Japanese firms tap China's farming industry

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GOV.cn | Saturday, June 3, 2006

Three Japanese firms, including two on the Fortune magazine's world top 500 list, have jointly leased 100 hectares of farmland in east China's Shandong Province, to become the first foreign investors in China's farming industry.

The new growers are Japan's leading beer-maker Asahi Breweries, and Fortune list firms Itochu Trading Corp. and Sumitomo Chemical Co..

The land has been leased from 800 local farmers for an annual rental fee of 12,000 yuan (1,500 U.S. dollars) per hectare.

The new venture is registered as Shandong Asahi Green Source High-tech Farm Co. at the local bureau of industry and commerce.

The corporate farming business aims to use organic methods for the high-end urban Chinese food market.

The total investment could reach 18 million US dollars when farm expands to the planned 300 hectares, said manager Masaya Inui. "We have a land use right of 50 years, and we plan to take four to seven years to cultivate strawberries and green vegetables, and graze cattle."

The company plans to employ local farm laborers to grow 17 hectares of strawberries and 100 hectares of green vegetables and graze 1,500 to 1,800 head of cattle.

Inui told Xinhua the venture hoped to sell 99 percent of the produce in China, and one percent will be exported to South Korea.

The manager said the farm would introduce high-technologies, such as computer-controlled temperature and humidity in greenhouses, and environmentally-friendly, natural methods, using cattle dung as fertilizer and produce methane to warm greenhouses.

Local farmers hailed the project as a boost for their living standards.

Dong Zhongzheng said he had rented out five mu (0.33 ha.) to the farm. Based on a rent of 800 yuan per mu annually with a four-yearly increment of 200 yuan per mu, he could earn more than 110,000 yuan (13,750 U.S. dollars) over 20 years.

"As landlords, my wife and I would earn more than by growing wheat," said Dong, in his 40s, who used to earn just 500 yuan per mu each year.

Dong also works as a watchman on the new venture, earning 30 yuan (3.75 U.S. dollars) every eight-hour day.

He will benefit from employee training in scientific farming and operating agricultural machinery. "Maybe I will learn to operate a computer," said Dong.

Liu Hongjun, of the China Institute of Modern International Relations, said the Japanese firms were the vanguard of corporate farming investors in China.

"Although China is one of the major destinations for foreign direct investment in the world, investment in agriculture is tiny compared with manufacturing. However, it is welcomed by the central government, which has constantly tried to boost farmers' incomes," he said.

Fast-food giants like KFC and McDonald's, which boast large food processing lines in China, have shown interest in China's agriculture with proposals for new crops and standardization of production.

Local officials hope the introduction of modern farming methods and technology will also develop sustainable use of the land.

Li Dongli, deputy director of the foreign trade and economic bureau of Laiyang, said the Japanese investors were very concerned about water and soil standards when selecting the location for their investment.

"We feel lucky that they chose Laiyang City. The local government sees it as a breakthrough in agricultural development, although it is unlikely to be contribute much to the local fiscal income," said Li.

Some experts have noted that if the venture is successful, other foreign firms could follow, challenging China's traditional small family-farm structure.

Original source: Gov.cn
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