Shanghai Markets: Food from Far Away

As China's biggest city and one of its richest, Shanghai has a thriving food industry supplied mainly with products from other provinces and from overseas. Shanghai is on the leading edge of a national trend of adding food miles and degrees of separation between consumers and farms. A thriving, gradually maturing industry is growing rapidly to get tasty food to consumers. But the trend also creates safety risks and opportunities for criminal food fraud. 

An annual "white paper" by Shanghai's market supervision authority posted on the central government's web site is meant to assure Chinese consumers that authorities have food safety under control. 

The report says Shanghai is becoming a "food distribution city" as the number of local food producers plummets. In 2020, 80 percent of the food consumed in Shanghai came from outside the municipality. The ratio was up 10 percentage points from five years earlier, according to the report. 

Relatively few local farms serve Shanghai and their production has declined sharply:

• The 2.4 million metric tons of vegetables produced by 975 local cooperatives in Shanghai during 2020 was down 16 percent from 2016.
• The 56,000 metric tons of fish and shellfish products from 490 aquaculture production bases was down 47 percent
• 117 Shanghai farms slaughtered 310,000 hogs last year, just 10 percent of the 2.9 million hogs slaughtered there in the peak year of 2014 

The report said Shanghai received 9.1 million metric tons of imported food during 2020. Meat, grain, fruit and nuts were the top food imports, the report said. 

Imported food summits were held in Shanghai the last two years.

The number of local agricultural wholesale markets fell from 50 to 22 between 2014 and 2020, and the volume of products moving through the markets fell 40 percent. 

The report said more food is being marketed through e-commerce, supermarkets, and by direct-sale shops operated by production bases in other provinces. 

In 2020, Shanghai had 114,273 food retailing businesses, 59,256 wholesale food businesses, and 12,938 businesses registered to do both wholesale and retail. 

Shanghai's food service sector has been exploding. Shanghai had 120,635 food service businesses and cafeterias at the end of 2020. Their numbers increased by more than 10,000 last year and they have increased 3-fold since 2015. The bulk of these are 57,000 small restaurants and 18,000 hole-in-the-wall eateries, fast-food joints and drinking places. Shanghai has over 16,000 cafeterias. The number of small restaurants has declined though. All restaurant operators have ambitions to become bigger and they are expanding rapidly, the report said.

The number of licensed food processors declined from 2,210 to 1,405 between 2010 and 2020. Only 30 percent of the food producers had sales above 20 million yuan (roughly $3 million), but the proportion went up 9 percentage points last year. The report says the larger "above-scale" food producers had a 2-percent increase in sales last year, despite impacts of the pandemic.

Shanghai also tends to be on the forefront of food safety regulation in China. With so much food coming from distant sources and large numbers of retailers and restaurants, Shanghai faces challenges in ensuring the safety of food. But the report claims Shanghai is making progress in regulating food safety.

Cartoon from Shanghai's Liberation Daily checks for "pesticide residues" and "illegal additives".

Shanghai had only 3 food poisoning incidents in cafeterias during May, June, and December last year. Two were salmonella poisoning and one was a staphylococcus bacteria. One was caused by cross-contamination of food, another resulted from dirty utensils, and the source of the third was not determined. Authorities monitored diarrhea cases at 30 "sentinel hospitals" and found salmonella, campylobacter, e-coli, and vibrio parahaemolyticus. Authorities observed a surge in sales of diarrhea medications in January, July and August. 

Shanghai authorities tested nearly 147,000 food samples last year with a pass rate of 99.1 percent. They also conducted over 2 million quick tests (an increase of 48 percent from the previous year, presumably due to the covid-19 epidemic) with a pass rate of 99.7 percent. The white paper brags that Shanghai tested 10.5 samples per 1000 people, a much higher rate than in Europe or the United States. 

Shanghai reports a pass rate of 99.9 percent for testing of agricultural products. Pass rates were 99.8 percent for food sampled from processing plants and 99.25 percent for food in distribution channels. 

China's customs administration reported that Shanghai rejected 300 out of 350,800 shipments of imported food in 2020. That translates to a 99.9 percent acceptance rate for imported food. Meat and seafood accounted for more than half of Shanghai's imported food rejections last year. Rejections peaked in July, the month after war on imported frozen food was declared. Processed food from other Asian countries accounted for another chunk. Lack of documentation and labeling were cited most often, but South American shrimp were cited for "animal disease" and Australian beef was cited for various violations. More than half of the rejections were shipments from the EU and Japan, not known for their risky food.

Monitoring of domestic food supplies at fixed points around Shanghai found 100 percent pass rates for most foods. Persisting problems identified by Shanghai authorities were contamination of food by pollution in the environment and veterinary drug residues. Improper food additives were detected occasionally. Specific problems reported were detection of cadmium and antibiotic residues in freshwater shrimp and fish; antibiotic residues in fresh eggs; traces of a plant growth promoter in bean sprouts; pesticide residues on chives; a mycotoxin in flour; and restaurant utensils that tested for detergent residue and coliforms.

The Shanghai report called attention to several types of fraud, including counterfeit or inferior flavorings, chocolate, milk powder and bottled water; and watered down liquor and wine. The report  noted an uptick in cross-provincial crime as "gangs became faster, more concealed and able to evade authorities." The production and storage of food outside the city makes Shanghai vulnerable to food fraud. The report said that criminal gangs are utilizing e-commerce sites and logistics channels to perpetrate fraudulent food sales.

A poll said 86.5 percent of Shanghai residents were satisfied with the safety of food, up 2.6 percent points from 2019 and the highest satisfaction rate in 11 years, the report said. The most common problems reported to a food safety hot line were spoilage, past expiration date, foreign bodies, illegal additives, and packaging labels on meats, restaurant foods, baked goods, fruit, and dairy products. Consumers reported discomfort after eating, delivery disputes, delays in delivery, unlicensed operations, and poor smoking control in restaurants.

Shanghai is not typical, but it represents the direction China is headed. It is no longer a country of subsistence farmers, and its industry performs an amazing task by feeding 24.3 million people on a daily basis.