IATP President Jim Harkness is blogging from China through June 14. (Due to internet access problems, Jim sent this blog via e-mail. I am posting it for him - Ben)
Last fall when I was in China, I saw an item in the paper announcing the opening of the country’s biggest “organic food store” in Tianjin, with over 800 square meters of space. Well, that’s not exactly huge, but I figured that if it’s the biggest in a country of 1.4 billion, then it might be a better place than an organic exhibition to learn about how ordinary people feel about this sector. More specifically, I wanted to see for myself the price difference between organic and conventional foods in China.
With a population of around 15 million, Tianjin is another one of those gigantic Chinese cities that no one outside of the country has ever heard of. (In fact, there are over 180 cities here with over 1 million residents.) I was surprised to learn that the Yi Nong Da Supermarket was not located downtown, but in a “Development Zone” called Binhai, about 50 kilometers from the city center. This industrial suburb turned out to be huge though, with a million or so inhabitants, and the store seemed right in place in a commercial street adjacent to some high-density housing.
Despite the name on the sign, however, it took a while to find any organic food in the store. About four-fifths of the floor space was dedicated to instant noodles, Snickers, toothpaste and Chinese convenience store fare like shredded squid (regular, BBQ or Cool Ranch). Along the back wall, the produce section had a sign proclaiming, “Fresh Organic Vegetables,” but for 20 minutes or so none of the few customers ventured anywhere nearby. Finally, a construction worker came in and made a bee line for the bananas. I asked if they were organic bananas and he said they were.
Me: Why are you buying them?
Him: They taste good.
Me: Aren’t they expensive?
Him: No.
Now we’re getting somewhere! If ordinary workers are willing to pay extra for organic food, then maybe there is hope for the domestic market. I followed up with questions about how often he shops here, whether his co-workers buy these products, etc, carefully recording his answers until a clerk came over and said, “The bananas aren’t organic.” In fact, when I started actually checking the labels I found that none of the produce was organic! The fruit was conventional and the vegetables were “Pollution Free” (wugonghai), a uniquely Chinese designation that seems to mean that no more than the recommended amounts of pesticides have been applied.
Since I didn’t have any organic products for my price comparison, I jotted down the prices of some pollution-free veggies. They seemed fairly reasonable, certainly not three times the cost of ordinary vegetables, but in my hour at the store I didn’t see anyone purchase even these less expensive products. The store manager said that usually there are more customers, and that about 20 percent of their customers buy pollution-free food regularly. To assure quality, Yi Ning grows its own vegetables on “bases” in several different provinces, but she said that it’s tough for them to compete because being in the suburbs, they have many vegetable farmers right nearby who claim that their goods are also pollution-free. I asked why she thinks more people don’t grow 100 percent organic, and she said: “If you don’t use fertilizers, they (vegetables) grow very slowly. Since people want to earn money quickly, they feel like they have to use some pesticides and fertilizers.”
From Yinong, I went to a nearby Tesco, one of the several big box stores competing in China’s retail market. The results of my survey are shown below. (The unit is Chinese yuan per kilogram, and there currently about 7 yuan in a U.S. dollar.)
YiNong pollution free
Tesco Conventional
Tesco pollution Free
eggplant
8.60
5.60
16.00
cucumber
12.00
1.36
16.00
tomato
9.60
3.80
13.00
potato
6.40
2.50
12.00
ginger
8.0
4.16
No one seemed to be buying pollution-free veggies in Tesco either, but given their huge mark-up compared to both conventional and Yi Nong pollution free, it wasn’t too surprising. Despite not being a cost comparison with certified organics, this survey showed that the price differentials for “healthier” food are indeed much greater than the 20-30 percent found in U.S. or European markets. And the studious avoidance of these products by shoppers in both stores made it clear that the price difference is indeed a huge barrier to the development of a domestic organic market in China.
On my way out of Tesco, I passed people lined up to taste little spoonfuls of Skippy peanut butter being dispensed by a young woman in a mini-skirt, and was reminded of another big challenge for organics in China: marketing. At the BioFach exhibition, more than one vendor had complained that most people have no idea what organic means, so of course they aren’t willing to pay more for it.
