Economy

A taste for organic agriculture

By Xu Junqian (China Daily)
Updated: 2011-02-28 10:42

A Japanese agricultural expert teaches Xia Hongfang (right) how to grow seedlings and cultivate organic vegetables on his 7,000 square-meter farm, which he rents from a government keen to promote high-tech farming to help lessen Ningbo's dependence on the export of small consumer goods. [Photo / China Daily]

Clothing manufacturer finds more enjoyment and profit in farming

SHANGHAI - Instead of tracking the ups and downs of the yuan exchange rate in his work as a clothing manufacturer and exporter in Ningbo, Xia Hongfang spends most of his working hours checking the moisture and acidic levels of soil using his computer.

Xia has no plan to abandon his garment factory in this lively city on the coast of Zhejiang province. But his interest has decidedly shifted to what he calls a more "sustainable" business - agriculture.

The 40-year-old entrepreneur is spending nearly all his time cultivating organic vegetables on his 7,000 square-meter farm, which he rents from a government keen to promote high-tech farming to help lessen the city's dependence on the export of small consumer goods.

Leaving his garment business to his trusted subordinates, Xia is concentrating on learning to be a farmer. His love for an agrarian life began two years ago on a business trip to Japan where he was treated by his business associates to a new kind of sweet melon.

"I can never forget the taste of the first bite," he recalled. "The moment I took a bite, I was enchanted by the divine taste. I had the urge to bring tons of them back to my kids and everyone I knew."

At that time, Xia was beginning to tire of the garment business that he founded a decade ago with Japanese partners. Like many other exporters in his hometown, Xia was feeling pressure from the appreciating yuan.

"The trading business has not been easy in recent years. With the high yuan exchange rate, and the rise in the costs of labor and raw materials, we are left profitless even though the machines are still working around the clock," he said.

Xia declined to say how much money the factory makes every year. But he said that rising costs had depressed his profit margins by at least 20 percent in recent months. "I can see no end to the squeeze," he sighed.

Born and raised on a farm, Xia, together with six partners, invested 10 million yuan ($1.5 million) in setting up Qihe Organic Farming with technical support from Japanese experts. Qihe has about 20 farm hands, recruited from neighboring villages. The land has been tilled, seeds have been imported and everything is ready for the coming spring, the season for sowing.

"There will be more than 10 kinds of fruit and vegetables growing in my fields, including tomatoes, sweet melons, and broccoli - Japan's best. One seed can cost as much as 10 yuan. We will not use any chemical fertilizers," said Xia.

However, the price of a healthy diet is high, for consumers at least. For example, every melon grown from Xia's land costs an astonishing 2,000 yuan, so highly is it prized, and tomatoes will be 20 yuan a kilogram.

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Xia predicts that his new farming business, which has already cost him 10 million yuan, won't be profitable within the first three years, even though the price of his organic food is five to 10 times that of non-organic produce.

"Soils need to be nourished into a better state for organic farming, and you have to be waiting for the right season for different kinds of seeds to be sown. It takes time and lots of money, and you can't just follow your own will to keep the machine running. There is the law of nature," he added.

But "the far-sighted businessman", as Xia described himself, believes what he is doing will turn into a viable business, because he is feeding a population of 1.3 billion, and the concerns over food safety are growing.

Because of that, Xia is thinking about putting another 50 million yuan into the venture and expanding the growing area to 40,000 square meters, "to increase the yield, cut the cost and establish a business chain".

A report delivered by CI Consulting on the Chinese organic food market in 2010 supports Xia's ambition.

It says China is expected to become the world's fourth largest organic food consumer in five years, with organic food accounting for 1.5 percent of the whole domestic food market, and the cultivated area of organic food and its annual yield will enjoy an increase of 20 to 30 percent every year within the next decade.

Meanwhile, there is also a growing demand for organic food produced in China, such as tea, rice and walnut oil, from the global market. In 2010, the global organic food market reached an output value of $100 billion dollars, with around one percent of the products coming from China. It is estimated that by the end of 2015, the share will rise to five percent or more.

However Xia says he will not export his organic products because he says the domestic market is large enough for his small field.

He plans to have his vegetables and fruits sold through several channels, including online stores, supermarkets and travel agencies, which Xia thinks will be the key stepping-stone for him to expand his farming business to neighboring cities. He bases that assumption on the belief that tourists coming to Ningbo and returning home with his food will help build a good reputation for the food where they live.

Come June, the first batch of Xia's crop will be harvested and sold through his own stores and supermarkets.

"It's exciting, not only in a business sense, but also like when you first planted a flower and looked forward to its blooming after such a long time of waiting and effort," said Xia.