CONSULT
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Organic food chain in China
The growing and processing of organic food has developed remarkably fast in China. Considering that China is still overall a developing country, it had already positioned itself as the third largest country in terms of certified organic farmland after Australia and Argentina in 2006, with a total of 2.1 million hectares. According to the latest reports, this figure has further increased to 3.76 million hectares. The turnover of organic food products in 2007 valued RMB 6.17 billion. Major cities like Beijing and Shanghai have already developed a basic infrastructure for the production, processing and distribution of organic food, including a few dedicated supermarkets. The latter are also offering imported products. While the expatriate community is a major market segment for this industry, the number of domestic consumers who regularly buy organic food is rapidly growing. Elsewhere in China, the organic food industry is still mostly concentrated on primary production, selling their produce to the major urban centers. However, even there the interest in organic food is growing.
Organic dairy farm in the Beijing suburbs
An organic food supermarket in Beijing
This development is not only highly relevant to a sustainable development of Chinese economy and society as a whole; it should be regarded as a major contribution to a more sustainable global economy as well. A fundamental misconception in the discussion on organic food production is that it should be based on small-scale farms, which distribute their produce to local processors and consumers. In fact, the law of economy of scale also applies to organic agriculture. One load of several tons of organic vegetables transported by train from a location in the Chinese hinterland to a sea port by train and then further shipped to, e.g., a supermarket in Tokyo, would probably require less fuel than if the same volume of organic vegetables would have to be transported by truck form dozens of locations in Japan. Experts argue that the shipping of food from the farm to the groceries amounts on average to about 2% of that food’s total environmental impact. Moreover, distance is not the only parameter in a particular food product’s sustainability. Organic food produced in China and flown into Europe may seem to be inacceptable in terms of food miles, but it also contributes to the development of sustainable agriculture in China, which will benefit China, but, because of the position of China in the global organic food production, would also contribute to the world-wide development of sustainable food production. This is directly related to the 7th Millennium Goal issued by the UN: Integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources. The experience of China may offer a more useful model for the development of organic food production in other developing countries that that of Australia and Argentina.
Eurasia Consult has noted the wide range of opportunities created by the developments of a these development market for organic food in China. This business has all the problems and pitfalls that problemize a. the market entry and development of entire Chinese economy for foreign firms, but also has a number of problems of its own. To mention a few: regularization does exist, but it is still rudimentary, while this entire business is based on reliable certification procedures. The next , problem is the lack of coherence in the chain of business processes from primary producers to retailers and exporters. Eurasia Consult is closely following the developments this market, in particular the organizational aspects. Who are the players? When, where and how do the meet? To what extent are governments at various levels involved in the organic food business?
International companies interested in starting up activities in the Chinese organic food market n will do well in seeking advice from Eurasia Consult.
Organic apples from Xinjiang
Organic oranges from Jiangxi