Farmers - innovate or fail
Ray McFarland chinadaily.com.cn  Updated: 2005-10-20 14:26

Raymond McFarland

China, like many other developing countries, is banking on the elimination of farm subsidies in Western nations to give its farmers access to a larger and more prosperous market.

However, eliminating such government assistance will have little or no impact unless Chinese farmers change their thinking and current business models.

As things now stand, Chinese farmers struggle mightily with only each other as the main competition. Wait until they face competition in the domestic market from their Western counterparts, as any cuts in subsidies will be contingent upon China opening up its farming markets to the highly efficient and market savvy European Union and United States.

Also, after the elimination of subsidies, Chinese farmers will find themselves competing with the likes of farmers from India, Brazil, and Vietnam, and so on, for a lucrative slice of the Western market pie. In the face of such fierce competition, only countries with sound domestic farming models will thrive in the subsidy-free global market.

A common sight in China is stall after stall of farmers selling the exact same products. Sometimes, a brave farmer may develop a new crop variety that proves successful. Then all the other farmers follow suit, leading to: stall after stall of farmers selling the exact same products. This is not good, as it offers little variety and skews the supply-demand ratio, leading to lower prices while leaving farmers with lighter wallets.

I understand the group mentality is why Chinese farmers set up their stalls beside each other, as in China, things are done based on the group. But in economics, this mindset is not the most efficient. It only leads to a lot of unnecessary competition and low selling prices. Such a cookie-cutter business mode, which is barely holding up domestically, will crumble on a more global stage.

(In other parts of the world, especially the West, farmers will set up their stall alone, separate from other farmers. This both lessens their competition and gains them more customers.)

Creativity and entrepreneurship are needed. More farmers in China need to be willing to blaze new paths and take risks, instead of always safely following the lead of others.

Recently I saw a China Central Television Program about a farmer who now raises unique-looking goldfish for a living. Before, he was just an ordinary farmer growing run-of-the-mill crops, like rice and onions. But he had a vision, took a risk, and now has a very successful business.

The slashing of subsidies will occur, sooner or later depending on China’s progress in opening up its agricultural market, based on World Trade Organization agreements. But in the meantime, Chinese farmers can start capitalizing on the opportunity now.

That will be the difference between the elimination of subsidies serving as a mere historical footnote or as a catalyst for Chinese farmers in their drive for meaningful prosperity.

Write to Raymond McFarland atmcstephen23@hotmail.com