CHINA SECURITIES JOURNAL Industry Survey: Shanxi Yongji Farmer Develop The Organic Agriculture Business model

From the data in 2013, China government fully support for family farm, cooperative and some big company for contracts. Started from 2004, the words of'cooperative'had been mentioned for 9 times.

Since the pollution harms the agriculture a lots, food safety problems happened,the cooperative become the hope for solve these problem. From the research, there have 67000 cooperative with  Business registration. But there are one problem so many cooperative, it is about the quality. At the same time, some of the cooperative which running in good ways and being good developed are stand out. The cooperative from Shanxi Yongji believed on the promotion of organic and Comprehensive Agricultural Association business model, so it become the business model of cooperative in mainland China. They got 3865 crew and 773 team in this cooperative, the production handled by the leader, all process will through the Unified soil testing , Unified prevention medication , Unified seed, Unified technical training, Unified standard sales, we want the greatest degree for avoid the quality hazard. Recently, one of the journalist from China Securities Journal was going to ' Pu Han Community' and their apartments for discover the how the cooperative running their business and the developments.

Develop the Organic Agriculture 

The 46 years old female farmer, Zheng Bing, being response for 22 cooperative.

In 1998, Zheng' s, he started up the “ Zhaizi technology center”  which is based on agricultural sales as a service target at Yellow River Beach. In 2001, she started the woman association, and the following become the first Farmers' Association with Home registration in mainland China. In 2007, there were other 28 cooperative registered and started with organic crops. Nowadays, because of the lead from Zheng Bing, ' Pu Han Community ' became social services and business collect as main line, the cooperative as the core value, and there the big Integrated community included 14 pieces of plates, and cover two villages, 43 sub-villages and 3865 crews. 

In between, there are 22 cooperative tried to plant some organic crops, and promote. According to the ' Pu Han Community ' in 10 year plan, in 2017, the 80000 Mu of the members will divide 30000 Mu for organic crops. Based on the mentioned of Zheng Bing, it already had 9000 Mu era for organic crops.

' In promotion of organic crops, they step by step. Before the cooperative, the youth organic agricultural farm already test and demonstration for 3 years. On the official promotion, we tried with make assumptions boldly; find proofs with care. 'said Zheng Bing.

On the bottom of traditional way of agricultural, we will started from landfill recover, we won' t use the fertilizers and pesticides, and we change it into organic composting, also we will use pepper water, marsh leaf, vinegar to insect repellent.

' People may think the organic agricultural will sacrifice production.  According to the data in recently two years, the production of corns, wheat and cotton are same production level with the traditional way. ' The organic corns production level are higher than than traditional one for 300-400 jin in 1 Mu. ' said Zheng Bing.

In price way, the price of organic crops are much higher than the traditional one. As the running of the cooperative and Zheng Bing mentioned, the corns from organic agricultural have the higher price than the traditional for 1 cent in each jin. It increase the product competitiveness, we can see the organic crops able to bring the good benefits.

However, organic agricultural as green agricultural, it already has been the broad affirmation of the community, but the process of the promotion are not really effective. Here is the view of the deputy director of the Agriculture Bureau in yongji about ' Pu Han Community ' to develop organic agricultural, it relate to the cooperative' s Organization in ' Pu Han Community ' . He kept explain his points of views, ' Nowadays, the selling model trend to turn into ' company +  headquarter+  Farmers ' , but now is far complex from that, for example, lets talk about the organic cotton. In the process of organic cotton agricultural, they both use piece of production base, but the different is they still got the organization of cooperative, so that they achieved they rules of supervision and unified promotion, it made the organic cotton agricultural become successful.

Zheng Bing introduced to the reporter' In our cooperative,we have 3865 members, we defined into 733 group, every group we have 5 members, all production are supervise by the team leader, I believed it can solve the problems of quality. ' In the specific planting parts, the United Society impelled the cooperative to finished the 5 parts of united : Uniform soil testing with fertilizer, Unified prevention medication, Unified selection of seeds, Uniform technical training and Unified standard sales. In those from standard we believed it can strictly enforced. The more important parts is, through training by the United Society, the organic agricultural already deeply rooted into the mind of members, the developed of it is conceptual consciousness.

Comprehensive Agricultural Association into the direction of development

' Our biggest experience were about comprehensive development' the Urban and rural interactive person in charge of Pu Han Community who be responsible for buy and sell, Zhang Jinglong in the interview of China Securities Journal reporter said.

In recently years, Zhang Jinglong examined the professional cooperative from Jiangxi, Henan and some province in mainland. In his point of view, many of the cooperative can' t run over 3 years. And the reason he think is about the the develop model is not diversify and the scale is small.

Here are the reason why Pu Han Community can long last. Pu Han Community is the integrated large  -  scale community, not only about the core plate organic agricultural cooperative, but also about the economic class plate of youth organic farm and the iteration of urban and rural. And then is about the public services class of Old age recreational service department, Women's Cultural Activity Center, Health Association and Child Education, Community Farmer School and Ecological home.

Somehow, Bing told the reporter the reason why adhere to Comprehensive development for 15 years' To adhere economical and cultural can have benefits in same time. In one hand, it can provided the financial support for cultural activities, on the other hand, it can enhanced the cohesion of members, and then it can energize the develop of economical.

Chinese Academy of Social Sciences Institute of Sociology researcher, Yang had done the research by visited the Po Han Community, She said' In the worldwide, the develop model like Pu Han community was existed before us. For example, in Japan, Korea and China Taiwan had already developed as a comprehensive model for many years. We grouped a delegation to visit Korea Agricultural Association, in the introduction they state clearly as a unified agricultural management system of Korea Agricultural Association. In Japan and China Taiwan, both of them claimed that they are developing the Comprehensive Agricultural Association.

In the views of Yang, the Comprehensive Agricultural Association is the way better than Professional cooperatives. ' Firstly, the crops of professional cooperative are not diversify compare tho the comprehensive agricultural association. Secondly, the economic function of professional cooperative are single compare to the comprehensive agricultural association. '

In 2013, the terms of ' Professional' was deleted by No.1 Central Document Focuses on Rural Issues, it clearly showed that the government want to develop the cooperatives model into the comprehensive agricultural association. The Director of Beijing Nonghe House Counseling Center who keep concern and supported the Comprehensive Agricultural Cooperative, Shi Yuan Cheng was interviewed by reporter, he told the reporter although the registered Comprehensive Agricultural Cooperative are still handful, but the future is bright. He said' The Comprehensive Agricultural Cooperative is the right way to solve agriculture, farmer and rural area problems. '

Without doubt the Comprehensive Agricultural Cooperative is diversify. Besides of  ' Pu Han Community' , nowadays the small town in the coastal zone, like the Zhangjiagang City, Yonglian town,they don't move around,they way it developed is about gather the population, gather the industry and agricultural, economic and social comprehensive development.It is kind of new type development model.

Multi - level market docking

In recently year, the overstock issue of agricultural products happened, it caucusing widespread concern in society. How the solo farmer connected with the market become the hot issue, that' s why the advantages of Comprehensive Agricultural Cooperative become the hope.

In Pu Han Community, the agricultural products by organic agricultural cooperative can external sale because of the interaction between urban and rural. Besides of the ' Company+ Cooperation'  business model, there have the traditional dealer acquisition and the direct docking selling model. In direct docking model,last year it has been started, mainly we distributed the the organic products produced by the cooperative to the community citizens from Yuncheng and Yongji City directly. From now on, it already developed ton 400 of households, the sale accounting for urban and rural interaction overall sales about 10% - 15%, in the views of Zhang Jinglong, the key factor why it can be success is it fulfill the concept with customers in organic foods. The food safety issue being concerned, customers trend to care about the health of foods, so the organic foods being popular. Zhang Jinglong tried to extend this kind of business model.

In the way of dealer purchases, Zhang said' We lack of communication with dealer used be, and we take the lesson of overstock, so we extend the introduction of the intensity of the dealer to solved the problems. ' Another views of Zhang, he think the reason why many of the dealer willing to come because we unified acquitted the organic products and it can be able to directly deal with the docking. ' It can cut down the purchase cost and unified satisfactory the specifications. In path of the selling price, the effect of the unified sales is clear. United Society can through the interaction of urban and rural made the better price than directly connect with the dealer.

Here is the ' Company+ Cooperative' business model. Started from 2011, the united society to carry out substantive cooperation with Mecilla LTD from Hong Kong, the Mecilla LTD responded to unified acquisitive the organic cotton produces by unified society, In past two years, it had been already cumulative acquisitive about 17-18 million tons.

Mecilla LTD Business presenter, Lu Feng told the reporter' There are three reason we use Company+ Cooperative business model: Low cost, Low raise+ Customers requested. '

'This business model can also cut down the operational risk.'The agricultural is the high input,long return,far output industry,if the production and operation risk is high if directly run but company.On the other hand,the chairman of Mecilla LTD,Tong Yeung told the reporter'We developed the organic cotton,it is hard to supervise with over 10000 clients by ourselves, unified society can.

'Company+Cooperative'business bring the good profits to unified society,Mecilla LTD purchased the organic cotton from it over 20-25% by market price.

Can the 'Company+ Cooperative' business model achieve Win-Win it depends on the quality of cooperative. Yeung said' Before we found Po Han Community,we faced lots of troubles. ''Nowadays, lots of cooperative are irregular,organizational power is weak. '

Enhance own- hematopoietic function

Started from 2007, the phenomenon of fake cooperative is very serious, some of it were tried to Cheat the country' s preferential policies and support funds.

When we talk about the problem of the cooperative irregular, Bing said' We are not mainly want to grab money from government. We want to gather the members,also the buy and sell,become the complete united.If we only rely on the money paid by government,we can really build up the health business model. But if we use the money by ourselves I believed that  it can be the motivation to build up the business and it can be more easy to set the rules. ' He told the reporter ' But somehow,there is some divergence between it.In 2007 to 2009, it had 6 cooperative take the initiative to withdraw from unified society. ' They just try to grab money from government. ' said Bing.

At the results, those 6 cooperative can' t run it long when it withdraw from unified society.

By no mean, the cooperative need money. In Zheng' s point of views, he think the most important part is the cooperative itself should build up the internal money cycle. The bottom of Pu Han community was about agricultural shop, and it grow up regularly till now, we formed a certain amount of capital accumulation. Besides of it, the members need to pay certain of fund for daily running, when the unified through the interaction between urban and rural to sell and buy, it will define 60%  as the from of in kind to members, 20% will define to community services, and the rest of 20% will define as provident fund, it is the way to fulfill the need of develop the society.

In last September, head of the Department of Financial Services, Miss Wang told the reporters, ' We aims are not extend the credit amount like Fuping Micro Credit Limited, we want to help the develop of society. ''After the establishment of financial services department for just half years, it already has been cumulative payment of loans 10 million RMB, it help out 600 members, and we glad to see the repayment rate is 100%. Wang kept saying' On the one hands, we provides low loans interest. On the other hand, we won' t set the time limited to our clients. ' The money of  Department of Financial Services is all from the members they paid for the rent and crops sales, it become the healthy money cycle.




























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