Biz Unusual

Fruits give farmers juicy bite of profits

By  Duan Yan in Qixia and Hu Yongqi in Beijing (China Daily)
Updated: 2010-11-04 15:52

According to the China Agriculture Wholesale Markets Association, the average loss of fruit and vegetables is 25 to 30 percent, which costs the industry roughly 100 billion yuan a year. In most developed countries, wastage is limited to just 5 percent.

"Dozens of middlemen are involved in the transport process," said Chen Hewu, an analyst with China International Futures. "It needs to be slim-lined."

Transportation costs alone are high. For example, a recent survey by the Chinese Academy of Social Sciences shows that a freight company shipping 5 tons of carrots from Sichuan province in the southwest to Guangdong province would need to pay 3,500 yuan just in expressway toll charges.

"I have to add at least 1 yuan to each jin of apples to cover (transport) costs, otherwise I will lose money," said trader Sun Shixian.

When the fruit finally reaches a shopping bag, two apples will cost roughly 6 yuan.

"Imagine an ordinary person who makes 2,000 yuan a month, who can afford to pay 6 yuan for two apples?" asked Guanli farmer Liang, who added that current problems have convinced him to quit the business this year.

Grassroots costs

Farmers say they are struggling with rising costs even before their vegetables come out of the ground.

"Fertilizers, pesticides, diesel fuel, labor cost; these things have all become more expensive," complained Lu Guoqi as he sold Qixia apples from his tricycle.

Counting his expenses on his fingers, he continued: "I needed to pay 140 yuan for a bag of fertilizer, which was about 110 yuan last year. Also, the price of pesticide and diesel has increased 33 percent and 10 percent (respectively)."

Even the cost of hiring fruit pickers and packers has gone up. Part-time workers earned 80 yuan in 2009, yet salaries rose to 120 yuan this year.

"That's 120 yuan and you have to take care of their lunches," said Mou Fengshan, a 64-year-old orchard farmer in Beiyanzikou village, Qixia.

To save some money, Mou got his son and daughter to help harvest his apples and also reduced the amount of fertilizers and pesticides he used.

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"I water the trees myself instead of using a machine, so I can save on diesel," said Mi Baosheng, 56. He discovered it is not only wholesalers who store and wait for peak demand. "The price of diesel dropped for a while and the gasoline station told me they were out. When the price is up again, they started selling it again."

Even though the central government has made farmers exempt from agricultural tax, as well as the tax on special farm produce, Mi said he spends far more on fertilizers and pesticides.

"Farmers' lives are easier now but I don't expect to make a huge profit and improve my living standards dramatically from the (apple) price hike," he said, scrubbing dirt from his worn pants.

After witnessing the rush this year, Mi said he has saved 10,000 kilograms of apples in cold storage and is hoping the price will rise even more.

"Farmers who saved last year have made a lot of money," he added.

Zhang Xiaomin in Dalian and Zhao Ruixue in Jinan contributed to this story.