets, intellectual property, and other assets could also be used.) Now the emphasis is on forming “farmer professional cooperatives” in this manner and changing companies already established in this manner into cooperatives. A 2007 document from Chongqing announced that companies could by formed by the new mode of using land use rights as investment, but regulations on cooperative registration issued by Chongqing this month say companies, partnerships, or other non-cooperative entities cannot be formed.
A Farmers Daily article reports that 36 cooperatives in the pilot program using land use rights as investment capital have been formed in 10 districts of Chongqing since last year. The coops have put together 65,000 mu of land (about 10,700 acres) with a value of 50 million yuan, roughly $7.3 million. That comes to about $685 per acre. The land use rights account for a third of the cooperatives’ assets.
Farmers have long-term contractual rights to use rural land for agricultural production, but they don’t have individual ownership rights. The land is owned by the village “collective.” New land transfer schemes have to stay within tight boundaries: farmers have to participate voluntarily, land cannot be changed from agricultural to other uses, only use rights are used, collective ownership is unchanged, and farmers cannot lose access to their land. When a cooperative is dissolved, the use rights must be returned to the contract household. If a cooperative wants to put up a factory, warehouse or other building it has to find some land that has already been designated as nonagricultural; it can’t build on farmland.
China’s cooperatives are small. An example is the “pollution free” (wu gong hai) vegetable cooperative of Little Rock village in the Wanzhou District. It has 110 members who have pooled 1200 mu (198 acres) of land that is under unified management. The value of the land is based on 3 years “benefits” (gross revenues?). The first batch of vegetables from the cooperative is now going to market.
China is taking tentative steps toward expanding an ownership society. Making urban households property owners through housing reforms in the 1990s gave the economy a huge boost and created huge wealth in the cities. This program operates within tight strictures, but it looks like a positive step for farmers.
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