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Fourth South-South Cooperation Workshop on Rural Development and Poverty Reduction - Hu Dinghuan
The opportunity & Challenges of Farmer-Supermarket Direct Purchase in ChinaAuthor: Dr. Dinghuan HuProfessor of Chinese Academy of Agriculture SciencesChief RepresentativeOffice of Wageningen University & Research Center in China
China’s Agro PolicyWith 4.76% of arable land in the world, China may support 20.5% of theworld population, which is closely related to the active agro policies ofChinese government. The keys of China’s Agro Policies are as follows:1. Ensure the scale of basic farmland;2. Improve the output of agricultural products in unit area through the development of agro science and technology;3. Adopt various measures to increase farmers’ income;4. Ensure the security of grains and food;5. Optimize agricultural product processing and market distribution system.
China’s Fast Developing Agriculture Since 1980s, China’s agriculture has achieved great success.
Challenges for China’s Agro Sectors 1. Farmers’ income increases less fast than urban residents’; 2. Agricultural products markets and price are instable; 3. How to improve the food safety of agricultural products; 4. How to satisfy the new needs of middle class.
It is difficult fo sell production The price of agro production always become very low, and farmers have not any profits In April and May of 2011, the vegetables’ price is at 0.08 RMB.
Traditional Supply China of Agricultural Products 传统农产品供应链采购的价值增值过程 78%farmer broker wholesal Wholesale er market Supplier offarmer supermarket Superma rket 12 ％farmer 5％farmer 5％farmer 2RMB 2.2RMB 3RMB 4RMB 5RMB
Traditional Supply China of Agricultural Products 传统农产品供应链采购的价值增值过程farmer 78% broker wholesal Wholesale er market Supplier offarmer Superma supermarket rket 12 ％farmer 5％farmer 5％farmer 1 day 2 days 2.5 days 1.5 days 3 days
Food Safety Issues • Shanghai Pudong Clenbnterol Hydrochloride In September 2006, over 3 00 people in Shanghai had suffered2006 from toxicities by Clenbnterol Hydrochloride, it involved. • several food safety events have occurred2007 Since the “Sudan Red” event, there was “Peacock green” event, and “big head” Baby event. • Melamine milk powder event2008 • Guangzhou Clenbnterol Hydrochloride20092010
The big challenge of supermarkets As fast development of supermarkets, the competition within supermarkets become Strictness 1. How to reduce the cost ； 2. How to improve the fresh of products ； 3. How to increase the food safety ； 4. How to attract more customs
The History FSDL FSDL started in 2007 ： Ministry have meeting with CEOs of 9 biggest supermarket, and asked the directly purchase agro-production from producers ； The FSDL in 2011 ： In 2011, there are 2000 supermarkets work on FSDL, and 14000 FAs take part in FSDL.
Main Models of Farm-to-Supermarket LinkingPromoted by Ministry of Commerce and Agriculture, many supermarkets carryout “farm-to-supermarket linking "programs, namely, supermarkets directlypurchase agricultural products from the producers. Carrefour Model supermarkets+ cooperatives +farmer members Metro Model supermarkets +leading enterprises +farmers Jiajiayue Model Supermarkets + farmers
Supermarkets and Government in Farmer-to-supermarket Linking Function of Supermarkets Function of Government Provide a great amount of Improve the purchase price of training for cooperatives; agricultural products by 10%; Support the cooperation Support the development of between farmers’ cooperatives cooperatives of farmers; and supermarkets through Improve farmers’ plant programs; technology through training ； Assist cooperatives to get in Establish the concept of touch with supermarkets; agricultural product standards Help solve the problems for farmers; between supermarkets and cooperatives.
Farmers’ Professional Cooperative in Liangli Town, Dangshan county of Anhui ProvinceIn the three years of farmer-to-supermarket linking, the number ofmembers of the cooperative increasesfrom 100 farmer households to morethan 6000 households.
Fujian Cooperative Case Fujian Nongxin Farmers’ Professional Cooperative is located deep in the mountains. There are more than 20 farmer households. When the manager of Carrefour visited here in 2010, he found that there are many bamboos here and then gave new orders to the cooperative, so that the market problems of farmers in deep mountains were solved and the income of poor farmers were improved.
Selection criteria2. FAs must comply with all Government documents2. Proof that benefits (60%) from FA must go back to farmers3. FAs must be located in the production area8. FASs have to sell what farmer number’s produces10. FAs must deliver from production area (not from wholesale market)
From FSDL to Socomo In November 1st, 2011, Carrefour China set up a new company, Called SOCOMO China. The propose of this company is export Chinese FAs high quality agro-food to international market
SOCOMO in Spain SOCOMO is a purchase department of Carrefour group ； SOCOMO set up in 1987 ； Purchase from 42 countries ； Sale to Carrefour stores in 18 countries ； In 2011, the total purchase at 550,000 t.
The model of SOCOMO in China1. Purchase teams are at fields;2. To insure the quality and food safety of agro- food ；3. Help the FAs to get new markets.
Ticket minimum separated 3 levels to match destinationcountry Food Safety regulations
Ticket Minimum results & Volume exported42 Chinese suppliers have been audited for FSQ Ticket Minimum• 18 suppliers fail (42%) – main reasons: no basic traceability & lack of records(TM <50%)• 8 suppliers (18%) must apply a Food Safety progress plan (TM 50%)• 5 suppliers (14%) TM between 50% and 70% can export to Asia and MiddleEast countries• 11 suppliers (26%) suitable to export according European standards (TM>70%)• 16 validated by FSQ department to cooperate with Socomo China