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China's Agriculture: Signs of Progress

This Business of Farming

Privatization and market reforms keep Chinese farms in tune with rising demand

Published on: November 13, 2012
With China's growing middle class demanding more protein-based diets, our group of American farmers are seeing a little bit of everything this week touring the country. At each farm stop we're getting a firsthand look at how China's once omnipotent Central Planning scheme has given way – more or less – to a more private, market-driven business atmosphere.

With the Communist party set to announce its new leadership this week, we heard a lot of glowing reports about China coming from Beijing. Some of those news reports claim China is upgrading its agriculture sector and will soon be self-sufficient in corn production.

True, China is investing in larger-scale, more modern farm practices. But from what we're seeing, we would have to conclude self-sufficiency will still be quite difficult to achieve.
En Junn Li, fish farm owner and manager.
En Junn Li, fish farm owner and manager.

Two days ago we stopped by Cangdafu Dairy, a 1,200-cow operation sited at an old Chinese penitentiary. It's owned by the government, and back in the early sixties Chinese prisoners worked the farm. The buildings we saw were built in 2002. It's a little spooky to be looking at a nice herd of Holsteins with high walls and barbed wire fence in the background. We jokingly wondered if the cows were trying to escape.

Milk is another one of those growth areas for China's more affluent middle class. Right now it consumes about one fourth of the milk products westerners consume.

Despite the country's overall effort to achieve competition and privatization, we got the feeling old habits die hard. Cangdafu has 30 workers on the payroll to handle milking and feedin…, and 20 'managers' who sell milk. Is it competitive? We weren't really sure.
China loves duck eggs, says farm manager Chi Ren Liu.
China loves duck eggs, says farm manager Chi Ren Liu.

The manager we spoke to, Tian Guang, said the main problem is low milk prices. Because this is a government farm it does not receive the same subsidies as a private business would.

"The government gives private dairy farms 100 yuan ($16) per cow as an incentive," says Guang. "But because this is a government farm we don't get financial help. It's hard to compete without those subsidies."

Ironic when you think about it.

"We must learn from you," he said, smiling.

Something fishy
The next day we were in Guilin, a beautiful subtropical region of southern China. This region is known for its tall, craggy limestone mountains interspersed with small plots of agriculture and urban development.

Here we visited a large, privately-held fish farm – over 200 acres of ponds. The company has 10 partners who went in together when the government decided to privatize the business. They only hire another two or three workers to help with the farm. The partners rent the farm from the city government and produce 400,000 kilograms of fish annually, mainly carp and catfish.

In effect, this is a fish fattening farm. They buy fish eggs and feed them six months until they are about half a kilogram, or 1.3 pounds. En Jun Li, one of the managers, says the farm has a net profit of $66,666, split evenly among the owners.That's better than average wages in China. He could rattle off what kind of feed they used (a commercial feed made from fish meal, soy meal, rapeseed and cottonseed), and their feeding strategy, which differs between larger and smaller fish.

"The local people here love to eat this fresh water fish," says Li, who graduated from a University specializing in acquaculture.. "The rest of China doesn't have such good quality water, so we even sell to the neighboring provinces."

They also rent some of the pond and land to a privately-held duck farm. Chi Ren Liu, shown in the photo, told us there were 3,200 ducks here – mostly female. The ducks are prized for eggs, and each female produces around 300 a year. This farm nets $50,000 a year for its owners. The Chinese love duck eggs; strangely enough, no one in our adventurous group wanted to sample one.

Tomorrow our tour bus will take us to a rice factory and a water buffalo farm.

From our vantage point it seemed that privatization here, while not perfect, is working. The Chinese demand for food of all kinds will continue to grow.

Watch for more reports directly from China as we visit agribusinesses and farms and fresh markets in Hong Kong.