Ancient Farming Makes A Comeback

Asahi and other Japanese companies rent a tract of land in Shandong, China and plant vegetables without using pesticide and chemical fertilizer.

 

In Laiyang, Shandong, a Japanese company rents 1,500 mu (about 250 acres) of farmland for farming and cattle raising. This company aims at China’s high-end market and mainly launches high-end agricultural products.

 

At first, local farmers were surprised to see Japanese farming in their area. As time passed, these farmers gradually became annoyed with the Japanese because they farm without using pesticide and chemical fertilizer. The land even had weeds. “They are abusing the fertile land they have,” one farmworker said.

 

When the world is exposed to the food safety problems, this Japanese company plans to expands its distribution system to all of China. The executives believe that agriculture will return to their methods. According to them, using pesticide and chemical fertilizer only provides short-term benefits and will be yielded in the future.

 

This company, Asahi Green Source Co., Ltd (Asahi Green Source), is a subsidiary of Japanese beer maker Asahi. Two other Japanese companies, Sumitomo Chemical and Itochu, also have stakes of in the farm company. Though the three Japanese companies are all listed on the Fortune 500 list, they have little experience in farming.

 

Five years ago, Asahi Green Source began a 20 year lease on a 1,500 mu area of land in Laiyang. The company has yet to see profits and has become the laughing stock of the area.  

 

“They don’t know how to farm or how to make use of farmland,” local farmhands say and they go on to admit that they think less of this Japanese company.

 

It is true that Asahi Green Source does not farm the same way the locals’ farm. The lack of chemical fertilizer, pesticides, and weeding, obviously come as very obscure way of doing things. Because of Asahi’s more organic practices, each acre of their land only produces half that of their local counterpart.

 

Some peasants even question whether Japanese actually rented the land for farming. The more creative stories say that the Japanese are actually look for mines buried under the earth, or that they actually want to build a gain base, to store food for their country.

 

Soil survey before renting

It is said that the Japanese made a thorough survey of the soil before renting this tract of land.

 

According to the land lease contract, Asahi Green Source pays 1000 yuan per mu (one mu equals 0.16 acres) every year. “At first, I don’t know what the Japanese would do with the land. When I saw them sampling in the land, I thought they were going to dig gold mines,” says one of locals.

 

The project was started in 2006 with the supervision of Shandong government.

 

Zhang Gaoli, then Party Secretary of Shandong, hoped that Japanese companies could make use of their advanced technologies to build an exemplary agriculture project. His thoughts were that the Japanese company could to help farmers improve food safety in Shandong and thus, increase the local farmers’ income. He hoped that the products from this project could break the “green barrier” of Japan, and other countries, which have strict requirements over imported foods.

 

According to vice president of Asahi Green Source, Maejima Keiji, Asahi was talking with Tsingtao Beer about possible cooperation on projects and when they heard about the Shandong farming they showed great interest.

 

This was the first time Asahi has engaged in an agriculture development. Therefore, it invited Sumitomo Chemical and Itochu to found Asahi Green Source together. Asahi took 73% of the joint venture’s stakes.

 

Sumitomo Chemical is a specialist in agricultural devices and services while Itochu is a company focused on retailing and logistics. Maejima Keiji said that Asahi invited them because of their advantages in the whole industry chains.

 

The farm lies in a town named Muyudian. According to the town’s head, a dozen of Japanese and Chinese experts came to different towns of Laiyang to conduct surveys about local soil conditions. Finally they chose Muyudian Town, which is next to the water reservoir of Laiyang and above all, has no plants around it.

 

But the process of leasing farms was not as easy as expected. Because the land is quite fertile and farmers here live on planting and selling vegetables, most of them were not willing to lease their land to Japanese. The representatives of local peasants raised the rent to 800 yuan per mu and required that the rent would increase by 200 yuan every five years.

 

Surprisingly, the Japanese agreed with this price. Therefore, local peasants, who could only earn 600 yuan from one mu of land at that time, agreed to lease their land to Asahi Green Source.

 

No pesticide, no chemical fertilizer

Local laborers were surprised to find that the Japanese leased such a large tract of land for farming. They were curious to see how these foreigners would farm, but gradually, their curiosity turned into confusion or even rage.

 

According to a local laborer named Lian Yusheng, Asahi Green Source set up greenhouses on the land in the first year and planted asparagus, sweet corns and strawberries there. Outsiders were not allowed into these greenhouses so local people did not know much information. All they knew was that the strawberries from these greenhouses were sold at more than 100 yuan per 500g.

 

The Japanese also planted corn and wheat in the open field. They chose the same breed of crops as the local farmers but their planting methods were different.

 

Asahi Green Source’s farm lies opposite the farms of Longda Group, largest agricultural company in Laiyang. The farm was divided into three areas with wire netting and was equipped with cameras and searchlights.

 

An old local peasant with the surname of Zheng said that he had never seen people farming in that way. “The Japanese seem to bet their harvest on the ‘God’s will’. How can harvest happen in a farm filled with weeds?”

 

Some experienced farmers estimated the output of Asahi Green Source’s farm just by looking. “The output per mu cannot be higher 200 kg, much less than our average output.”

 

The different farming methods have caused several unexpected problems for Asahi Green Source. Since Asahi never uses pesticides in farming its farm is especially susceptible to pest attacks and that’s just what happened. Their farm was attacked by a large swarm of pests, which then spread to the farms of locals, and cause big losses for everyone. The angry peasants then demanded Asahi Green Source for compensation on their losses and the matter remains in court.

 

In addition, local peasants have sued the Japanese company several times because they could not stand the awful smell from the manure – in 2007, Asahi Green Source introduced 1800 Holstein dairy cows and all the manure of these cows have been collected and used, causing that awful smell.

 

Other differences with the Japanese farming technique have continued to confuse the locals. Asahi Green Source’s waters their plants using a dug a 200-meter deep well in the field. In comparison, local peasants’ wells are only 20 meters deep.

 

In the first two years of Asahi Green Source’s farming, a part of the land was even left uncultivated. Some peasants wanted the Japanese company to return the uncultivated land to them but this idea was quickly rejected.

 

Circular farming

Manure from cows are used to improve the quality of soil for better, chemically free crops. These crops are also used to feed the cows which often allows for high-quality milk production for humans, along with more manure for fertilizing.

 

This is the “circular farming” that Asahi Green Source adopts. Maejima Keiji says that it is normal for local peasants to misunderstand them. He said that this project’s goal is more than just profits; it is also to serve as an example for improving the quality of crops.

 

“This is the first time we engaged in ‘circular farming’. So it is normal to have trouble in the first five years. In my opinion, the first tens years will be used to improve the soil quality and conduct experiments. We do not expect profits in this period,” says Maejima Keiji.

 

Maejima Keiji puts forward the ancient Japanese proverb– “fertilize land before farming”. “That’s what we are doing now,” he says.

 

Zhao Binghui, a local laborer who has worked in Asahi Green Source’s farm for two years, thinks that the soil quality of Asahi Green Source’s farm is indeed better than the other farms.

 

Maejima Keiji explains that the corns and wheat from Asahi Green Source’s farm are all used to feed their milk cows. In order to keep the high quality of milk, pesticide and chemical fertilizers are forbidden.

 

Asahi Green Source’s milk is priced at 22 yuan per liter, 1.5 times more than ordinary milk in China. The strawberries from this company are sold at 120 yuan per 500g, the highest in China.

 

Though local peasants do not agree with Asahi Green Source’s farming pattern, they do admire the high quality, and prices, of its products.

 

“The milk is much better than other milk I have seen because their cows’ food is even better than people’s food,” says Lian Yusheng.

 

The blank market

Laiyang is the largest county-level city in Shandong and is often called “vegetable garden” in Japan because 90% of the vegetables from this city are exported to Japan.

 

However, Asahi Green Source considers China as its only market. According Maejima Keiji, China was considered as Asahi Green Source’s only market from the beginning of establishment. “We made a thorough survey about the market and found that there were more and more consumers needing “safe” and “high-quality” foods in major cities of China.”

 

Asahi Green Source eyes the high-consumption groups of China. According to the statistics, the number of luxury consumption people in China is about 50-60 million people, accounting for 3%-5% of the country’s total population.

 

In addition, the number of these people is increasing. Besides from Asahi Green Source, many other companies have sensed this. For example, Longda Group from China previously sold 85% of its high-end products to foreign countries. Now the proportion has dropped to 60%. Gong Mingjie, general manager of Longda Group, says that the domestic high-end agricultural product market will be a huge pie in the future.

 

Maejima Keiji shares the same viewpoint with Gong Mingjie. He believes that more and more people will choose its products as the living standard of Chinese people increases. “Now, our milk is only sold in Beijing, Shanghai and Shandong but the sales are increasing by 20% per month.”

 

After the “melamine event” in 2007, the domestic dairy products were gradually snubbed by consumers and foreign dairy products took over the dominant place in China. According to the statistics, the foreign dairy brands have already taken 80% of the market in China’s major and second-tier cities.

 

Therefore, foreign companies represented by Asahi Green Source began to share the blank market, which has been left because of Chinese enterprises’ recession.

 

Land transfer as the premise

The government officials of Laiyang think Asahi Green Source’s operation pattern has a bright outlook.

 

A local official says that the circulative farming of Asahi Green Source is rare in China and can serve as a good example for this country.

 

Maejima Keiji hopes that more Chinese companies or farmers can follow their suit. However, right now, no company is doing this.

 

It is necessary to note that Asahi Green Source is not the only foreign company leasing farmland in China. Early in 1997, a Singaporean company leased 6,000 mu (about 1,000 acres) of land in Shandong for 20 years to plant fruits.

 

Asahi Green Source and the other foreign companies investing in farming in China need large tracts of land. They usually lease the land from the farmers in different places via local agricultural cooperatives. This kind of land transfer is the premise for their business in China.