permaculture

["wenshidi@yahoo.co.uk" <wenshidi@yahoo.co.uk>]

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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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