Mark Tallon01.01.09
Organic agriculture is developing at a rapid pace. According to recent estimates, the global market doubled during the 2000-2006 period to exceed $27 billion annually. Of the 138 countries with data regarding arable organic land, China has become the second largest with more than 2 million hectares, $350 million in organic export revenue (2005), and an annual growth rate of more than 30%.
But questions surrounding quality, regulatory control and China's potential impact on the global organic market are threatening its long-term survival. The following offers insight into the evolution of organic China and what its green future may hold for the country, and the rest of the world.
China has been a relative latecomer to the green foods boom of the late 1980s. The 1970s are often defined as a period during which the Chinese government gave priority to the use of chemicals as a means to squeeze the highest yields from limited farmland. For those willing to speak out for pesticide-free foods, arrests and imprisonment were commonplace. In fact, even in the mid-1990s no domestic market existed, so China operated primarily as an exporter of organic goods. It was not until the late 1990s that China became recognized as a player in the organic food market.
However, its development has been hindered by product labeling issues, lack of regulatory standards, increasing cases of food adulteration and the indiscriminate use of farming chemicals (pesticides). According to the Chinese government, an estimated 53,300 to 123,000 people are poisoned with pesticides each year.
Despite these obstacles, China has established new safety standards as well as a recognized organic food certification scheme, which meets the International Federation of Organic Agricultural Movements (IFOAM) standards (detail of this development in the following section). Currently, China has between 250 and 300 different organic products, according to foodsolutionschina.com, and more than 12,000 export permits granted. But two major challenges stand in the way of organic growth in China: trust and price.
Purchase price is still a significant obstacle to domestic acceptance of organic food. In 2004, organic foods in the U.S. commanded premiums of 9–78% over comparable non-organic items, according to John Stevens-Garmon and colleagues, writing in food trade magazine Choices (volume 22, issue 2, 2007). Despite these premiums, Chinese consumer movements related to "eco-food" became popular in cities where expatriate communities enjoyed incomes much higher than local wages, allowing premium purchases of up to 700% over comparable items, according to IFOAM. This small local demand has made room for the development of a sustainable domestic organic market for Chinese grown goods. With domestic demand emerging, a clear framework for organic imports and exports were required to aid the future development of organic produce in China. The framework had to take into consideration two primary factors: development of standards and awareness building at the consumer and farming level.
China first committed to the development of an international organic policy in the late 1980s following discussion between Nanjing Institute of Environmental Science (NIES) and IFOAM. Even following the 1990 launch of a Chinese organic tea in the Netherlands, no clear direction for the development of organic had been put in place. In 1994, the Organic Food Development Centre (OFDC) was established, followed by the introduction of its organic certification standards in 1999. From this point the Chinese organic food industry began to move forward in line with the international standard for management and production of organic food.
The certification of organic goods can now be split into domestic and international goods, and associated logos are awarded to manufactures for use on approved products. While domestic certificates are primarily granted by the OFDC, international validation is carried out via the Organic Crop Improvement Association (OCIA). Additionally the State Environment Protection Administration (SEPA) also published a "Standard for Certification of Organic Products and the Regulation for Administration of Organic Food Logo" in conjunction with the international standard.
Although green and hazard-free foods were already in existence throughout this period of regulatory development in China, an internationally recognized certification for organic produce would have to be adopted if they wanted to trade on the global markets. Despite China's development of its own in-house standards, it was the country's alignment of guidelines and laws via the Chinese National Organic Products Standard (CNOPS) to IFOAM's basics standards in 2005 that gave it international recognition. This development allowed China to ensure international organic compliance for quality, safety and manufacturing.
The implementation and promotion of these standards are conducted through the Certification and Accreditation Administration of China (CNCA). Additionally, the decision of whether natural products are defined as "Organic" or "Organic in Conversion"-the latter defined as three years of no chemical land treatments-is assisted by certified bodies approved by the China National Auditor and Training Accreditation Board (CNAT), in conjunction with the OFDC. Currently, there are 32 certifying bodies in China, but more than 80% of the certifications are carried out by only four organizations. Upon meeting IFOAM's standards, OFDC figures recorded a tenfold increase by 2008 in certified organic farming.
Detailed administrative measures for organic certification through CNOPS are available in the Administration on Quality Supervision, Inspection, and Quarantine (AQSIQ) Decree no.67 2004. This decree came into force around the same time CNOPS adopted IFOAM's basic standards. The document is useful as it provides detailed regulatory guidance for organic food production, certification, labeling and potential punishments for those who violate the law.
Despite these bold moves to position itself as a contributor in the international organic market, China's still facing many obstacles. In order to truly compete in the world market it must develop a more transparent strategy when it comes to regulations and supervision of organic management systems-these are key to building both the domestic and international markets. Until this happens, China's efforts will not be recognized by the global community, and uncertainty over quality will remain.
Domestically, China's organic manufacturers face two chief problems-consumer education and the availability of arable land. Currently, the Chinese consumer is confused by the many terminologies surrounding eco-foods, such as: "hazard-free," "grade A green," "grade AA green" and "organic." As such, identifying what is an "organic" product and what it means as a healthy food choice is difficult for companies looking to exploit this platform. Secondly, much of China's land has been left with an over-farmed legacy, which includes mass contamination by toxic pesticides (banned in 2007).
Although China is one of the largest organic producers in total hectares, only 13% of all farmland is arable land, which averages 0.27 hectares per capita. This is only one-eighth of the U.S. farmland (only 40% of the world average), leaving China's organic manufacturing some serious obstacles to overcome in the next decade in terms of meeting both global and domestic supply.
Export growth continues to feel the impact of the many food safety and adulteration scandals, along with allegations of corruption in the certification process (counterfeit labels). Many international organizations such as IFOAM and the WTO are trying to assist in these potential barriers to growth. According to some reports, if China can iron out some of these issues, its potential organic output value could exceed more than $1 billion during the next five years and a 1-2% share of the world market.
To fully realize the potential of China's organic markets, consumer income will have to continue to rise to meet the price premiums. Further, small farms and independent traders have to be educated and trained to enforce IFOAM standards. Also, arable land may have to be procured from marsh or scrublands. Finally, a government-driven campaign boosting the domestic and international understanding of China's organic markets must be initiated in order for the industry to flourish.
But questions surrounding quality, regulatory control and China's potential impact on the global organic market are threatening its long-term survival. The following offers insight into the evolution of organic China and what its green future may hold for the country, and the rest of the world.
China Goes Green
China has been a relative latecomer to the green foods boom of the late 1980s. The 1970s are often defined as a period during which the Chinese government gave priority to the use of chemicals as a means to squeeze the highest yields from limited farmland. For those willing to speak out for pesticide-free foods, arrests and imprisonment were commonplace. In fact, even in the mid-1990s no domestic market existed, so China operated primarily as an exporter of organic goods. It was not until the late 1990s that China became recognized as a player in the organic food market.
However, its development has been hindered by product labeling issues, lack of regulatory standards, increasing cases of food adulteration and the indiscriminate use of farming chemicals (pesticides). According to the Chinese government, an estimated 53,300 to 123,000 people are poisoned with pesticides each year.
Despite these obstacles, China has established new safety standards as well as a recognized organic food certification scheme, which meets the International Federation of Organic Agricultural Movements (IFOAM) standards (detail of this development in the following section). Currently, China has between 250 and 300 different organic products, according to foodsolutionschina.com, and more than 12,000 export permits granted. But two major challenges stand in the way of organic growth in China: trust and price.
Purchase price is still a significant obstacle to domestic acceptance of organic food. In 2004, organic foods in the U.S. commanded premiums of 9–78% over comparable non-organic items, according to John Stevens-Garmon and colleagues, writing in food trade magazine Choices (volume 22, issue 2, 2007). Despite these premiums, Chinese consumer movements related to "eco-food" became popular in cities where expatriate communities enjoyed incomes much higher than local wages, allowing premium purchases of up to 700% over comparable items, according to IFOAM. This small local demand has made room for the development of a sustainable domestic organic market for Chinese grown goods. With domestic demand emerging, a clear framework for organic imports and exports were required to aid the future development of organic produce in China. The framework had to take into consideration two primary factors: development of standards and awareness building at the consumer and farming level.
Standards, Regulations & Harmonization
China first committed to the development of an international organic policy in the late 1980s following discussion between Nanjing Institute of Environmental Science (NIES) and IFOAM. Even following the 1990 launch of a Chinese organic tea in the Netherlands, no clear direction for the development of organic had been put in place. In 1994, the Organic Food Development Centre (OFDC) was established, followed by the introduction of its organic certification standards in 1999. From this point the Chinese organic food industry began to move forward in line with the international standard for management and production of organic food.
The certification of organic goods can now be split into domestic and international goods, and associated logos are awarded to manufactures for use on approved products. While domestic certificates are primarily granted by the OFDC, international validation is carried out via the Organic Crop Improvement Association (OCIA). Additionally the State Environment Protection Administration (SEPA) also published a "Standard for Certification of Organic Products and the Regulation for Administration of Organic Food Logo" in conjunction with the international standard.
Although green and hazard-free foods were already in existence throughout this period of regulatory development in China, an internationally recognized certification for organic produce would have to be adopted if they wanted to trade on the global markets. Despite China's development of its own in-house standards, it was the country's alignment of guidelines and laws via the Chinese National Organic Products Standard (CNOPS) to IFOAM's basics standards in 2005 that gave it international recognition. This development allowed China to ensure international organic compliance for quality, safety and manufacturing.
The implementation and promotion of these standards are conducted through the Certification and Accreditation Administration of China (CNCA). Additionally, the decision of whether natural products are defined as "Organic" or "Organic in Conversion"-the latter defined as three years of no chemical land treatments-is assisted by certified bodies approved by the China National Auditor and Training Accreditation Board (CNAT), in conjunction with the OFDC. Currently, there are 32 certifying bodies in China, but more than 80% of the certifications are carried out by only four organizations. Upon meeting IFOAM's standards, OFDC figures recorded a tenfold increase by 2008 in certified organic farming.
Detailed administrative measures for organic certification through CNOPS are available in the Administration on Quality Supervision, Inspection, and Quarantine (AQSIQ) Decree no.67 2004. This decree came into force around the same time CNOPS adopted IFOAM's basic standards. The document is useful as it provides detailed regulatory guidance for organic food production, certification, labeling and potential punishments for those who violate the law.
The Future of Organics in China
Despite these bold moves to position itself as a contributor in the international organic market, China's still facing many obstacles. In order to truly compete in the world market it must develop a more transparent strategy when it comes to regulations and supervision of organic management systems-these are key to building both the domestic and international markets. Until this happens, China's efforts will not be recognized by the global community, and uncertainty over quality will remain.
Domestically, China's organic manufacturers face two chief problems-consumer education and the availability of arable land. Currently, the Chinese consumer is confused by the many terminologies surrounding eco-foods, such as: "hazard-free," "grade A green," "grade AA green" and "organic." As such, identifying what is an "organic" product and what it means as a healthy food choice is difficult for companies looking to exploit this platform. Secondly, much of China's land has been left with an over-farmed legacy, which includes mass contamination by toxic pesticides (banned in 2007).
Although China is one of the largest organic producers in total hectares, only 13% of all farmland is arable land, which averages 0.27 hectares per capita. This is only one-eighth of the U.S. farmland (only 40% of the world average), leaving China's organic manufacturing some serious obstacles to overcome in the next decade in terms of meeting both global and domestic supply.
Export growth continues to feel the impact of the many food safety and adulteration scandals, along with allegations of corruption in the certification process (counterfeit labels). Many international organizations such as IFOAM and the WTO are trying to assist in these potential barriers to growth. According to some reports, if China can iron out some of these issues, its potential organic output value could exceed more than $1 billion during the next five years and a 1-2% share of the world market.
To fully realize the potential of China's organic markets, consumer income will have to continue to rise to meet the price premiums. Further, small farms and independent traders have to be educated and trained to enforce IFOAM standards. Also, arable land may have to be procured from marsh or scrublands. Finally, a government-driven campaign boosting the domestic and international understanding of China's organic markets must be initiated in order for the industry to flourish.
