Building trust in food

Community supported agriculture projects may have started to help address Chinese consumers’ fears about food safety, writes H Frederick Gale.

After a string of toxic-food incidents in recent years, some commentators in China describe the nation’s food industry as facing a crisis of consumer confidence. Many consumers feel they can no longer rely on the usual means of identifying “safe” food after reputable companies with special “inspection-exempt” status were implicated in the melamine milk-adulteration scandal, stories surfaced about lax certification and fake organic food and one of China’s largest meat companies was caught selling pork containing illegal feed additives.

A budding “community supported agriculture” (CSA) movement in China is a new option for consumers searching for ways to build trust in food. The CSA concept was developed in Europe, Japan, and the United States to connect urban consumers with their agricultural roots. New CSA arrangements in China preserve the broad goals of producing and consuming food in an ecologically balanced manner, but the direct links with producers have an added appeal to Chinese consumers searching for safe food.

CSA is an arrangement where consumer-members pledge support for a grower and share the risks and benefits of production. Members typically make an advance payment that provides the farm with working capital. Members then receive regular deliveries or distributions of the farm’s produce over the course of the growing season.

The most prominent Chinese CSA is the “Little Donkey Farm” on the outskirts of Beijing. Farm members sign a 20-week agreement and pay a fee at the beginning of the season for a “distribution share” that entitles the member to a box of produce from the farm each week. The farm also offers the option of a “working share” that provides a plot of land, use of tools and technical guidance to members who want to grow their own produce.

The Little Donkey Farm was founded in 2009 by Shi Yan, a doctoral student at Beijing’s Renmin University who worked on a CSA farm in Minnesota, in the Midwestern United States, and came back to China to promote the concept. The Little Donkey Farm began with about 50 members and 20 mu (about 1.3 hectares) of land that formerly was used as a tree nursery outside Beijing’s sixth ring road. In 2010, membership grew to over 280 distribution shares and 120 working shares—mostly through word-of-mouth—and the farm expanded to 230 mu (about 15.3 hectares).

CSAs are a new—and still tiny—part of China’s food system. Unofficial counts say there are about 100 CSA projects in China. A “country fair” held in the Renmin University gymnasium in November 2010 listed about a dozen CSA and organic farms in the Beijing area. Other CSAs have been set up in the cities of Qingdao, Shanghai, Chongqing, Xian, Henan and Tianjin.

Members are attracted to Little Donkey Farm for various reasons, but food safety concerns seem to be prominent. A report in the Chinese newspaper the International Herald Leader described a retired worker surnamed Yi, who comes to the farm to tend her garden twice a week. Yi was drawn to Little Donkey Farm as a solution to her loss of trust in the food system. She said, “I used to work in commerce and I know food distribution methods – it’s hard to control pollution.”

“Establishing trust” is one of the objectives listed by The Little Donkey Farm on its website. Shi emphasises that first-hand contact can substitute for a government-sanctioned organic certification. In an interview posted on an online forum, Shi explained that China’s organic certifications are geared toward large farms operated by companies and encouraged consumers to visit the farm and certify it themselves.

Renmin University professor Zhou Li, another proponent of CSAs in China, expresses similar views. He has described CSA as a reaction to the industrialisation of agriculture in China: “Food safety is a crisis of trust…at its deepest level it is the separation of man from nature and a separation of man from man.”

Trustworthy food can be expensive. Little Donkey Farm’s cabbage costs 8.3 yuan (US$1.26) per jin (0.5 kilograms) including delivery, nearly 10 times the price of cabbage in produce markets. Little Donkey Farm offers pork that costs about three times the supermarket price of common pork. In an interview with the Tianjin Daily newspaper, Shi Yan acknowledged that the farm’s vegetables are expensive, but pointed out that they are still less than the 15-yuan price for organic vegetables in supermarkets.

In China, retail food prices are generally low. Since the 1990s, China’s food prices have occasionally spurted upward (in 2010, for example), but over the last two decades as a whole Chinese food prices have risen much more slowly than consumer incomes. Compared with 20 years ago, Chinese consumers eat more meat, fish, off-season vegetables, exotic fruits and meals in restaurants, yet the share of urban consumers’ disposable income spent on food fell from 46% in 1990 to 26% in 2009. (In the United States the share is under 10%.)

China’s low food prices reflect a highly efficient marketing system, but low food prices could also reflect the “lemon principle” first advanced by economist George Akerlof in 1970. If consumers cannot easily discern “safe” food from “unsafe” food, they may suspect all food of being unsafe. Just as consumers typically discount the price they are willing to pay for a used car that might be a defective, “lemon” consumers are not willing to pay much for food in the open market if they can’t be sure it’s safe. Under these conditions, Akerlof’s principle suggests that “unsafe” food may drive “safe” food out of the market.

CSAs are an innovation that addresses the disconnect in China between the willingness of consumers to pay a premium for “safe” food and the lack of reliably safe food in the general marketplace. In the Tianjin Daily, Shi said that some potential CSA members were put off by the high cost and up-front payments, but she noted that some who joined the Little Donkey CSA were reprioritising their spending. Chinese consumers have traditionally tried to conserve on food spending, freeing up cash to spend on name-brand apparel, cell phones and home furnishings. But the growing popularity of CSAs shows that China has a small but growing segment of consumers willing to pay higher prices for food they can really trust.

CSAs may not be the final answer to China’s food confidence problem, but they do provide another choice for Chinese consumers who shop in a haze of uncertainty. CSAs are just one of a number of experiments with new marketing arrangements, corporate management strategies, and traceability systems that are changing the way Chinese people buy and sell food. Hopefully, these experiments will produce a recipe for food that consumers can trust.

H Frederick Gale works at the Economic Research Service in the US Department of Agriculture. The views expressed in this article are those of the author and may not be attributed to the Economic Research Service or the US Department of Agriculture.

Homepage image from jrodmanjr