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Story Publication logo October 20, 2014

Feeding China: Produce Industry Could Grow, If It's Perceived as Safe


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China faces huge challenges in feeding its people sustainably and safely. Iowa and U.S...

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Zhao Yuqi already ships organic produce around the world. Now she's ready to convince her comrades at home to buy organic.

"More and more people know organic food," she said. "People want to eat safe food."

"Locally grown," however, can be a hard sell when the Chinese government admits that nearly 20 percent of the nation's soils are polluted. Zhao's company, Qimei Agricultural Science and Technology Co., believes "made in China" can come to signal healthful fruits and vegetables.

Food safety fears have helped the organic movement gain momentum in China, especially among expatriates and affluent urban residents. Community-supported agriculture enterprises, organic farmers' markets and urban farming are catching on in Beijing and elsewhere.

But "organic" often means "imported" in China, as consumers demand milk, meat and vegetables produced elsewhere.

Why it matters to Iowa

China wants to grow more of its own food. Vegetables could be an opportunity for Chinese farmers, without taking away business from Iowa farmers.

Former Iowan Jim Spear has found a model to save Chinese villages. The Marshalltown High School grad and his wife, Liang Tang, run the Schoolhouse at Mutianyu, an eco-resort near the Great Wall. They have restored abandoned buildings and launched small-scale development projects.

China is the world's largest vegetable producer, but little of it goes to the United States. If the country can overcome safety problems, it has a huge opportunity to both increase exports of produce as well as feed its people. That shift could benefit Iowa farmers because China would need to import more grain for livestock feed.

Some experts also think greater emphasis on organic food production would help China's small farms survive and prevent domination of the nation's agricultural industry by large, U.S.-style farms. Qimei, for example, says it has raised living standards for small farmers in Hebei, working with about 3,900 growers to plant peppers, asparagus and other crops without chemical pesticides and fertilizers.

Agricultural products represent one of the few areas in which the U.S. has a trade surplus with China. In 2004, China shifted from being a net food exporter to an importer.

The U.S. sends ships full of Iowa-grown soybeans and other grains to feed livestock and satisfy Chinese appetites for more meat and dairy. The U.S. relies on China for cod and tilapia, apple juice, garlic and a few other products.

Chinese farmers have an opportunity to sell more produce to the U.S., argues Dermot Hayes, an Iowa State University economist.

The Chinese government heavily supports grain prices, which encourages farmers to plant corn and wheat. Officials are experimenting with market-based reforms.

Hayes said it's possible that "millions of acres of land and tens of millions of people now devoted to corn and wheat production will be freed up to produce the crops in which China has a comparative advantage," such as fruit, vegetables, nuts and other crops.

Challenges include contaminated soil

Persuading farmers that such crops have value can be difficult, however. Consider the experience of the Schoolhouse at Mutianyu, an eco-resort near the Great Wall. Its restaurants buy about 80 percent of their ingredients from villagers in the area, as a way to help the local economy and source safe supplies.

"Farmers ask, 'Why buy from me?'" said Wuyun Tana, the sustainability manager at the Schoolhouse. The growers know that similar produce is a quarter of the cost in Beijing, she said.

Another hurdle is the health of China's soils, which are tainted with heavy metals and other chemicals. Those contaminants are showing up in rice, garlic, ginger and other food.

A government inspection in 23 major Chinese cities found that a quarter of fresh vegetables and fruits had pesticide residues that exceeded regulation levels, for example.

Premier Li Keqiang announced this spring that China was "declaring war" on pollution, as the government sought to assure its people that it was taking the problem seriously. This year, the government announced its first pilot projects to rehabilitate polluted soils, but critics say the efforts are underfunded and inefficient.

The problem hits home in Handan, where Qimei is based. Seven of China's 10 most polluted cities, including Handan, are here in Hebei province, Iowa's sister state.

The province surrounds Beijing and serves as its industrial belt, home to steel, coal and cement plants.

In 2002, Zhao and other founders of Qimei identified unpolluted, sandy soil near the Ming River and began planting asparagus. Since then, they've cultivated 1,600 acres in villages around Handan.

The company sells about 60 kinds of organic produce, plus chicken. About 95 percent of it goes for export.

Qimei's export sales include fresh vegetables sent to Southeast Asia, plus freeze-dried and frozen products shipped to the U.S., Europe, Japan, Canada and other countries. The company proudly shows off organic certifications for those markets.

But growth through export sales are challenged as international concern grows over China's food safety issues and recalls. Within three years, Qimei officials say they hope sales shift to 70 percent export, 30 percent domestic.

Expansion is aimed at domestic market

To serve the Chinese market, Zhao has big plans to expand. She shows visitors the company's 60-acre production park, which now contains four buildings used to process edamame, millet and other foods. Qimei acquired the land in 2011.

A large sign shows plans for 13 more buildings. On land where women pick red chili peppers for export to the U.S. and Sweden, the company envisions office buildings, an organic restaurant, a child-care facility and production plants to process vinegar, wheat flour, juice, soy sauce, peanut and sesame oils and beef and chicken.

The project would cost $137 million, and local officials have given their blessing through low-income loans and other help. Zhao wants to compete the project in three years.

Down the highway, nearly 90 greenhouses offer more unpolluted acres. Fields of broccoli bound for Malaysia await harvest.

Some of this produce goes to local store shelves. Qimei has two of its own stores in Handan, plus plans to expand. The company also has dedicated shelf and freezer space at the Sunlight supermarket, located at Handan's biggest mall.

Shoppers who walk past the department store ads for Mont Blanc, Gucci and Longines can check out Qimei's corn, cabbage, potatoes, garlic, egg rolls and dumplings.

Another Western import is here, too: organic milk. Qimei sells whole milk in aseptic packaging from Organic Valley, a farmer-owned cooperative based in Wisconsin.

The companies signed a trade agreement in Des Moines in October 2013, as part of the 30th anniversary of Iowa and Hebei's sister-state relationship. China Iowa Group, a West Des Moines import-export firm, helped the companies make the connection.

Organic Valley declined to give sales figures but said its milk, produced in California, is the best-selling imported organic milk in China.

"It is growing double digits year over year," said Pete Bassett, director of global sales at Organic Valley.



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