China Agribusiness Goes Green

Business

  • Author Dezan Shira
  • Published July 12, 2011
  • Word count 532

9Food is imperative to Chinese culture. It is the focus of celebratory gatherings, symbolic during festivals and holidays, and it is even part and parcel to a common greeting – "Have you eaten yet?" So, as the general population becomes more wealthy and as food quality has, in several tragic incidents, fallen victim to rapid production, shoddy regulations, and brutal capitalism, consumers take notice.

The organic food movement in China, though small, is undoubtedly headed in the direction of higher agricultural production standards, sustainability, and health. Valued at just RMB108 billion in 2010, the organic food and agribusiness industry is likely to grow to anywhere between RMB248 billion and RMB594billion by 2015, dependent greatly on potential developments in complementary areas such as policy, research and development, investment, and industry and consumer acceptance, according to Laurens Kasteleijn, business development manager at G&C Group in Shanghai.

"China is more and more ready for agricultural organic goods. Chinese consumers are in favor of organic vegetables and fruits, and would pay a high premium for it," Kasteleijn says.

Beijing, Shanghai (Chongming Island), Dalian, Xinjiang Province, and Shenzhen are just some of the regions that have seen successful implementation of organic vegetable production.

In 1994, China’s Ministry of Finance, Ministry of Agriculture, State Forestry Administration, and Ministry of Water Resources jointly launched the "Introduce Advanced Foreign Agriculture Technology to China" program, nicknamed the "948" program, to develop long-term modernization, research, and development in the Chinese agriculture industry. Thus far, the program has supported projects in plant breeding, genetic modification for higher yields, pesticide resistance, disease prevention, precision farming technology, water conservation technology, and bio-degradation.

China Green Agriculture (NYSE: CGA), manufacturer of humic acid-based fertilizers, recently announced eight new product releases in the first quarter of 2011 through its wholly owned subsidiaries in China, each of which address crop production issues ranging from weather and disease resistance, early growth development, high yield production, and general fertilization. Humates and humic acid are additives to fertilizers to enhance crop yield by enriching soil’s natural chemical balance. The company estimates that these products added RMB 19.3 million in total revenue to first quarter earnings alone.

To the Chinese consumers, going green is more than just about food and quality. It is about increased health, nutrition, and environmental friendliness. It is fueled by media promotion of toxic scandals and safety, as well as growing disposable incomes among the urbanizing middle class. Yet, as a recent survey report by Ogilvy Earth reveals, what Chinese consumers know of green, sustainable and organic living is far from what Chinese consumers do to incorporate those values into their lives.

"When a question about adoption of green behavior is put to consumers in China, they instinctively claim to be green because they already have the basic knowledge they need to change their behaviors – and it is the politically correct thing to say. But the reality is, while they may be concerned, they often feel powerless or do not have the means to adopt sustainable behavior," said Kunal Sinha, chief knowledge officer and team leader of Ogilvy Earth. "So there is a wide gap in China between people’s claimed and actual sustainable behavior – what we are calling the Sustainability Gap."

This article on Green China business was written for China business news site, China-Briefing.com.

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