China a tough market for organic

Published on
April 29, 2012

A large banner advertising organic yellow croaker was conspicuous this spring at the entrance to Xiangmanlou Restaurant, a spacious dining house catering to a mid- to upper-tier clientele near the west gate of Chaoyang Park, one of Beijing’s most salubrious addresses.

However, the certified-organic yellow croaker, advertised as from coastal Fujian province, has struggled to find sales and has been withdrawn in the past two weeks, several months after sales commenced.

Staff at Xiangmanlou said price — “it was RMB 300 per fish, compared to RMB 150 for Mandarin fish” — was an obstacle to sales of the organic yellow croaker. Staff also said that customers were less than enthusiastic that the yellow croaker was sea fish, whereas locally sourced Mandarin fish is a freshwater favorite showcased to customers live in tanks. The yellow croaker was delivered to the restaurant frozen, explained staff.

A sales hotline number for the yellow croaker originally displayed at the Xiangmanlou appears to be out of operation. However, reached by phone, Taimei, a Taiwanese-owned organic food producer in southeastern Fujian province, explained how its organic yellow croaker was largely for the export market. Fish weighing up to 150 grams are sold for US 7, while 400-gram fish are sold for up to USD 18 per fish, explained Taimei staff.

Raised in the coastal city of Ningde in Fujian, Taimei’s yellow croaker is not retailed in Beijing or major Chinese cities, explained the company intended to focus on export sales. “Frozen fish is easier than selling in restaurants where you have to showcase the fish in tanks with other fish.” Calls to numerous supermarkets in Beijing proved fruitless in locating certified-organic fish.

Meat importers here have found China a tough market for organic product. Kenneth Arrild, a butcher and sales manager in China for Austrian meat export firm Horber said his firm has quit importing organic meat to China: “we couldn’t sell it…so just before it went out of date so we sold it at cost to five star hotels which served it as normal meat.”

Arrild, whose key customers include local industrial catering firms, foresees rising demand for swordfish — white, tender, lean and affordable — as well as more expensive marlin and turbot. Industrial catering cost pressures mean shrimp is purchased locally, at low cost. “I’ve heard [some Chinese suppliers] don’t feed the fish the last two weeks to ensure the antibiotics are flushed out of the system and the shrimps are edible,” he said.

On China’s burgeoning online-commerce market, organic-themed seafood gift boxes are priced between RMB 598 and RMB 888 and sold by New Farm, a Beijing-based organic producer. New Farm boxes include dried yellow croaker as well as Norwegian salmon, bluefish, South American shrimp and New Zealand mussels.

Seafood hasn’t featured in the top rankings of China’s best selling organic products. According to market research agency Euromonitor, the key players (based on retail sales value in 2010) in China’s organic food market are Qingdao Changshou Foods, followed by Hain Celestial and Huangshan Guangming Tea Industrial Co. The fourth- and fifth-placed firms are also tea makers. Euromonitor data is collected on “food and beverages that are certified organic by an approved certification body … for organic products to be included under Euromonitor definitions, the organic aspect needs to form part of positioning/marketing of the product.”

China requires both a national organic logo and the logo of the third party certification body to be displayed on packaging of food sold as organic. The national Chinese Organic Food mark is a logo issued by Organic Food Ratification Committee, which is set by the State Environmental Protection Administration. Liu Zenhui of the China Product Certification Centre explained how Chinese standards are based on IFOAM and EU organic criteria in order to “promote the international organic trade.”

While the China Organic Food Development & Certification Centre (OFDC) is allowed to certify as an International Foundation for Organic Agriculture Movements (IFOAM) accredited body, only two other certifiers have been accredited by the China National Accreditation Board for Certifiers (CNAB) which regulates certifiers: the independent WIT Assessment and the semi-state China Organic Food Certification Centre (COFCC). The latter leads the field in terms of market share.

Food safety remains a key concern in China, something food brands have exploited with green-themed marketing campaigns. Yet a wave of regional and national organic-themed certification schemes confuse consumers and typically don't meet IFOAM criteria. For instance, the China Green Foods Development Centre (established in November 1992 under the Ministry of Agriculture) oversees two ‘Green Food’ standards — A, which allows some use of synthetic agricultural chemical, and AA, which is more stringent. Green Food standards are, however, less intended to monitor actual use of agricultural chemicals and rather emphasize the testing of products for chemical residues.

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