Brewer helps plant seeds for success

By Xie Yu (China Daily) Updated: 2014-07-03 07:18

Edward Zhu, chief executive officer of Chic Group Global Co Ltd, said that for contract farming to run smoothly, the potential purchaser must be acutely aware of market demand. His company is one of the world's biggest canned fruit suppliers to such big names as Wal-Mart Stores Inc and Coca-Cola Co.

Yet the path of contract farming in China isn't always smooth because of problems on both the farm and purchasing ends, Zhu noted. "Some farmers won't honor their contracts if they can find others who offer higher prices," he said, citing his own experience.

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He said the situation will improve with the emergence of large-scale farms. That's what Ma Yuefeng, 30, wants. He gave up a construction materials business to go into farming.

Now he runs a farm covering about 107 hectares. The land was formerly cultivated by 46 households. When local authorities began promoting rural land transfers, Ma and four other individuals set up a farmers' cooperative and won approval to lease the land for 15 years, starting in 2014.

"Land concentration and economies of scale will improve efficiency and returns, and contract farming will be the trend," Ma said. Even water can be more economically used on a large farm, he explained. Large-scale irrigation can save 40 percent of the water that individual households would use.

Almost all of the crops on his land - potatoes, barley, wheat, garlic, asparagus and lettuce - are under contract. His cooperative tries to diversify what it plants to reduce risks.

"I hope we will have more stable orders. For example, if AB InBev will sign a long-term contract with us and guarantee purchase targets and prices, I'd be very willing to join the program," Ma said.

Zhu said: "It's a very bumpy road. China is such a large market, and farmers are used to traditional planting. China should learn from the US and Europe when it comes to agricultural operations.

"Large scales and high technology are important drivers, but it will still take time for China to find its own way."