Organic Food Industry in China - Current State and Future Prospects -

Thesis (M.A.), 2004

223 Pages, Grade: 1,0


Table of Contents

List of Figures

List of Abbreviations

1.1 Questions of Interest and Outline of the Thesis
1.2 Methodical Approach
1.3 General Overview of Research and Literature
1.4 Technical and Practical Notes
1.5 Introduction to Organic Agriculture
1.5.1 The Development of Organic Farming
1.5.2 What is Organic Agriculture
1.5.3 Why Organic Agriculture

2.1 Basic Political Preconditions
2.1.1 Land Tenure Rights
2.1.2 The Rural Reform after
2.2 Parallel Development of Two Contrasting Agricultural Conceptions
2.2.1 The Industrialization of Agriculture
2.2.2 Approaches to Agricultural Sustainability
2.3 Environmental Deterioration its Consequences and Policy Responses
2.3.1 Environmental Policy
2.3.2 Use of Agricultural Technology on the Whole
2.3.3 Fertilizers
2.3.4 Pesticides
2.3.5 Overuse of Agro-Chemicals
2.4 Low Economic Viability of Agriculture
2.4.1 Situation of Low Agricultural Profitability
2.4.2 Agricultural Implications by China’s Accession to the WTO
2.4.3 Selected Reasons for the Low Agricultural Profitability
2.4.4 Consequences of Low Agricultural Profitability
2.5 Prerequisites for the Development of a Domestic Organic Market
2.5.1 Private Purchasing Power in Urban Areas
2.5.2 Changes in Chinese Food Consumption

3.1 Interest Groups of Environmentally Friendly Agriculture
3.1.1 Governmental Involvement
3.1.2 Certification and Consultation Bodies
3.1.3 Business Companies within the Production Chain
3.1.4 Consumers
3.2 The Attitude of the Government towards Environmentally Friendly Agriculture
3.3 Ecological Agricultural Concepts and their Certification Bodies
3.3.1 Organic Agriculture and Organic Certifiers in China The Organic Food Development Center The Organic Tea Research and Development Center Other Chinese Organic Certifiers Foreign Organic Certifiers in China
3.3.2 Green Food - A Chinese Agricultural Model
3.3.3 Further Agricultural Concepts in China
3.4 The Chinese Organic Industry
3.4.1 Organic Farms in China - Focus Shanghai The Four Organic Farms in Shanghai Other Farms Producing for the Shanghai Organic Market Organic Farmers
3.4.2 Research, Consultation and Networking Research in Chinese Organic Agriculture Consultation and Trainings Sharing Organic Knowledge
3.4.3 Subcontractors, Processors and Traders The Organic Ancillary Industry The Organic Processing Industry Organic Trading Companies
3.4.4 The Organic Food Market Places to Buy Product Range Prices for Organic Products
3.4.5 The Organic Consumer Who Buys Organic Food? Consumer Motivation to Buy Organic Products Favored Products in Organic Quality Consumer Knowledge about and Confidence in Organic Products Consumer Suggestions for Improvement

4.1 Macro Environment of the Organic Food Trading Industry
4.1.1 Political Factors
4.1.2 Economic Factors
4.1.3 Socio-Cultural Factors
4.1.4 Technological Factors
4.1.5 Ecological Factors
4.1.6 The Influence of Macro Environmental Factors on the Organic Industry
4.2 Micro Environment of the Organic Food Trading Industry
4.2.1 Supplier Power
4.2.2 Buyer Power
4.2.3 Substitute Products
4.2.4 Threats of Market Entry
4.2.5 Rivalry among Competitors
4.2.6 Conclusion of Industry Forces and Implications for the Entire Organic Industry

5.1 The Organic Industry’s Expansion in China
5.2 Obstacles for the Organic Industry in China
5.3 Organic Farming’s Contribution to Solving Major Problems
5.4 Prospects for the Development of the Chinese Organic Industry

A Major Interviews, Talks and Visits
a During the Field Study in China
b After the Field Study in Germany
c Interviews by Other Persons, Not Within the Own Research Period
B Consumer Questionnaire
C Questionnaire for Organic Farms (in Chinese)
D List of Organizations Relevant to the Organic Industry
E Table of Chinese Terms
a Chinese Geographical Names
b Other Chinese Terms
F Table of Plants Grown in Organic Quality
G OFDC Certification Chart

ZUSAMMENFASSUNG (Conclusion in German)


Chinese Organic Vegetables

List of Figures

figure I Organically Cultivated Areas in Asia

figure II World-wide Area under Organic Management

figure III Continent’s Share in Organic Production Area

figure IV Continent’s Share in Number of Organic Farms

figure V Classification of Organic Consumers

figure VI Organic Agriculture’s Potential to Solve Problems

figure VII Scheme of Involvement in the Organic Sector

figure VIII Public Advertisement for Organic Food in Shanghai

figure IX OFDC Certification Labels for Organic In-Conversion Production and Certified Organic Production

figure X Label for OTRDC/ TRI Certified Organic Tea

figure XI Labels of Five Organic Certification Bodies Being Active in China

figure XII Green Food Label

figure XIII Label for Environmentally Friendly Agricultural Products

figure XIV Organic Vegetable Fields in Anhui Province

figure XV Greenhouses on Fengpu Organic Farm

figure XVI Scheme of the Organic System

figure XVII Certified Organic Fertilizer

figure XVIII Insect Lamp Used on an Organic Farm

figure XIX Packaging of Fresh Organic Vegetables

figure XX Ready for Distribution to Local Supermarket

figure XXI Advertisement of Fengpu Organic Farm, Hanging in Food Shops in Shanghai

figure XXII Fresh and Deep-Frozen Organic Vegetable Offers in Shanghai

figure XXIII Organic Tea Offers in a Special Organic Tea Shop in Beijing

figure XXIV Instruments to Carry Out an Environmental Scan

figure XXV Environmental Factors Seen from an Organic Food Trader

figure XXVI Adopted PEST-Analysis

figure XXVII Porter’s Five Forces Model of Competition

figure XXVIII Five Forces Model of the Chinese Organic Food Trading Industry

List of Abbreviations

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Chinese economic growth rates may send many people into raptures, but the agricultural sector is usually excluded from this enthusiasm. Being the problem child among Chinas economic sectors, agriculture is characterized by its low productivity and sluggish development, negatively affecting the national development, and in particular, a rural upturn. Under these conditions, the emergence of environmentally friendly farming - including organic agriculture - gives rise to great hopes, since these approaches are expected to have positive influences on economic, social and ecological fields.

Organic farming continues to show a rapid development world-wide. On the Asian continent the total area of organic production still is relatively small, but the interest in organic is steadily increasing.1 According to a SÖL-survey, among the countries in Asia “ […] China heralds perhaps the highest growth potential [for organic farming] in the near future.” (SÖL 2004a; Ong 2004a:70/pdf2) The Chinese organic development is only a few years old, but more than one third of Asia’s total area under organic management is already situated in China. (Ong 2004a:69:pdf1) Tremendous growth rates have been evolving in all fields of the Chinese organic industry and market.

In 1990, the Dutch organic certification body SKAL inspected and later certified a Chinese tea plantation, which became the first organic farm in China. Four years later, the earliest Chinese organic certification body, OFDC, was established. (Gao 2002:32; Zhou/ Xiao/ Yang 2002) By 1995, altogether almost 45,000 ha of land were reported to be certified as organically cultivated in China. If the SÖL is right with its estimation, the certified organic production area increased to more than 100,000 ha in 2001, plus about 200,000 ha that are cultivated according to organic standards, but still have not received an organic certificate.2 Nevertheless, this is only 0,06 % of the total agricultural land in China. (Zong 2002:55; Ong 2004b:76/pdf1)

Attracted by price premiums, it is not only farmers that are eagerly turning to organic production. A local organic sector, covering diverse sections within the production chain, such as ancillary industries, producing sites, small-scale processing and organic trading is developing. Most organic enterprises in China focus on foreign markets. From 1998 to 2001, the monetary value of Chinese exported organic merchandise increased by 150%. (Zong 2002:55; Xinhua Nov 10, 2003) In recent years, beside export, a local organic food market has been emerging in big Chinese cities. There is a growing demand and increased purchasing power for high-quality food products. (Jiao/ Fang 2002:2) Organically Cultivated Areas in Asia3

Figure I (Data according to a SÖL survey in 2004: Ong 2004a:69/pdf1)

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Still, the organic farming concept, which is of foreign origin,4 is not widely known in China. The rapid expansion of organic businesses called the attention of policy makers. In May 2001, it was the first time that organic agriculture and organic food have been formally discussed on a Chinese national conference.5 (Zhou 2001b:10) The development of the organic industry is now officially included in the national targets and receives governmental support. (Zhang, Yong 2002; State Council 2001e)

1.1 Questions of Interest and Outline of the Thesis

Despite only a few years of development, the young organic market and the industries behind it are gaining momentum in China. The aim of this study is to give an account of the setting and state of affairs of the Chinese organic industry that focuses the domestic organic food market. In a further step, the attractiveness of the domestic organic trading industry is examined and the future potential of organic farming in China is assessed.

In order to explore the organic industry’s background, its current situation and prospects, different fields around and within the organic production chain are considered. This includes basic political, social, economic and ecological preconditions, explained in chapter two, which build a general frame.

An account of different interest groups within the Chinese organic industry is made in chapter three. At this point, diverse parties that are involved in - mainly none exportorientated - organic matters are taken into account. When it comes to the description of organic production sites, of the domestic organic market and of Chinese organic consumers, a regional focus is set on Beijing and Shanghai. This limitation is useful, because by the end of 2002, which marks the final time for this paper’s field study, these were the two major organic markets in China. Moreover, organic farms in Shanghai municipality are key producers for the organic market of Shanghai.

With an environmental scan of the organic trading industry, chapter four focuses on one of the central sectors within the entire organic industry. As an element which is directly linked to many other fields within the organic field, such as producers, processors, certifiers and consumers, the trading segment takes a crucial position within the organic industry and its development allows one to draw conclusions on the entire organic industry. The attractiveness of the organic trading business is analyzed in order to deepen the comprehension on the circumstances of the Chinese organic industry and to approach the question of organic agriculture’s future expectations in China.

Chapter five recapitulates the findings on the Chinese organic industry’s state of affairs and discusses its contribution to solve substantial problems. At last, prospects to organic farming’s future potential in China are given.

The four focal points of this thesis for Magister, are summarized in the following:

1. The primary focus is set on the domestic organic industry, i.e. the wing among the Chinese organic industry which concentrates on the domestic Chinese market.
2. This is underlined by the regional focus on Shanghai and Beijing for specifications on production sites, market particulars and consumer characteristics.
3. Carrying out the environmental scan, a spotlight is put on organic trade, since this is a key industry for the development of the Chinese organic market.
4. In a further restriction, the entire study concentrates on organic food products, disregarding non-food products, because other produces than food are not yet significant on the Chinese organic market.

In order to better convey the situation of the organic industry in China, the account is not categorically limited to these boundaries, although, if helpful for comprehensive understanding it goes beyond the four restrictions.

1.2 Methodical Approach

A descriptive approach is used in order to explain the background and current situation of the Chinese organic industry in general. The investigation on organic trading’s attractiveness and the assessment of organic farming’s future potential is carried out through an analyzing approach.

For the description of the organic industry’s basic preconditions in China (chapter two), mainly secondary literature was consulted.

Most material on the organic industry’s development and its current situation (chapter three) was collected by the author in a field study, carried out between August 10th and November 10th 2002 in eastern China, namely Shanghai and Beijing municipality, as well as Jiangsu, Anhui and Zhejiang province. For the duration of these three months, together with Ms Wiebke Deeken,6 the author was invited to participate in the final period of the Organic Farming Development Project (OFDP), based in Nanjing and carried out by the OFDC and the German GTZ.

Information on the Chinese organic subject was mainly gathered in dozens of informal talks and interviews with relevant persons, as well as by visits to related sites. Appendix A lists the major visits and conversations completed during the field study that are pertinent to this thesis. With a very few exceptions, these informal talks and interviews were conducted in Chinese. In order to create an informal atmosphere, none of the conversations were recorded, and as a result, none of the talks and interviews were transcribed. If the situation did not allow taking notes during the dialogue, records were made subsequent to each of the conversations and visits.

With the support of the OFDC, the GTZ and the Shanghai Vegetable Office the author was able to carry out an investigation on organic farms within the municipality of Shanghai. The questionnaire used is shown in appendix C, more methodical information is given in chapter 3.4.1. The realization of a small survey on organic consumers in Shanghai was facilitated by the OFDC, the GTZ and Fengpu organic farm and was assisted by Ms Chen Fangli.7 Methodical details on this study are explained in chapter 3.4.5 and in appendix B. Additionally, together with Ms Wiebke Deeken, the author carried out a small study on market prices (Milbrodt/ Deeken 2002a) for organic produce in Shanghai, Beijing and Nanjing.8 Further internal information on the development of organic farming within the OFDP was provided by the OFDC and the GTZ.

After the period of field study in China, the author gathered additional information when attending the International Fair “Biofach” in February 2003 in Nürnberg and while attending a GTZ-Symposium hold in Berlin in September 2003, both, listed in the second part of appendix A.

In the analyzing section (chapter four) two related methods, borrowed from business management, are utilized to carry out an environmental scan on the organic trading industry. The basic tools used are the PEST-Analysis for an examination of the macro-environment and the Five-Forces-Model to scan the micro-environment. Methodical details are given in chapter four.

1.3 General Overview of Research and Literature

Publications on Chinese organic farming and on developments that are directly related to it are not abundant, but gradually on the rise. In China, the discussion on Green Food,9 a parallel but far much more prominent agricultural concept, dominates public awareness of organic food matters. Despite that, advocators of organic farming push the debate on Chinese organic agriculture in specialist journals.10 Reports in Chinese daily newspapers about the organic industry and organic food are ever-increasing - though confusion with other concepts is typical.

Governmental and semi-governmental units at diverse levels help to clarify the organic issue. Regulations on certification, production, processing and trade of organic produce are published by Chinese administrations11 and organic certification bodies.12 Details on the regional development of the organic food industry are provided by several local governmental sections, such as the Shanghai Vegetable Office.13

Organizations and individuals that are involved in the organic subject in China contribute to a spread of information on organic farming and the organic food developments by own articles.14 Within the project period of the OFDP, many internal documents on the development of organic farming and on findings in practice related research have been written. Some of these unpublished materials fortunately have been available to the author.15 During the project period, a newsletter was published monthly by the OFDP, providing information on the project and beyond. (Organic Fields/ youji tianyuan)

Furthermore, a little brochure for Beijing consumers (CESDRRC 2002) was of practical relevance to the completion of this study. After three months of intense market research, a comparable booklet (Milbrodt/ Deeken 2002b) with brief information on organic farming and places to buy organic products in Shanghai and Nanjing as well as a leaflet (Milbrodt/ Deeken 2002c) on places to buy organic produce in Shanghai were prepared by Ms Wiebke Deeken and the author.

Only two thorough scientific documents on research about the organic subject in China are known to the author. One of it focuses on the political economy of organic institutions and Green Food (Thiers 1999), the other emphasizes Chinese organic consumers (Smith 2002). Since there is no comprehensive publication on the organic industry in China, this thesis offers a broad overview on different segments within the domestic organic field, including practical information.

1.4 Technical and Practical Notes

Some notes on the use of important terms are given first, before explaining a few technical details of this thesis:

Since the term “organic” has two different meanings, which are both used within this thesis, the reader must differentiate. Predominantly, “organic” is used in the sense of “certified organic”, according to the definitions in chapter 1.5.2. In its second meaning, “organic” is an attribute in the chemical sense, used for terms such as “organic waste”. Because both meanings are relevant for the term “organic fertilizer”, in the first sense, it is specified as ”certified organic fertilizer”. Both terms, “organic farming” and “organic agriculture”, are used synonymously. For an introduction into the basic ideas of organic agriculture see chapter 1.5. “Environmentally friendly” (agriculture) in this paper is used as a general term referring to different agricultural concepts that give attention to ecological appropriateness and sustainability. The term “conventional” is used with reference to all farming systems that are not in accordance with certified organic agriculture.

There is a significant difference between the two terms “food security” and “food safety” that has to be paid attention to. “Food security” is used according to the FAO definition as “ […] a situation in which all households have both physical and economic access to adequate food for all members, and where households are not at risk of losing such access […] ”. (FAO 1983) In contrast, “food safety” indicates a situation in which consumers can set their minds at rest concerning the food quality, without worrying about health threats arising from the products.

All photos are taken by the author during the field study. If not specified, figures are sketched by the author, too.

Organizations mentioned in the text are usually named in their shortened form; full names, if necessary including Chinese characters and transcriptions in hanyu pinyin, are shown in the list of abbreviations and in appendix D.

Within the chapters it is avoided to use Chinese characters. For essential Chinese terms the transcription hanyu pinyin is written in italics behind the English translation. Chinese characters for these words, as well as for all Chinese geographical names used, are shown in appendix E.

For plant names that are available in organic quality, behind the English term, the reader will find the Chinese name transcribed in hanyu pinyin in brackets. In case an English name does not exist, or could not be identified by the author, a translation of the Chinese name was used instead. The Chinese characters, different names and subspecies, as well as the Latin term are listed in appendix F.

1.5 Introduction to Organic Agriculture

When looking at the state of organic farming in China, one first needs to comprehend general principles and advantages of organic agriculture, and its historical background. This will enable the reader to better understand the entire situation. The subsequent section, introducing organic agriculture in general, is divided into three sub-chapters. First, the origins and the global development of organic agriculture are introduced. In the second part, the nature of organic farming is explained. It follows an illustration of potentially positive effects of organic farming systems.

1.5.1 The Development of Organic Farming

The roots of organic farming can be dated back to the 1920’s, when the Austrian philosopher Dr. Rudolf Steiner developed his agricultural concepts. Arising from his concept of antroposophy, he laid the foundations of the bio-dynamic agriculture, considering the farm as a living organism. (Steiner 1924) English scientists, such as Sir George Stapledon and Sir Albert Howard were influenced by Steiner’s ideas, giving an important stimulus to Lady Eve Balfour, founder of the organic movement. (Balfour 1943) Howard’s and Balfour’s ideas on the role of healthy soil in agriculture and its connection to human health were pursued and developed by the American Rodale family. The American soil scientist Franklin H. King also contributed to the early development of the organic farming movement.16

At about the same time when Steiner developed his ideas, in Switzerland, Dr. Hans Müller founded a movement for agricultural reform. It was centerd on the Christian concepts of land stewardship and the preservation of family farming. In the 1950’s, out of his earlier ideas, Müller generated the organic-biological farming method. (Lampkin 1994:6; SÖL 2003b) This concept was further developed by Dr. Hans-Peter Rusch in the 1960’s, who was contributing important ideas to soil fertility and soil microbiology. (Rusch 1968) Since that decade, beside pure agricultural matters, social concerns over rural population decline, environmental problems and health risks through the quality of food have been influencing the development of organic agriculture. (Lampkin 1994:6)

The origins of the organic farming movement can be understood as a reaction against the industrialization of agriculture.17 During its initial phase from 1924 to 1970, organic farming pioneers “struggled in a hostile political and economic environment”. (Thiers 1999:59) Diverse publications on organic farming and the foundation of organizations18 being devoted to this agricultural concept had a positive influence on the expansion of the organic farming movement from the early 1970s on.

Organic agriculture entered a second development phase that continued roughly until 1990. Organic farmers, most of them small-scale cultivators, worked cooperatively to establish organic labels and certification structures. The marketing of organic produce was characterized by cooperation among farmers, as well as between farmers and consumers.19 There was not any state involvement in the organic industry until the early 1980s, when the French government was the first to support organic farming. (Thiers 1999:60)

Since the end of that decade, the number of organic farms and the demand for organic food has grown steadily; organic farming reached a third stage. During the early 1990s, common basic organic standards (and labels) have been developed by national governments and by governmental entities, such as the EU.20 By granting subsidies, many national governments encouraged farmers to convert to organic agriculture.21 Several countries have set specific targets for transforming conventional agricultural fields into organic production areas. (FAO/ ITC/ CTA 2001a) As shown in figure II, certified organic farms have now been established on all continents of the world. In about 100 countries of the world (Yussefi 2004), almost 24 million ha of land are cultivated according to organic standards. (SÖL 2004a)

World-wide Area under Organic Management

Figure II (SÖL 2004a)

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The total size of the organically cultivated land in Asia still makes up only a small part of the world-wide certified organic areas, but the Asian organic development shows considerable growth rates. According to data published by the SÖL, China accounts for more than one third of the total organic area on the Asian continent. Depending on the structure of organic farms, the organic production area per farm can vary considerably in different regions of the world,22 which is illustrated by the following two figures III and IV.

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Figure IV (adopted from: SÖL 2004c)

Government attention to organic farming and the growing demand for organic products led to a transformation of the whole organic industry. The emergence of an international organic market with price premiums attracted large agribusinesses. Parallel to small-scale subsistence farming, large-scale enterprises became active in organic production and international trade. Besides the traditional forms of organic marketing,23 based on local markets and direct consumer contact, new distribution forms,24 such as national or international supermarkets, became involved in organic marketing and trade.

Not only did organic distribution channels become more varied, the consumers became more diverse, too. A classification of the current organic consumers has been developed by the Hartmann group, referred to by Smith. (Smith 2002:8-10) As shown in figure V, it divides organic food consumers by their different motivations and purchasing habits into two groups. The “classic organic consumers” or “true naturals” are much concerned with the impact of farming on the environment. For them, in order to support sustainable agriculture, consumption of organic products is a moral choice. With the expansion of the organic food market from the 1990s on, the “new organic consumers” or “health seekers” appeared. They are more concerned with the final food products instead of its farming process, setting great store by food safety and health benefits. Due to these new consumers, organic farming lost its image of a “radical alternative” (Smith 2002:9), and to a certain extent became a mere marketing strategy or even a fashion.

Classification of Organic Consumers

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Figure V (Smith 2002:8)

1.5.2 What is Organic Agriculture

Not just in China, but in Europe too, many consumers are uncertain about a clear definition of what an organically produced product is and what exactly organic agriculture means. During its process of historical development, various agricultural ideas with an eye on sustainability and prosperity have been developed and put into practice. With organically produced farm products being on the rise worldwide, strict definitions and guidelines were necessary to protect producer as well as consumer interests and to facilitate trade. (Schmid 2003:41/pdf 1) Despite the existence of many different approaches, some of these approaches fused into a coherent concept of organic farming, which today in many countries is a clearly defined concept and a protected term. Other approaches are not included by the idea of organic agriculture.

Both, on legislative and private levels, clearly defined standards for the production and processing and certification of organic products exist. These principles are an essential element of organic farming, in order to distinguish it from other forms of sustainable agriculture. Initially, organic guidelines have been defined by private producer associations and put into practice by their members. Later, umbrella organizations combined different private standards into regionally, nationally or even internationally common concepts. As a global umbrella organization, the International Federation of Organic Agriculture Movements (IFOAM) was founded in 1972.25 The first Basic Standards for Organic Production and Processing were published by IFOAM in 1980. (Kilcher/ Huber/ Schmid 2004:27/pfd1) In recent years, the association is continuously developing these basic guidelines that are now internationally recognized by private organic organizations as the minimum standards for organic production and processing.26 As organic agriculture became more widespread, many countries fixed national organic standards on a legal basis.27 Since the 1990’s, national governments, cross-national state authorities (such as the EU28 ) as well as international organizations (e.g. FAO and WHO) also defined a common ground for organic guidelines. Despite the fact, that there are no universal standards for organic agriculture, some definitions and guidelines have been widely adopted internationally. In many countries, regulations on organics have been implemented as national or cross-national laws, which is also due to the fact that products which shall be exported must meet requirements equivalent to those defined by the organic farming legislation in the importing country. (Willer/ Lünzer/ Yussefi 2003; FAO/ ITC/ CTA 2001b: pfd1) In the following, two of these commonly accepted definitions for organic agriculture are introduced. IFOAM and the Codex Alimentarius have similar standards, differing just marginally. The core of these definitions is also applied in this thesis.

IFOAM defines organic agriculture as a particular farming system, which is in accordance with the “IFOAM Basic Standards for Organic Production and Processing”. The organic umbrella organization fixed the following basic principles and aims for organic production and processing, all of them being equally important: (IFOAM 2002a:pdf13)

- “to produce sufficient quantities of high quality food, fibre and other products
- to work compatibly with natural cycles and living systems through the soil, plants and animals in the entire production system
- to recognize the wider social and ecological impact of, and within, the organic production and processing system
- to maintain and increase long-term fertility and biological activity of soils using locally adapted cultural, biological and mechanical methods as opposed to reliance on inputs
- to maintain and encourage agricultural and natural biodiversity on the farm and surrounds through the use of sustainable production systems and the protection of plants and wildlife habitats
- to maintain and conserve genetic diversity through attention to on-farm management of genetic resources
- to promote the responsible use and conservation of water and all life therein
- to use, as far as possible, renewable resources in production and processing systems and avoid pollution and waste
- to foster local and regional production and distribution
- to create a harmonious balance between crop production and animal husbandry
- to provide living conditions that allow animals to express the basic aspects of their innate behaviour
- to utilize biodegradable, recyclable and recycled packaging materials
- to provide everyone involved in organic farming and processing with a quality of life that satisfies their basic needs, within a safe, secure and healthy working environment
- to support the establishment of an entire production, processing and distribution chain which is both socially just and ecologically responsible
- to recognize the importance of, and protect and learn from, indigenous knowledge and traditional farming systems”

Genetic engineering expressly is excluded from organic production and processing. (IFOAM 2002a; Neuendorff/ Sabel-Koschella 2001:7)

Giving a second definition, according to the international Codex Alimentarius29 “organic agriculture is a holistic production management system which promotes and enhances agro- ecosystem health, including biodiversity, biological cycles and soil biological activity. It emphasized the use of management practices in preference to the use of off-farm inputs, taking into account that regional conditions require locally adapted systems. This is accomplished by using, where possible, agronomic, biological and mechanical methods, as opposed to using synthetic materials, to fulfil any specific function within the system.” (FAO/ ITC/ CTA 2001b: pdf1; Wynen 1998a) The Codex Alimentarius can be seen as an international guideline of reference which is often used to create or to check equivalency between the legal standards.

As these two definitions reveal, the main focus is not made on the product itself, but rather on the system of management and production, which is recognized as a holistic approach. In the concept of organic farming, the farm is seen as an organism in which all belonging parts create a coherent system. (Lampkin 1994:5) Maintaining and improving the “health of the individual farm’s soil-microbe-plant-animal system” (Wynen 1998a) is the central idea of organic agriculture.

As a basic resource in the farming system, the soil is given special attention in order to protect its long-term fertility and to support its biological activity. By indirectly stimulating processes for natural nutriment absorption and pest30 management, organic farming techniques are rather directed towards preventing problems. In order to cope with emergent difficulties, such as a pest severely threatening a crop, certain inputs are allowed to apply. Pest control in organic farming includes for instance crop rotation, crop diversity, the use of natural predators and of resistant varieties. Any thermal, biological and chemical intervention should be minimized. Organic farming techniques that support the nutrition of plants from the soil include effective recycling of organic materials, such as crop residues and livestock wastes as well as the use of green manure.31 (Lampkin 1994:5-6)

In order to create a farming system which is consistent with organic standards, a conversion period of several months is required. This time is needed to transform the whole management system of the conventional farm, to give farmers time gaining experiences in organic agriculture and at the same time to recover the soil from synthetic inputs. Once, holding the organic certificate, inspections are carried on regularly as part of the continuous process of certification. (IFOAM 2002a)

The term “organic” is mainly used in English-speaking countries, in other regions the equivalent words “biological” or “ecological” are used.32 In some countries, including the EU-states, these and other terms that are regarded as equal to “organic” and are legally protected. (Wynen 1998a)

There are further agricultural concepts emphasizing environmental benefits, which should not be confused with organic farming. One of the more common approaches are “integrated” farming systems.33 Chemical intervention for fertilization, pest control and other agricultural methods, which are excluded by an organic farm management, are restrictively allowed on farms with integrated cultivation. Although stemming from different backgrounds, integrated farming is sometimes referred to as a middle course between highly intensive agriculture and organic farming. (Lampkin 1994:7)

1.5.3 Why Organic Agriculture

Sustainability is the major objective behind the concept of organic farming, meant in a wider sense, encompassing environmental, material and social sustainability. As proposed by

IFOAM president Gunnar Rundgren, diverse problems can be solved by introducing organic farming. These arguments are shown in the following table, figure VI. There may be other solutions for each individual problem pointed out, but according to Mr. Rundgren at the moment there is no other solution “that to such a large extent is addressing most of the problems facing rural communities.”

Organic Agriculture’s Potential to Solve Problems

illustration not visible in this excerpt

Figure VI (adopted from: Rundgren undated)

Apart from organic farming’s potential to help solving the raised problems, there may be further good reasons to introduce organic production, such as market opportunities and the personal satisfaction of the farmer. (Rundgren undated)


Diverse prerequisites in different fields of the political, economic, ecological and social environment were necessary, before the development of an organic industry became promising in China. The following chapter shall give an insight into the most important factors that led to the emergence of Chinese organic agriculture. The first five sections (chapters 2.1-2.4) will concentrate on political, agricultural, environmental, social and economic aspects that gave the young organic industry a chance to develop. In the last section (chapter 2.5) the focus is set on social and economic preconditions that were necessary for the development of an organic market in China.

2.1 Basic Political Preconditions

The agricultural development in every country is underlying policy influences. Since the PRC’s foundation in 1949, several shifts of the political environment also affected China’s agricultural situation. Focussing on the reform period, basic political decisions with a major influence on the agricultural sector are outlined in the following two sections. As basic preconditions for current organic farms in China, both, the land tenure rights, outlined in the first section, as well as the agricultural production system after 1978, summarized later, have a direct impact.

2.1.1 Land Tenure Rights

Land is the basic resource for agriculture. The land tenure rights in a specific political system can be seen as a fundamental feature of its ideology. According to its self-image, the People’s Republic of China is a socialist country. As one major characteristic of so-called socialist political systems, the state-ownership of all means of production, including landed property, was fixed in the Chinese constitution.34 For several decades, Chinese peasants did not have had the right to individually decide about the use of land, nor could they farm it by themselves.35 During the existence of the People’s Communes,36 in addition, all land for private housing and other use was passed into communal possession (gongyou).37 (Zhu 1997:51-53; Hudson 1997, cited from Asia Society 2003)

With the introduction of the “household production responsibility system”38 (shengchan zerenzhi) in 1978, plots of land for private self supply were allowed again, but individual farming in general was still forbidden.39 In 1979, the first year of practice with the new regulations, unauthorized types of the responsibility system, including individual farming and de facto privatization of the means of production, occurred on a local level and caused vehement discussions within the Communist Party. In September 1979, these types of the production responsibility system were approved as exceptional cases for some regions.40 Within three years, the collective basis of the system was abolished almost all over the country and the responsibility for the management of land and labor was transferred to the individual households again. The ownership of all means of production except the land was passed back to the peasants. (Zhu 1997:69-71,78-79; Findlay/ Martin/ Watson 1993:16)

In general, land in rural areas is now owned by the collectives.41 Within the household production responsibility system an agreement between the farming households and the collective, who is trustee of the state, is signed. The farmers have the duty to sell a certain quota of particular crops for a fixed price to the state and pay taxes and levies on the land. They are not allowed to sell the land, but have the right to sub-contract it or to hire labor to farm it. Once they have fulfilled their contract, households are free to decide about further cultivation. Within the state-planned economy the production responsibility system gives the farmers an individual right of land use. In early 1984, a guarantee of at least 15 years of land use was given to the rural households by the state. This was meant to eliminate farmer’s uncertainty about their future right to farm the land and to promote investments by peasant households.42 Nevertheless, the size of land per household is depending on changing private and public demands.43 Therefore, no general guarantee can be given to the farmers. The law on land-management, which was enacted in 1986,44 formally fixed the separation of the right on disposal of land and the right on the use of land. When it was revised two years later,45 the assignment of land use rights on other persons was also defined by law. (Zhu 1997:58,75-76; Findlay/ Martin/ Watson 1993:16; Zhang 1999; Spence 2001:818)

After more then two decades of China’s transformation into a market economy, still, there is no private ownership of land. However, the right of individual land use is regarded as a basic characteristic in agriculture and rural society. (Jiang Zemin in: RMRB: Oct 21, 1992, cited from Zhu 1997:76) Converting farmland from conventional into organic cultivation requires costs which are tied up to that land. The long-term guarantee to use a certain piece of land is therefore an important precondition for organic farming.

2.1.2 The Rural Reform after 1978

In December 1978, the third plenum of the Party’s XI. Central Committee passed two important documents on agrarian policy.46 Originally proposed as a managerial reform to accelerate the agricultural development (Findlay/ Martin/ Watson 1993:15), these documents can be seen as the beginning of the agricultural and economic reform. Being the basis of the entire reform process, the regulations introduced the rural responsibility system, and emphasized the right of self-determination by the collective production group. Local cultivation plans within the state-planned economy or the distribution of income by different methods of counting the individual work could be decided by the collectives. Furthermore, the production groups were given the right to refuse orders sent by administrative bodies if these were not agreeable with local conditions. Plots of land for private use, extra earnings and markets for private trade no longer were criticized but even encouraged by the new regulations. By raising the fixed prices for chief crops that were bought by the state47 and lowering the prices for agrarian inputs and means of production, the agricultural sector was supported financially. (Spence 2001:772; Zhu 1997:66-67; Kueh 1993:232) These fundamental political changes were embedded in the setting of the Four Modernizations (sige xiandaihua), one of them being agriculture.48

After the introduction of the rural household production responsibility system in 1978, the model was transformed from a collective to an individual basis at a local level first, and later all over the country. In 1980, individual farming systems were officially legitimized by law,49 and immediately they expanded all over China. Collective and individual forms of the responsibility system were coexisting simultaneously. At the beginning of 1982, a party document again emphasized the approval of all types of income distribution within the household production responsibility system.50 In most rural areas, the collective basis of agricultural production was abolished in favor of individual management and responsibility.51 The decollectivization was carried out within three to four years after the introduction of the responsibility system. In 1983, the communes had disappeared and subsequently they were officially abolished that same year. In order to increase family incomes, individual peasant households moved towards economic diversification. More profitable crops were cultivated and many families split their labor force between field work and other earnings.52 The rural administrative machinery was reorganized, by officially separating the influence between the Communist Party, economic bodies and administration authorities,53 but in practice the power of the party was still very strong. (Zhu 1997:69-71, 78-79; Kueh 1993:233; Findlay/ Martin/ Watson 1993:16; Tan 1987:13, cited from Zhu 1997:79) In the mid-1980’s, by relaxing the system of input-procurement and by reducing the state purchase of grain, the agricultural reform was extended. A few years later, commodity prices and rural financial markets were started to be liberalized. (Carter 1999:202)

After three decades of collective farming, the rural peasant households once again became the basic element of agricultural production. Families were free to organize their labor as long as they fulfilled the contract. Demands from the state and from the free market had to be combined now. China was gradually shifting from a planned economy to a market-oriented economic system. The individual decision on the use of agricultural land is a basic precondition for introducing organic farming on a private level.

2.2 Parallel Development of Two Contrasting Agricultural Conceptions

Long-term food security54 needs to be ensured in spite of a rising Chinese population and in the face of a decreasing area of agricultural land.55 It is therefore generally accepted that the enhancement of agriculture’s efficiency is the only way to guarantee lasting food security.

Beside this challenge, further difficulties urgently have to be solved, such as the insufficient food safety and agriculture’s low international competitiveness. To achieve these goals there are different approaches, which can generally be divided into two contrasting positions. The mainstream emphasizes high inputs, especially an intense agricultural industrialization. A contrasting position is advocated by a minority of Chinese agro-scientists; an approach of limited inputs towards more sustainable farming. Organic agriculture in China directly emerged from the latter attitude.56 The development of these two divergent opinions towards agricultural productivity is outlined in the following two sections.

2.2.1 The Industrialization of Agriculture

Agricultural yields began to stagnate in the mid-1950’s, threatening food security in China. The government first reacted in the long-established way, attempting to extend agricultural production into new lands. During the Great Leap Forward, within mass campaigns, it was tried to intensify production by various questionable techniques, such as deep ploughing, dense sowing and systematically killing pests.57 (Gernet 1988:556). When this approach to increase agricultural outputs by methods of intensification of labor and extensification of land failed and the agricultural crisis reached a dramatic point around 1960,58 the government was forced to shift policy. In order to overcome food shortage the focus was turned to technological change.59 Aiming at an increase in output per unit, principally improved seed varieties, chemical fertilizers and pesticides, as well as intense mechanization were introduced in China from the early 1960’s on.60 The slogan of the “Four Changes” that should lead to modern agriculture, beside chemicalization and mechanization also included irrigation and electrification in agricultural production. (Stavis 1974:22) The introduction of the new techniques was going along with a rapid decline of organic recycling and the disappearance of ZTN 2000:379; Betke 1998:244; CIIC Sep 21, 2000; Wu 2000; Heilig 1999a; Wang 1999:85-86; Spence 2001:804) the complex system of crop rotation. (Smil 1993:139) An authorized technological extension service (tuiguang) heavily promoted and controlled the use of the new methods in agriculture. The extension service and an organized system of subsidized production, as well as input distribution were meant to guarantee the success of this agricultural development strategy. Designed as a top-down approach, the new agricultural policy was able to increase the adoption of the Green Revolution technologies almost all over the country.

With the activation of the reform period in the late 1970’s, agriculture as one of the Four Modernizations, once again became focal to the political discourse. The formerly centrally planned and tightly controlled agricultural sector through the creation of small family farms was decentralized. It became subject to private incentives and individual responsibilities for production decisions. However, in order to make use of economies of scale,61 seeming contradictory it was fixed as a national objective to concentrate agricultural land among “efficient” farmers. (Leeming 1994, cited from: Thiers 1999:92) Pieces of land were also united by local state entrepreneurs. With the intention of increasing scale, the “modernization” of agriculture was going along with an intense agricultural industrialization. Large farms with a high use of modern technology were seen as example. Agro-chemicals and a high level of mechanization were promoted to achieve the agricultural “modernization”. (Thiers 1999:92)

Since problems caused by agricultural practices became more and more obvious, beside the primary goal of increased yields, the alleviation of negative impacts in ecological, economic and social fields became a secondary agricultural goal.62 In the 1990’s, within the vocabulary of the mainstream agricultural development community, the “modernization” of agriculture was gradually replaced by the term “sustainable development” (kechixu fazhan). As Thiers comments, this rhetoric change can not be seen as a departure from their earlier attitude towards a successful agricultural development. It does not question the “high input, high output, high efficiency”63 approach of modernization paradigm. Citing an advocator of “sustainable agriculture”,64 Thiers rightly doubts that its main objective is the maintenance of the natural ecosystem. (Thiers 1999:93)

2.2.2 Approaches to Agricultural Sustainability

A more genuine approach to agricultural sustainability is the Chinese eco-farming movement, initiated in the early 1980’s. Chinese Ecological Agriculture (Zhonguo de shengtai nongye) (CEA) combines traditional agricultural methods with modern scientific technology. It aims at establishing an agricultural system, both being “ecologically appropriate and regenerative” (Thiers 1999:94), attempted not only to solve ecological difficulties but also addressing economic and social problems in rural areas. Labor intensive farming techniques65 and the focus on internal inputs, are essential aspects of CEA. In order to achieve higher economic efficiency, the concept rather point towards limiting input costs66 instead of maximizing yields, turning away from the “high input - high output” paradigm. Furthermore, an environmental pollution of chemical inputs shall be prevented. (Thiers 1999:95; Sanders 2000:3,67-68) Responsible governmental agencies, with the help of local authorities, research institutes and universities, organized eco-farming projects all over China.67 One decade after CEA’s initiation, the UNEP awarded eight eco-villages or eco-farms and one village leader for the successful implementation of sustainable agriculture. By the mid-1990’s, within the Ecological Counties Program,68 about 1,200 eco-villages or eco-farms were established and 50 model counties were selected for the demonstration of eco-farming. (Zhou/ Xiao/ Yang 2002) Although the State Council and different government departments encourage the development of eco-agriculture, still, CEA is not a mainstream among the agricultural development community. However, since the term Chinese Ecological Agriculture is used in several state documents it gained substantial policy influence. The movement culminated in the early 1990’s but now seems to lose momentum. (Thiers 1999:95; Sanders 2000:73-74)

Several offshoots developed out of the CEA movement. This includes Green Food agriculture69 as well as organic farming,70 both being integrated in several Ecological sustainable agricultural development and integrated production require, on the one hand, that we diligently increase petrochemical inputs, and raise the level of material cycling in the agro-ecosystem. On the other hand, we must make use of technology improvements, raise the energy conversion rate of external inputs, increase integrated use and reuse, and raise the benefits of ecological and economic integration.” (Mei 1995:316-317, cited from Thiers 1999:94)

Counties Programs. (Thiers 1999:116) By means of different conceptualizations, their agricultural approaches aim to combine increased agricultural profitability with the reduction.71 or termination in the use of chemical inputs. Suggesting related ideas, the two concepts independently emerged from different governmental fragments. By promoting ecologically appropriate farming, each found a position within the current policies of environmental protection72 and agricultural commercialization (nongye de chanyehua)73 was found. State entrepreneurs at various levels and private businesses joined these engagements. Many of them are primarily motivated by financial reasons, but justify their participation with a moral decision. (Thiers 1999:117-118)

2.3 Environmental Deterioration its Consequences and Policy Responses

Ecological problems are not only caused by industrial pollution, but agriculture has also a significant impact on the deteriorating ecological situation. Agricultural environmental degradation includes the contamination of water and soils by farm pollutants. Resulting problems from these issues have equally their own ecological, social and economic dimension.

This chapter describes at first the development of a general Chinese policy towards environmental matters. In the following sections it is focussed on agricultural technology, especially agro-chemicals, since these are one of the most serious farming pollutants. The application of chemical pesticides and fertilizers, their consequences and specific policy responses are also explained.

Because organic farming does not apply any chemically synthesized inputs,74 the situation explained below is a major precondition for organic agriculture to become an alternative farming approach in China.

2.3.1 Environmental Policy

Industrialization efforts, highly intensive agriculture and a growing urbanization along with an overexploitation of natural resources over several decades or even centuries (Edmonds 1994:30-34), are mainly responsible for the steady deterioration of the country’s national environment. Nevertheless, for a long period of time environmental protection was not recognized as a policy goal of high relevance,75 even though activities to safeguard the environment have been carried out for centuries.76 Policies influencing the environmental quality were actually focussing on further issues, such as public health, management of resources, economic development or pure political purposes.77 (Ottley/ Valauskas 1989:484)

Not until the early 1970’s Chinese top officials were dealing with problems of environmental degradation in internal conferences and documents.78 At that time, however, due to political disagreements neither the discussion on environmental issues was carried on in public, nor were the documents on it made public. (see e.g. Plath 1991:46) The first two national laws with the purpose to protect the environment were adopted in 1979.79 The Law on Environmental Protection80 was aimed to outline basic policies on environmental issues rather than establishing precise standards or regulations. (Ottley/ Valauskas 1989:492) Again, environmental protection was not seen as a goal in itself, but rather as a mean “ [...] to create a clean and salubrious environment for the people’s life and work, protect people’s health and promote economic growth in the interest of social modernization.”81 The law states that the environmental quality is influencing the country’s social and economic development, therefore making it reasonable to give environmental protection political priority.82 In the PRC’s 1982 constitution this was taken into consideration, by emphatically is calling upon the state to protect the environment (article 9 and 26).83 (LAC 1987:15,22)

Since the beginning of the 1980’s protecting the environment is included in the regular Five- Year-Plans as a national goal, and from 1986 on special Five-Year-Plans for environmental protection are worked out additionally.84 After the enactment of the basic environmental law, environmental administration bodies on all levels were built up85 and numerous policy directives86 as well as local regulations87 and pollution control programs88 were put into force, most of them focussing on urban industrial pollution control. (Ottley/ Valauskas 1989:498-502; Ma/ Ortolano 2000:8) Although problems caused by methods of agricultural intensification were obvious,89 environmental deterioration as a results of the “modernization” of agriculture has received far less attention from policy makers than industrial pollution.90 Beside the basic environmental law, more than twenty special laws to protect natural resources and the integrity of ecosystems as well as to control environmental pollution have been enacted during the last two decades.91


1 Figure III in chapter 1.5.1 shows the organic production area per continent.

2 See figure I and footnote 3; According to data published by the Xinhua news agency, the area of organic cultivation in China has reached 700,000 ha in 2002. (Xinhua Nov 10, 2003) This is quite unlikely and may include areas different from organically certified.

3 The data for China dates from 2001 and includes approximately 200,000 ha of organic-in-conversion production. This means that in the year 2001, an area of 101,295 ha were certified as organic quality.

4 See chapter 1.5.1.

5 It was „The National Conference on Three-Green Project“, held in Qingdao and organized by several Chinese ministries.

6 Ms Deeken is an agricultural engineer from Germany specialized in organic farming.

7 Ms Chen is a master student at the Nanjing Agricultural University.

8 This study was part of the evaluation of the OFDP.

9 See chapter 3.3.2.

10 See e.g. Li/ Bai 2000; Gao 2002; Pennarz 2002; Plagge 2002.

11 See e.g. SEPA 2001; MOA undated; MOA 2002a-d; BLE 2003-2004a-h.

12 See e.g. OFDC 2001, 2002b.

13 See e.g. Jiao/ Fang 2002.

14 See e.g. Zhou/ Xiao/ Yang 2002; Zong 2001, 2002; Xi Yunguan 2002a; Rahmani/ Song1999.

15 See e.g. Bao 2001; Plagge 2000; Kotschi/ Schrimpf/ Zhu 2000; Janz/ Jacobi / Buley 2003.

16 In his work “Farmers of Forty Centuries”, he praises East Asian farming methods, after having visited China, Japan and Korea in 1907. (King 1949)

17 This e.g. includes the excessive application of chemical inputs and an inappropriate use of livestock and land with the aim of receiving maximum output.

18 Bioland, the first independent farmer-run certification body (producer association) was founded in 1971; in the following year, the global umbrella association IFOAM was established. (SÖL 2003b)

19 Until the 1980s, organic products were primarily traded directly and locally, with alternative distribution channels, such as on-farm-sales, consumer cooperatives, farmer markets and small organic food stores.

20 These national or supra-national organic regulations did not displace standards established by nongovernmental certifiers. They are only minimum requirements, surpassed by the organic standards of many producer association’s.

21 From 1989 onwards, EU state funding supports the extensification of organic farming. For different national governmental policies concerning organic agriculture see chapter two and three of FAO/ ITC/ CTA 2001a.

22 While Oceania is the continent with the largest area used for organic agriculture, amounting to around 10 million ha (Halpin/ Brueckner/ Mason 2004), at the same time it is the continent with the smallest number of organic farms. On the other hand, most organic farms are situated in Europe, but with its tradition of organic small-scale farming, the total European area of organically certified land is only average.

23 See footnote 20.

24 Today, many retailers for conventional food offer organic products, special organic supermarkets came into being and even the private and public catering trade has discovered organic food.

25 All over the world IFOAM has more than 500 member organizations that promote organic farming. (Thiers 1999:61) In China, there have been almost 30 institutions being a member of IFOAM by 2002. (Gao 2002:32) Such an IFOAM membership is not the same as an IFOAM accreditation. (See chapter

26 IFOAM does not directly certify companies of organic production, processing or trade. Through IFOAM basic standards, a framework for organic certifying bodies all over the world is defined. Any certifying organization being accredited by IFOAM, has to act according to these standards. (SÖL 2003a; IFOAM 2002b) This is contributing to internationally harmonised rules concerning the production, processing of organic products, as well as the trade with organically produced goods. It is also providing equivalency of organic quality claims. For further information on the IFOAM Accreditation Programme (IAP), which is managed by the International Organic Accreditation Service Inc. (IOAS), see the IOAS homepage.

27 By early 2002, 32 countries already had a fully implemented national organic regulation, all EU-states and several Asian countries among them. (Commins/ Ong 2002)

28 The EU passed its first regulation on organic food in 1991 (2092/91); amendments were made in 1999 (1804/99). (Guillou/ Scharpé 2000:3,10; Schmid 2003:41/pdf 1)

29 The Codex Alimentarius is a set of international food standards, jointly developed by FAO and WHO. Beside standards on conventional food, the Codex Alimentarius Commission also created guidelines on organic food, taking into account the current regulations on organic agriculture in different countries. (Schmid 2003:41-43; FAO/ ITC/ CTA 2001b: pdf1) The commission’s organic guidelines can be downloaded from the FAO (FAO 2001)

30 The term “pest” in this thesis is used in a wider sense, embracing all living organisms that have a negative impact on the farm productivity, including weeds, insects, fungi, livestock parasite, nematodes etc.; the term “pesticide” correspondingly includes all kinds of plant-protective agents.

31 Green manure (lüfei) are leguminous crops grown to be ploughed back into the soil to improve its fertility, instead of harvesting it as cash crop or food.

32 In the French, Italian, Portuguese and Dutch language, „biological“ is the equivalent term to the English “organic”, but in Danish, German- and Spanish-speaking countries rather the term “ecological” is used in its respective translation.

33 The word derived from „integrated pest management“.

34 This principle is fixed in article 6 of the 1982 constitution: “The basis of the socialist economic system of the People’s Republic of China is socialist public ownership of the means of production, namely, ownership by the whole people and collective ownership by the working people.” (LAC 1987:13)

35 See e.g. CCP’s Central Committee 1953: Regulations by CCP’s Central Committee on Mutual Aid in Agricultural Production, first draft in September 09, 1951; Resolution on Mutual Aid in Agricultural Production, February 1953

36 As part of the Great Leap Forward, in 1958, large scale agricultural units were created. Each commune consisted of many production brigades and production teams, comprising about 5,000 households on average. This organizational structure was abandoned from the early 1980’s on. (Hudson 1997, cited from Asia Society 2003; Dreyer 1993:125)

37 CCP’s Central Committee 1962: Regulations on the Work in Rural People’s Communes

38 In the following, it is also called “production responsibility system“ or “responsibility system”.

39 Draft resolution, December 1978: Resolution of the CCP’s Central Committee on Several Questions to Accelerate the Agricultural Development (draft)

40 Resolution in September 1979: Resolution on the Fourth Plenum of the CCP’s Central Committee on Several Questions to Accelerate the Agricultural Development

41 Article 10 of the 1982 constitution of the PRC: “Land in the cities is owned by the state. Land in rural and suburban areas is owned by collectives except for those portions which belong to the state in accordance with the law [...]” (LAC 1987:15)

42 CCP’s Central Committee document number 1, 1984: Circular of the CCP’s Central Committee on the Work in Rural Areas 1984

43 Due to demographic changes and the transformation of land to non-agricultural use (see below chapter 2.2, footnote 55), the size of allocated land to each household is subject to change. With the aim of egalitarian distribution, in most regions, the area per person and the area per field had to be reduced regularly. This is causing a feeling of uncertainty about the long-term security of land tenantship. Negatively affecting investment decisions and resulting in economic losses, this gives rise to a growing dissatisfaction among peasants. Moreover, the increase of households and the distribution of scattered of pieces of land due to differences in natural soil fertility within one village also result in a shrinking area of each piece of farmland. More small scale production units are created, on which economies of scale (see footnote 61) do not function. (Zhu 1997:123-129; Findlay/ Martin/ Watson 1993:17; Heberer 1998:388; Chen 1995:29-30; Heilig 1999e)

44 The „Law on Land Management of the People’s Republic of China“ was enacted during the 16th plenum of the NPC’s VI. Standing Committee on June 25, 1986.

45 Revision of this law in 1988: The Law on Land Management of the People’s Republic of China, enacted by the 16th plenum of the NPC’s VI. Standing Committee on June 25, 1986, revised by the fifth plenum of the NPC’s VII. Standing Committee on December 29, 1988

46 1) Draft resolution, December 1978: Resolution of the CCP’s Central Committee on Several Questions to Accelerate the Agricultural Development (draft), with 25 paragraphs on agrarian policy and measures to promote the agricultural development

2) Sixty New Regulations, December 1978: Regulations on the Work in Rural People’s Communes (revised draft), revised version of the old „sixty regulations“ from 1962

47 In the late 1980’s and early 1990’s the prices for major grains bought by the government fell behind input prices for agricultural chemicals. Since 1993 prices for major food crops have been effectively raised by the government. (Thiers 1999:116)

48 The further three modernizations with political priority are industry, national defence and science and technology (preamble of the 1982 constitution of the PRC: LAC 1987:5). The Four Modernizations were introduced in the 1978 constitution as basic policy goals. For detailed information see e.g. Baum 1980.

49 document no. 75 in 1980: Several Questions to Further Strengthen and Improve the Responsibility System in Agricultural Production: Summary of a Protocol of the September 14th-22nd 1980 Discussion among the Party Committee’s First Party Secretaries on the Provincial Level

50 document number 1 in 1982: Summary of the National Conference on the Work in Rural Areas in December 1981, published by the CCP’s Central Committee in January 1982

51 However, still today there are some Chinese villages that kept the collective production system, most of them being situated near the big cities in the east of the country (Steinbuch 1993:11), e.g. the first village of eco- agriculture (CEA), Liuminying, in the suburbs of Beijing. (Liuminying 1999; Sanders 2000:210-211; talk no.9)

52 For details on economically motivated migration see below chapter 2.4.4, footnote 159. Christiansen specifies further aspects on labor strategies of peasant households. (Christiansen 1999:181-182)

53 Organizational Laws 1983 and 1987: a) Organizational Law of the People’s Republic of China on Regional People’s Congresses and People’s Governments, 1982 and b) Organizational Law of the People’s Republic of China on the Villager’s Committees, 1987

54 An intense debate about China’s continued ability to produce enough food has developed among academics in China and abroad (See e.g. Brown 1995; Smil 1995; Liang 1996; Huang/ Bolin 1997; Ross-Larson 1997; Ma 1999; Findlay/ Watson 1999).

55 Arable land is continuously lost in China. Data collected by satellite images showed an annual loss of arable land to non-agricultural use at an average rate of 0.5%. (US Embassy 1997, cited from Thiers 1999:105) This is seen as a major problem by the central government. Various construction activities between 1988 and 1995 on almost 1 million ha of previously cultivated land are a principal reason for (most likely) irretrievable losses of farmland. (Heilig 1999a) Problems such as salinization, soil erosion, desertification, flooding and droughts also continuously diminish agrarian land. On the one hand, the natural conditions have an impact on these ecological problems and natural disasters, but on the other hand man-made mistakes when dealing with nature can be held responsible for it. Moreover, there are areas of cultivated land reversed into pastures or transformed by reforestation programs to prevent further reduction of useful land by desertification or flooding. But China has also considerable arable land resources which currently are not utilized. This is termed “flexible land” (jidong tudi), reserved by local governments for non-agricultural use to attract potential investors. Further agricultural areas are lying idle due to a shortage of labor caused by rural exodus. In contrast, there is a rural surplus population, which in the mid 1990’s was up to 200 million laborers. (Cheng 1996:1129; Heilmann 1994a:14; Rozelle et al. 1999:390; Heberer 1998:390; Taubmann 1998:34; Thiers 1999:107; Ottley/ Valauskas 1989:503;

56 The initial development was mostly supported by the State Environmental Protection Administration (SEPA). Although fields within the Ministry of Agriculture (MOA) also advocate sustainable farming, an intense rivalry between the two state administrations impedes a common development strategy. See chapter 3.1.1.

57 such as certain bird species

58 For detailed information on agricultural production, food shortage and famine during and right after the Great Leap Forward see e.g. Bachmann 1991, Teiwes 1999.

59 For details on the technological transformation in agriculture see chapter 2.3.2.

60 The beginning of a widespread implementation of the Green Revolution technologies can be dated to 1964. A domestically developed rice variety, created to withstand high levels of chemical inputs and bringing high yields, for the first time was adopted in many parts of China then. (Stavis 1974:26-33)

61 “When more units of a good or a service can be produced on a larger scale, yet with (on average) less input costs, economies of scale […] are said to be achieved.” (Heakal 2003)

62 See chapter 2.3.5 and 2.4.

63 See also Sanders 2000:73.


“If we do not use, or rarely use, chemical fertilizers, pesticides, farm machinery and other petrochemical

inputs, we clearly can not satisfy the demands of sustainable and integrated agricultural production […]. Chinese

65 Fertilizers are mainly produced on the farm itself.

66 other than labor costs

67 Resulting from different natural conditions and local practices there is a wide range in the variety of ecofarming projects. Many of them included systems of material recycling, such as the use of organic waste for biogas plants. (Sanders 2000:74-75)

68 The demonstration projects were chosen on county, township and village level in order to search for solutions to improve the ecological efficiency of agriculture. (Thiers 1999:115)

69 For details on Green Food see chapter 3.3.2.

70 For details on organic agriculture in China see chapter 3.3.1.

71 Many agricultural experts in China, even those who are open-minded about environmentally friendly concepts, cannot imagine managing modern agriculture without chemical inputs. (See Zhang, Xiaojie 2002)

72 See chapter 2.3.1.

73 In order to increase farmer’s incomes, the government recently promotes to add value on agricultural products. Through the integration of production, processing and trade, the economic viability shall be enhanced. (Thiers 1999:116-117)

74 See chapter 1.5.2.

75 For decades, environmental damage in China was denied for political reasons. Such problems were said to be results of the market economy, while the planned economy in socialist systems equally can combine economic and ecological goals. Increasingly emerging environmental pollution and destruction in China therefore were interpreted as an ideological problem. (Plath 1991:41; Sternfeld 1984:16-22)

76 With priorities on soil and water protection, desertification and desalination environmental research has already been pursued before the People’s Republic of China was founded. At the beginning of the 1950’s, especially in the field of forestation and against soil erosion, several pro-environmental projects have been organized. (Prinz/ Koch 1984:22, cited from: Plath 1991:41)

77 Demands for a sparingly use of natural resources and their recycling were fixed in the first national Five-Year- Plan (1953-1957) mainly for economic reasons. (Plath 1991:43)

78 In reaction to China’s participation at the UNO’s first international environmental conference in 1972 (the seat in the United Nations was transferred to the PRC in 1971), in 1973 a national conference on environmental protection was initiated by the State Council to review a survey on the extent of pollution in China. As a result, “Several Regulations on Environmental Protection and Improvement” were adopted by the State Council. The same top governmental authority was establishing the Environmental Protection Leading Group - EPLG as a coordinating and planning body. From 1977 on, the Beijing Environmental Monitoring began operating monitoring stations. The document “The Key Notes of the Summary Report on the Work of Environmental Protection” was approved by the Central Committee of the CCP in 1978. (Plath 1991:45; Lotspeich/ Chen 1997:50; Ottley/ Valauskas 1989:489).

79 The Law on Environmental Protection and the Forestry Act are the first two laws on environmental matters. The latter is, as the name shows, focussing on the protection of forest resources of China.

80 In 1979 this law was passed for trial implementation and was finally adopted comprehensively in 1989.

81 Article 2 of the 1979 Law on Environmental Protection (Ottley/ Valauskas 1989:493)

82 See also Plath 1991:47.

83 The moderate commitments to environmental protection in the 1978 constitution were expanded a lot in the constitution of 1982.

84 In the sixth national Five-Year-Plan (1981-1985) environmental protection was declared as one of the ten most important tasks for the social and economic development. The first specifically environmental Five-Year-Plan within the seventh planning period (1986-1990) was mainly focussing on industrial pollution control and environmental problems in conurbations. (Plath 1991:47-49)

85 Almost 2,500 local environmental protection bureaus with over 60,000 employees are spread all over the country. (Lotspeich/ Chen 1997:52) The national organization NEPA was elevated in status in the late 1990’s, when it became SEPA. See chapter 3.1.1.

86 To implement the environmental policies there are many administrative edicts issued by the State Council, NEPA/ SEPA or other state agencies, e.g. Collection of Pollution Discharge Fees (1982), PRC National Park Regulations (1994), and Natural Flora Protection Regulations (1996). (Ma/ Ortolano 2000:17)

87 Local regulations were always combining incentives and penalties in order to improve environmental conditions. (Ottley/ Valauskas 1989:500) However incentives seem too little and penalties often are not severe enough to be effective. (Edmonds 1994:252)

88 Since 1978, eight major pollution control programs were initiated. They are implemented by the local environmental protection bureaus. (Ma/ Ortolano 2000:8)

89 See chapter 2.3.5.

90 Giving an example, to improve the water quality, environmental policies in the 1990’s usually focussed on industrial water pollution instead of agricultural wastewater control. (Ma/ Ortolano 2000:3)

91 Examples are: PRC Solid Waste Pollution Prevention and Control Law (1995), PRC Air Pollution Prevention and Control Law (1987, revised 1995), PRC Water Pollution Prevention and Control Law (1984, revised 1996), PRC Forest Law (1984), PRC Grassland Law (1986), PRC Wildlife Protection Law (1988), PRC Water and Soil Conservation Law (1991). (see Ma/ Ortolano 2000:17)

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Organic Food Industry in China - Current State and Future Prospects -
Free University of Berlin  (Ostasiatisches Seminar)
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The study gives an account of the setting and state of affirs of the Chinese organic industry that focuses the domestic organic food market. In a further step, the attractiveness of the domestic organic trading industry is examined and the potential of organic farming is assessed. The paper contains 28 figures and a large appendix including lists of relevant organizations and Chinese terms.
Organic, Food, Industry, China, Current, State, Future, Prospects
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Carola Milbrodt (Author), 2004, Organic Food Industry in China - Current State and Future Prospects -, Munich, GRIN Verlag,


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