Dim Sums: Agricultural Markets in China

A Wal-Mart in Nanchang, shortly after its opening in 2005 Is there a war against foreign supermarkets in China? The Chongqing arrest of Wal-Mart employees for repeatedly passing off conventional pork as premium "green food" pork has received huge publicity and Wal-Mart has closed all its outlets in Chongqing. In January of this year, Carrefour and Wal-Mart outlets were singled out for fraudulent pricing behavior. Why are Carrefour and Wal-Mart being singled out? Are these fortune-500 companies more shifty and dishonest than other retailers in China? Surely not. These crackdowns are likely to some degree a reflection of growing resentment in China against foreign supermarket chains that is starting to pop up in the Chinese press. The release of the 2010 list of top-100 retailers highlighted the growing influence of foreign chains in the Chinese supermarket sector , noting that five foreign chains opened 140 new stores, a faster growth rate than domestic supermarkets. An art...

The Ministers of Commerce and Agriculture announced a new campaign to improve city vegetable supplies by pushing forward the "Farmer-Supermarket Counterpart" program. This is an arrangement in which supermarket chains buy fresh produce directly from farmer cooperatives. By cutting out the middlemen (traders, brokers, wholesale markets), farmers should get a higher price and supermarkets reduce their cost. Ideally, supermarkets form stable long-term supplier relationships with cooperatives, sign contracts at fixed prices, provide standards and technical training, and help the cooperatives develop brand names for their products. Retailers exert more control over producers and it becomes easier to trace products back to their source. Earlier this year it was announced that the "farmer-supermarket counterpart" would be expanded, and another meeting was held in October 2009 The program's Chinese name, nong chao dui jie (农超对接), is hard to translate. Above, I translat...

The Ministry of Commerce announced that its "Farmer-Supermarket Linkage" pilot program will be expanded this year . This innovative program, begun last year by the Commerce, Finance, and Agriculture Ministries, arranges for supermarket chains and other agricultural companies to purchase farm produce directly from producers. The idea is to reduce marketing costs by cutting wholesalers and traders out of the supply chain. The cost savings are distributed to farmers, consumers, and retailers. Farmers get a higher sale price, supermarkets purchase at a lower price and they pass on savings to consumers through a lower retail price. The Commerce Ministry says it supported 205 projects last year, which on average raised farm prices 15% and cut retail prices 15%, bringing benefits to all three parties: farmers, consumers, and enterprises. The losses sustained by traders and wholesalers--most of whom were probably poor farmers a few years ago--apparently don't matter. The program ...

An article that appeared in the Chongqing Evening News last September reports the story of Mr. Chen who found a bottle of toxic pesticide mixed in with his rice. The story provides an example of the combination of ignorance, minimal regulation, and callous disregard for other peoples' welfare that creates China's severe food safety problems. Mr. Chen bought a 10-jin bag of rice at the supermarket, brought it home, and as he was preparing dinner, his child noticed a small plastic bottle in the bag. The child exclaimed, "There's a bottle in the rice!" Photo from Chongqing Evening News The bottle was about the width of a finger and contained a powder. It had a tiny hole drilled in the side. Mr. Chen picked up the bottle, and it gave off a strong odor. He examined the label and found that it was a highly toxic pesticide called aluminum phosphide. The label said it was forbidden for home use. As he thought about it, Mr. Chen became more nervous, recalling many other b...

According an online report , a forum on the "Farmer-Supermarket Linkage" program was held in Beijing on October 29, where the Ministries of Commerce and Agriculture signed memoranda of cooperation with Wal-Mart. This project promotes direct purchases of produce by supermarket chains from farmers (actually cooperatives or distribution centers run by farmers). Wal-Mart announced that it plans to involve 1 million Chinese farmers in its “farmer-supermarket linkage” project by the end of 2011. Since 2007, Wal-Mart has established 11 direct purchasing bases in 7 provinces. The bases cover an area of 150,000 mu [10,000 hectares] and 200,000 farmers directly benefit [10 farmers per hectare!] Wal-Mart’s International Business chief told a reporter, “The farmer-supermarket linkage program is representative of Wal-Mart’s development strategy in China. We want to bring our world-wide experience in farm product operations into China’s supply chain, spread scientific crop-production, envi...