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  • From: "wenshidi@yahoo.co.uk" <wenshidi@yahoo.co.uk>
  • To: permaculture <permaculture@lists.ibiblio.org>
  • Subject: [permaculture] China’s tycoons go farming
  • Date: Thu, 17 Nov 2011 04:49:47 +0000 (GMT)

An interesting article on investment into organic farming in the PRC.

Chris

http://www.chinadialogue.net/article/show/single/en/4622


China’s tycoons go farming
Yuan Ying

November 10, 2011
Big business has woken up to the growth
potential of organic agriculture in China. This will boost the sector,
writes Yuan Ying, but could also squeeze out small farmers.


“Over the past year, lots of companies have
visited Anlong to propose cooperation, investment, even acquisitions,
many of them well-known firms. But Gao has refused them all. ‘We’ve
always been small farmers,’ he said.”
China’s biggest PC manufacturer to grow vegetables? It sounds ridiculous, but
that’s exactly what Liu Chuanzhi, chairman of computer giant Lenovo, wants to
do. 

“Agriculture is a very important sector,” Liu told reporters early last
month during a discussion about the future direction of the firm.
Shortly afterwards, Chen Zhaopeng, Lenovo’s former senior vice president
and president of emerging markets, moved to parent company Legend
Holdings to take up a post as head of the modern agriculture business.

“The arrival of this new leadership marks a fresh strategy for our
agricultural business,” said spokesperson Gui Lin.

At the start of the year, rumours were already circulating in industry
circles that Lenovo was looking to partner with Chengdu city, western
China, on farming projects. This would see the creation of a new food
brand, concentrating initially on fruit products. Liu has also said
talks about 12 agricultural investment schemes are under way.

Liu is not alone in his new passion. Property tycoon Wang Jianlin, chairman
of Dalian Wanda is also heading out to the fields.

In Yanqing county, to the northwest of Beijing, Wang’s company is planning a
10,000 mu organic farm (one mu is around 667 square metres), set to produce
over 1,200 tonnes of organic
fruit and vegetables each year, even though Wanda has never previously
had anything to do with organic agriculture.

Even e-commerce hotshot Liu Qiangdong, chief executive of 360buy.com, is
getting in on the act. For a while his website was selling a brand of
organic “entirely pollution-free” rice, grown in Liu’s home county in
Jiangsu province, eastern China. The product is now listed as “sold
out”.

“The rice was an experiment, and 360buy.com is still exploring the
possibilities of organic agriculture,” said one industry insider close
to Liu.  

Zhu Xinli of Huiyuan Juice Group is even more ambitious. In a valley in
Miyun, to the northeast of Beijing, he has taken charge of a new project.
With 400 mu of organic peaches, 300 mu of organic apricot and plum trees, 30
mu of organic peppers, 20 mu of organic strawberries and more, Zhu wants to
create a “second Huiyuan” on this 15,000 mu tract of land. Already in charge
of the leading business in the fruit juice
industry, Huiyuan’s boss now has a new goal: to become a giant of the
organic farming world.

From IT to property, e-commerce to soft drinks, experienced and
capital-rich executives are piling into organic agriculture, and their
arrival could mean big changes for the industry.  

Until five years ago, these businessmen had not woken up to the growth
potential of organic agriculture. In the past, Zhang Lihui of Tsing Capital
struggled to find organic agriculture projects to invest in. “There was a
range of problems – limited land, a weak system for certifying
organic products . . .the market wasn’t there at the time,” he said.

Then, in 2006, Sequoia Capital, the world’s largest venture-capital firm
invested US$5 million (31.7 million yuan) in Fujian farming firm
Linong, while investment bank Goldman Sachs spent US$315 million (2
billion yuan) buying meat-processor Shineway. The capitalists had
announced their arrival.

In the years that followed, international investors including Deutsche
Bank, the Blackstone Group, The Carlyle Group and SAIF Partners all
jumped into China’s agricultural sector. Investment peaked in 2010. A
consortium led by Tsing Capital ploughed US$10 million (63 million yuan)
into Tony’s Farm,
Shanghai’s largest organic outfit. Industry insiders say that the
company made a profit of 50 million yuan (US$7.9 million) in 2010, and
that this figure is set to at least double this year.

Figures from the Zero2IPO Research Center, a venture capital and private
equity consultant, show that in 2010
investment in agriculture reached a new peak: 47 investments were made
totalling US$891 million (5.7 billion yuan) – more than half the worth
of all previous investments put together.

“Green and organic methods are one of the factors attracting capital,”
said Zero2IPO researcher Xiao Jun. And the tycoons have sniffed out this
opportunity. 

State-owned foodstuffs corporation COFCO has repeatedly sent delegations to
observe operations at Tony’s Farm and
its food products website Womai.com is set to invest 10 billion yuan in
an organic sales platform. Meanwhile, not content with selling organic
rice, Liu Qiangdong is considering setting up farms around Shanghai, to
be managed by Tony’s Farm.

“There aren’t any established organic agriculture brands, or any strong
companies – it’s wide open for quick entry and expansion by investors,”
explained Tsing Capital’s Zhang Lihui.

Organic and Beyond was one of the first firms to open up sales
channels for organic food products, by offering them as corporate gifts.
“Retail channels are the most valuable part of the chain,” its
chairman, Zhang Xiangdong said.  

“Besides capital, existing retail and online sales platforms give the
big companies an advantage in the organic agriculture market,” added
Xiao Jun.

Despite facing so many powerful competitors, founder of Tony’s Farm
Zhang Tonggui doesn’t feel under pressure. Quite the opposite: he told
Southern Weekend that “The entry of stronger companies will shake the sector
up and force the small and medium sized firms to improve.”

The idea of organic agriculture first came to China in the 1980s. “But
from then until 2005 it was export-orientated,” explained Shi Yan, who
founded Beijing’s Little Donkey Farm after gaining a PhD in sociology from
Tsinghua University.

By 2008, China was starting to pay a lot more attention to food safety
due to a series of scandals, most infamously the poisoning of babies
with melamine-tainted infant formula. “That was when community-led
organic agriculture began to emerge in China,” Shi said.

But compared to thriving markets in the European Union and United
States, China’s organic agriculture sector is still in its infancy. It
remains marginalised and, if it is to expand, needs larger companies to
get involved.

Since 2009, renowned agricultural expert Wen Tiejun has been helping Shi Yan
experiment with organiccommunity-supported agriculture on a 20 mu patch of
land in Beijing’s Haidian district.

She said she has learned a lot over the last two years, including the
fact the sector’s powers are limited: “There still aren’t any powerful
interest groups involved, so when it comes to lobbying the government or
influencing policy we don’t have anything like the impact of a major
fertiliser firm like Sinochem.

“At the least the arrival of big business will have a beneficial effect
on the soil and environment of the area.” Although Shi Yan is cautious
about the changes, she is still positive.

But rich and powerful backers could prove a double-edged sword.

I spoke to farmer Gao Yicheng on the phone while he was out delivering
vegetables. It was a Monday, so he was on his way from his home in
Anlong, 30 kilometres outside of Chengdu, to make one of three weekly
deliveries of organic vegetables grown by his farming cooperative.

The group of nine households has 40 mu of land, and provides
vegetables to 170 Chengdu families. Its monthly income is about 2,000
yuan and Gao and the other farmers are very busy.

Over the past year, lots of companies have visited Anlong to propose
cooperation, investment, even acquisitions, many of them well-known
firms. But Gao has refused them all. “We’ve always been small farmers.
If we become part of that industry, we won’t be able to do things the
way we like anymore or guarantee our future livelihoods,” he explained.

To achieve economies of scale, it is crucial for the big firms to piece
together large stretches of land from smaller holdings. Take Huiyuan’s
15,000 mu of land in Miyun as an example: that land belongs to
900 different households in two different villages. Chen Zhihui, a
company official, explained that the company started to lease land here
in 2006. The villagers get 800 yuan per mu per year, paid every five years.

“There’s been a fundamental change in the way the agricultural means of
production are organised,” said Zhang Xiangdong of Organic and Beyond.
In the short term, this means farmers are getting more income than they
would if they worked the fields themselves, which seems like a good
thing. But there are huge worries about what that separation of farmers
from the land will mean in the long term.

Similar concerns exist in the United States, where organic agriculture
is more mature and the industry is controlled by a small number of large
firms. One of America’s earliest advocates of organic farming,
Elizabeth Henderson, told Southern Weekend that, since
discovering the profits to be made in the organic food market, big
business has been snapping up existing farms, or establishing their own. This
has created new challenges, she said. “Organic agriculture in the
US faces problems, with these firms unfairly treating their workers,
squeezing out small farmers and using their clout to influence organic
standards.”

The values at the heart of organic agriculture – ecological protection,
health, love and justice – seem to be at risk as the sector scales up
and become more commercial.

The Chinese tycoons are already speeding up. How will the long term
interests of farmers be assured once their land has been leased? How
will Gao Yicheng and similar farmers compete? We don’t yet know the
answer.

Yuan Ying is a reporter at Southern Weekend, where this article was
originally published.

>From toby@patternliteracy.com Wed Nov 16 23:50:30 2011
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F67xAlZywHMq6nLyAAZUm9IWXDIHvgBHeASubject: Re: [permaculture] Biochar
is part of a LOCAL solution
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On Nov 16, 2011, at 3:33 PM, John D'hondt wrote:

>
> I like this but still think that charcoal burning is detrimental if we want
> to stop climate change. We produce 20 times more CO2 while making charcoal
> than we ever sequester whatever system we use.

I was just at a biochar workshop this weekend and the numbers given were that
the method we used can sequester 40% of the carbon in a given piece of wood,
and that's more than if microbes ate it, and far better than the "20x" that
you state. Does your number come from an actual calculation? The numbers I've
seen suggest that a clean pyrolysis is carbon neutral or even negative by
weight, since putting pure carbon in the soil means that nearly 3 times that
weight (the weight of one carbon plus two oxygens) is kept out of the
atmosphere. (that strikes me as a funny way to calculate it, but that's how
they do it for CO2)

I think the jury is still out on biochar in temperate climates, but replacing
inefficient open fires or wood stoves with biochar pyrolysis makes a huge
amount of sense, since you get a much cleaner burn (reduced pollution), more
efficient generation of heat for cooking, and a useable product in the
charcoal, instead of ash. So for cultures that rely on wood, it's very smart.

Toby
http://patternliteracy.com





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