Down on the farm

By Liang Fei Source:Global Times Published: 2011-8-8 22:41:00

Zhang Tonggui, owner of Tony’s Farm. Photo: IC

About 50 kilometers from downtown Shanghai there is a vast area of vegetables, bordered by a small river. This is Tony's Farm, the largest organic farm in Shanghai.

The owner of the farm, Zhang Tonggui, decided to start the project seven years ago. At that time he was the owner of a successful chain of Sichuan restaurants in Shanghai. But in order to start his organic business, he sold the restaurants, and invested more than 250 million yuan ($39 million) to build the farm.

"I have a passion for organic agriculture," said Zhang, "not only because I majored in agriculture in college, but also because organic food tastes nice!"

Zhang, 48, has big dreams for his organic business. He now has two farms in Shanghai, covering an area of more than 550 acres (223 hectares) in total. And he is planning to set up two more farms in Beijing this year.


Zhang now has more than 7,000 families ordering vegetables from the farm, and over 50 corporate clients, including Baosteel, Intercontinental Hotel, Shanghai Stock Exchange, and restaurant chain South Beauty. Last year, the total sales volume of Zhang's farm business reached 50 million.

But things were not so smooth at the beginning.

In 2005, when Zhang was embarking on his organic plan, many friends and family members questioned the wisdom of his investment.

In the first three years, the company did not generate any sales. Since most farmland in China makes heavy use of fertilizers, it took time for the soil to regain its natural balance. For Zhang's farm it took three years.

Organic farming also requires high quality water. Just improving the water supply cost Zhang more than 60 million yuan.

"The initial investment in the farm was about 250 million yuan, and at that time all my friends felt nervous about my investment," said Zhang. "People did not understand what I was doing," which according to Zhang, was his biggest frustration at that time.

Nearby farmers also did not understand. What they knew was that there was a vast area of land lying idle, with nothing being produced.

"A Xinhua News Agency reporter wrote an article about my farm, saying that there was a vast area of land lying idle near the Pudong International Airport. The report caught the attention of top leaders. I was under great pressure at that time," Zhang recalled.

But with patience and persistence, Zhang's efforts began to pay off. In 2009, Tony's farm finally recorded its first sales.

Last year, Tony's Farm received 70 million yuan in investment from venture capital firm Tsing Capital, a strong vote of confidence in the company's future. The firm is now engaged in its second round of financing.

More interest

Currently Zhang's farm offers more than 100 kinds of vegetables. They are sent directly to consumers, instead of supermarkets, in order to keep them as fresh as possible.

For example, a three-month delivery package, which includes 40 kilograms of vegetables, costs 1,580 yuan. But Zhang said that he does not think his product is overpriced.

"It is only the price of a cup of coffee (for 1 kilogram of vegetables)," said Zhang, saying that the company is targeting consumers with strong purchasing power. "We are aiming at 1 to 5 percent of all consumers," said Zhang.

Besides fresh vegetables, Tony's farm also raises some pigs and chickens to provide untainted meat and eggs to consumers, as well as providing "green" manure for the farm.

Zhang told the Global Times that he wants to build the farm into a place where people can really enjoy the "organic lifestyle." Currently the farm offers hospitality services to its members, and training programs on knowledge of organic food are also available.

Zhang said that his company is expecting to grow at 30 to 50 percent annually in the next few years. And he is also planning to build two organic farms in Beijing, which will require investment of 200 million yuan.

"Organic agriculture still has plenty of room for further development in China," he said.

According to Zhang, in developed countries, 8 to 10 percent of all the vegetables consumed are organic, but in China, it is still less than 1 percent.

"But in the next five years, about 5 percent of vegetables consumed in big cities like Beijing and Shanghai will be organic, and the market for organic food in the two cities will exceed 10 billion yuan," he said, confidently.

A growing number of companies are eyeing the organic market. At the beginning of this year, real estate conglomerate Dalian Wanda Group invested 490 million yuan in rural Beijing to set up an organic farm. And beverage maker Huiyuan Group also owns an organic farm in Beijing.

The country's growing appetite for organic produce has also attracted foreign investors.

In 2006, three Japanese companies – Asahi Breweries, Sumitomo Chemical and Itochu Corporation – formed a joint venture to grow organic produce in Shandong Province, with total investment of around $2.6 million.

The joint venture, Shandong Asahi Green Source Hi-Tech Farm, rented 100 acres of land in Laiyang, Shandong Province, to grow organic vegetables. "Our clients are mostly high-end supermarkets in Shandong, Beijing and Shanghai," said Maejima Keiji, deputy manager of the company. He said the company expects to start making a profit in two years.

Growing pains

Wang Ying, an industry analyst with Beijing Orient Agribusiness Consultant Ltd, said that due to the number of recent scandals over food safety, domestic consumers are now more interested in organic food. "Private organic farming is getting popular now and more and more companies will also start to produce organic food," said Wang.

But due to the absence of industry standards, many problems have surfaced. Last month, various media reports said that a leading organic vegetable brand in Beijing called Xiaotangshan actually got all its vegetables from a wholesale market, rather than from an organic vegetable farm.

"We are in talks with the Ministry of Agriculture to help set up industry standards," said Zhang from Tony's Farm.

Zhang said that the lack of talented graduates in organic farming is also an issue faced by the sector.

"Many college students feel reluctant to pursue a career in agriculture, but Chinese organic farming needs talent in order to develop further," he said.

Zhang's experience has proved that organic farming can offer a good career. "We will be Shanghai's first listed company that produces organic agriculture," he said.

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