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Articles

THE RISE OF CHINA’S ORGANIC FARMS

By Sarah O'Meara     12 Aug 2016

Can a small, self-financed organic farm compete with larger-scale, subsidized competitors using innovation and ambition alone? Entrepreneur Jane Tsao explains why growing organically is the best way for a business to flourish

Situated on the outskirts of China’s largest city, BIOFarm looks like a rural idyll. Local schoolchildren from Shanghai giggle in a greenhouse as they learn about growing vegetables, workers pick strawberries to pack up and deliver to city residents, and a rabbit that’s escaped from its hutch makes friends with a goat in a nearby pen.

But go beyond the bucolic scene and you’ll find a modern commercial venture led by one of the most ambitious minds in China’s burgeoning organic industry. Jane Tsao, 52, has been one of the driving forces behind the expansion of BIOFarm, an 83-acre farm in the vanguard of Shanghai’s organic food movement. The farm grows, sells and delivers more than 300 different types of vegetables to e-commerce sites, as well as homes, restaurants, supermarkets and hotels across the city.

Shanghai’s organic food scene has blossomed in the past decade thanks to a handful of farming and e-tail pioneers such as Tsao, who have ensured local service companies can rely on a regular supply of produce, from staple vegetables to more exotic varieties such as green amaranth, yellow beetroot and edible flowers.

Fresh fruit and veg—plus edible flowers!
Fresh fruit and veg—plus edible flowers!

‘Our major difference to the other organic farms around Shanghai has always been that we don’t have any outside investors. We want to be self-sufficient,’ says Tsao, distinguishing her business from competitors who have pulled in millions in government subsidies and investment.

‘Farmers like me want to prove to ourselves that running an organic farm is a worthwhile and commercially viable business model,’ she says. ‘I’ve deliberately avoided applying for grants that might be available for this kind of sustainable business—you can call it pride if you like.’

Flying solo

Going it alone with no reliance on government subsidies or loans is brave. For entrepreneurs looking to set up an organic farm in China, the economic and practical odds are already against them.

Highly polluting emissions from industrial plants and farms have contaminated a fifth of arable land and 60 percent of groundwater, and toxic heavy metals such as cadmium have begun finding their way into the food supply. Cleaning up contaminated land is expensive, and a start-up organic farmer must undergo three years’ worth of inspections by local officials to prove their land is free from potentially hazardous waste chemicals before gaining certification.

Even if a business wants to get financing, state-owned banks prefer to give loans to larger farms that employ traditional methods of farming that yield bigger profit margins, so entrepreneurs can find it difficult to get start-up capital.

Despite such obstacles, the organic food market in China has tripled since 2007, and now accounts for just over 1 percent of total food sales, which is double the size of the Japanese market, and just fractionally smaller than Australia’s. The potential for growth is vast, if the 5 to 8 percent of organics as total food sales in Europe and the US is any indication.

But organics are more than just a business proposition for BIOFarm, and Tsao has every respect for those whose job it is to produce what we eat. ‘Food is a very important part of Chinese culture,’ she says. ‘For example, when you meet someone, you say, ‘Have you eaten?’ rather than ‘How are you?’ The farmers who grow food for us should be treasured.’

Local schoolchildren learn from BIOFarm
Local schoolchildren learn from BIOFarm

Unlike farms run using mainly machinery, with just a couple of farmers on site, Tsao is interested in growing people as well as plants: ‘BIOFarm hires young people from the local area and trains them up in different skills, from growing vegetables and running our farm shop to helping with PR and marketing. It’s a time-intensive approach, but it’s worth it.’

Tsao is every inch the hardworking, hands-on farmer, right down to the antisocial hours she keeps. ‘Life on the farm is not like a regular job. You need to be awake when the farmers are awake. I go to bed around 9pm and I’m up six hours later at 3am. I drive 20 minutes to work, drink a coffee and then walk around the farm thinking of the day ahead, before getting stuck into meetings, staff training and admin.’

Winning hearts and minds

The biggest challenge when running an organic food business in China is gaining customers’ trust, says Tsao. Food scandals are common, from out-of-date meat sold in McDonald’s to the production of fake chicken eggs. Industrial farms often have poor food safety and hygiene practices, and food poisoning is a regular occurrence. But customers are prepared to pay a premium for organically grown food—around three times the price—as one way to improve their families’ health.

‘The organic market in our country is not very organized or mature, so consumers don’t trust organic certificates on products,’ she explains. ‘You’ll see lots of products with organic advertisements, but whether they are real or not, I don’t know. It’s quite chaotic. BIOFarm is a small farm, but we have a good reputation for stringent quality control, from our growing practices to the training of our workers.’

‘One of the reasons we like our customers to visit the farm is so they can see for themselves how our staff maintain high standards at every stage of food production. We can only hope that the quality of our food speaks for itself,’ she says.

From small beginnings

Tsao first came to China in 2006 from Taiwan due to her husband’s work, leaving behind a successful career as a pharmaceuticals patent engineer at a law firm. She immediately missed the organic food culture of home. ‘On every trip home I’d fill my suitcase with organic products to bring back to the mainland,’ she recalls.

A chance discovery of China’s first organic supermarket, which opened in Shanghai in 2005, led Tsao to volunteer at the farm producing the food, where she met future friend, mentor and business partner Sherrie Tian, the original founder of BIOFarm.

‘After four months, Sherrie offered me a job as PR director,’ says Tsao, who has a technical understanding of the science of organics. ‘I’d specialized in researching microorganisms when I trained in veterinary medicine in Taiwan. I guess this set me up for BIOFarm—I really know what’s happening in the soil, and how it affects the food we grow.’

A year after she started, Tsao decided to invest about $35,000 worth of savings in the business, and now owns one-third of the company, which turns over $1.4 million each year and employs 60 full-time staff, plus a small group of volunteers. Tian and Tsao draw salaries from the company, and the rest of the profits go into business development.

Tsao and Tian: the voices behind the brand
Tsao and Tian: the voices behind the brand

Tsao and Tian are ambitious for the BIOFarm brand, and are keen to expand across the country. So far their marketing strategy has mainly relied on word-of-mouth, from Shanghai’s health-conscious foodie networks to the local school community whose teachers and pupils visit the farm. They’re also taking to social media platforms such as WeChat and Facebook to gain followers and sell products. ‘Social media is perfect for us because it relies on personal recommendations,’ says Tsao.

In order to make the farm fully sustainable financially, Tsao has developed numerous income streams beyond its multiple greenhouses. During the past three years, she has developed a consultancy arm, and recently her team completed their first project in the southern city of Chongqing where they established a new organic farm, offering everything from remote technical advice to on-site practical help.

Tsao also invites high-profile Shanghai-based chefs to BIOFarm and encourages them to buy locally sourced ingredients. ‘Chefs in China increasingly want their customers to know where their food comes from. Occasionally it’s difficult because they have very specific demands that we can’t meet. Now, if they ask for a certain type of edible flower and we don’t have it, I’ve trained our staff to quickly recommend something else.’

Perhaps Tsao’s most exciting project to date comes in the form of a multimillion-dollar investment in high-tech machinery. Her team has spent four years liaising with overseas experts to develop equipment that will grow food quickly to the highest possible safety standards.

Tsao’s first line of products, Ambrosia, is a range of sprouts including alfalfa, broccoli and red cabbage launched at SIAL China 2016, Asia’s largest food-innovation exhibition, held in early May in Shanghai.

‘We want to take a market lead with these products,’ she says. ‘Sprouts are a functional food with high nutritional value. They’re a new product for our market, but with this innovative technology we can produce them quickly, to order and can assure customers there’s no possible chance of contamination because they’re not grown in the ground.’

Looking to the future

Despite its focus on self-reliance, it’s still crucial for BIOFarm to have good relationships, long-term connections and trust (known as guanxi) with other businesses, organizations and local government officials. In the past year, the company has acquired 50 more acres of farmland from the local government. It took a year’s worth of negotiation, led by Tsao’s business partner. ‘Sherrie has taught me a lot about how to get things done,’ says Tsao. ‘She has been my mentor in guanxi.’

Tsao’s ambition is to have BIOFarms across the world, and her vision could play well in the global organic food market, which is projected to grow by 16 percent in the next four years, and trending toward on-demand services such as door-to-door delivery of healthy food.

For now, she’s content for her farm to offer an alternative lifestyle and an escape from the city. ‘My joy comes from watching people come to the farm and purchase their foods from our bio-farmers face-to-face, and share the joys of biodiversity with their families and friends,’ Tsao says. ‘The countryside encourages us to slow down and be inspired, and to communicate. It’s not just a business; it’s a way of life.’

Share your thoughts on China’s organic farms with #momentumtravel

Photos: Alamy, Sarah O’Meara, Jane Tsao

Sarah O'Meara
Sarah O'Meara (@sarahomeara)

Sarah O’Meara is the former lifestyle editor of The Huffington Post UK turned Shanghai resident. She writes about China for The Telegraph, The Atlantic, Forbes, Broadly, Al Jazeera and CityLab, among others.

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