Chinese organic agriculture began in the late 1980s, driven initially by environmental concerns and later by export opportunities. The latest estimate, from 2009, was that there is 2 million hectares of certified organic farmland, while total organic production was valued at about US$ 2.4 billion in 2008. There are 27 organic certification bodies active in China. By 2005, compulsory organic standards and supervision systems were introduced for organic certification bodies operating in China. ‘The future of the organic market is promising in China given strong consumer interest. However, the lack of mutual recognition between the Chinese organic regulation and other major markets makes exports to China potentially costly for poorer countries.’ says Alexander Kasterine, Senior Market Development Adviser of the ITC.

A recent report from the International Trade Centre (a joint UNCTAD/WTO initiative based in Geneva) gives the most comprehensive overview of the Chinese organic market so far. By the late 1980s, some local governments in China began promoting what was known as ‘ecological agriculture’. Meanwhile, seeing opportunities in the growing global demand for organic foods, other government bodies began to promote organic farming. One such agency was the Nanjing Institute of Environment Science (NIES) of the State Environment Protection Administration, which became a member of IFOAM in 1989. The first certified organic product was tea certified by a Dutch organisation and exported to Europe in 1990. The main drivers of modern organic agriculture in the early period were Chinese enterprises, both state-owned and private, which were contracted by European, Japanese and American importers.  The first local organic certifier was the China Organic Food Development Center (OFDC), which was established in 1994 by the NIES.

Production and market

China’s organic production is mostly based on organised systems rather than individual farmers. There are three main organic production models adopted by companies and producer associations:

1. An organic processor or trader leases land from farmers and this company then manages the farm production. Farmers are paid rent and become farm workers on the company’s leased land.
2. A processor or trader sets up an organic production project in cooperation with a local agent or government in a village or township. Farmers in the designated project areas are asked to convert to organic production in line with the firm’s demand, and the local government signs a long-term contract with farmers for organic production and purchase.
3. Organic production associations under which the village administration or the farmers themselves organize organic producer associations. The association manages and provides technical support to producer members and buys their produce, which it then sells to processors or traders.

There were some 2,500 certified organic producers, with more than 100,000 individual farmers in 2007. Between 2 million and 3 million hectares of farmland is certified  as organic, putting China among the world’s top five organic producers, in acreage terms. Statistical data on Chinese organic production, however, vary from one source to another.

In 2008, the total value of organic production reached about 16 billion Yuan (US$ 2.4 billion), with exported organic products exceeding US$ 500 million and the domestic organic market reaching US$ 1.1 billion. The remaining US$ 800 million in organic products were sold as conventional products. Organic imports were estimated at about US$ 20 million in 2009. China’s domestic market in organic products began developing in the mid-2000s and has expanded rapidly, especially in the past few years in the light of an increasing number of food scandals.  Chinese consumers are very concerned about food quality, which they define less in terms of appearance and more in terms of nutritional properties and safety. Retailers, especially supermarkets and speciality shops, dominate domestic organic markets. The major sales channel is through conventional and high-end supermarkets, which control more than 80% of retail markets. Speciality shops are growing in number, but their sales are limited. There is currently market saturation in some organic products, such as rice, fresh vegetables, fresh fruits, meat and green tea.

Standards, certification and regulation

There are three national agencies that are important for the organic system in China. The Certification and Accreditation Administration of the People’s Republic of China (CNCA), is the national administrative body overseeing all types of certification and accreditation within China.  CNCA covers food safety and food quality schemes, including ‘Green Food’ (another Chinese system for environmentally friendly agriculture production), good agricultural practices (GAP), good manufacturing practices (GMP), feed production, HACCP and organic products. The national accreditation body is the China National Accreditation Service for Conformity Assessment (CNAS). This body does technical conformity assessment and sets technical rules, such as the certification criteria for all certification bodies. In addition to the above, inspectors of all certification and certification training bodies must be approved and registered with the China Certification & Accreditation Association (CCAA), which was established in 2005.

The specific regulations and standards for organic certification were introduced in 2004 and took effect in 2005. The relevant items were:

• The organic standard, i.e. National Standard of the People’s Republic of China: Organic Products (GB/T 19630.1–19630.4-2005), is based on international norms with added emphasis on contamination by pollutants and prohibited materials and quality management systems, especially record keeping and traceability.
• The Regulatory Measures on Organic Product Certification Management (also known as Decree No. 67 of State General Administration of Quality Supervision, Inspection and Quarantine) defines organic certification and organic products, including the scope and requirements for certification bodies and inspectors. It also sets principles for organic certification, national organic labelling, import requirements and principles for international cooperation and supervision measures.
• The Implementing Rules on Organic Certification (CNCA 2005 No.1) regulates organic certification activities. It defines organic certification objectives, scope of application, standards, certification procedures, administration after certification, certificates, marks and logos, as well as certification fees.

Under this complex system, rules and regulations are set by different agencies. For example, an organic certification body must first comply with rules set by CNCA on qualifications of certification bodies. Then the certification body must comply with technical rules set by CNAS so that it can acquire accreditation. At the same time, inspectors working for certification bodies must comply with CCAA rules and have CCAA approval. Currently, there are only 26 organic certifiers with such approval, and all are based in China.

Organic imports to China

The organic regulations of 2005 covered imports as well as domestic production. Article 36 of the Regulatory Measures on Organic Product Certification Management requires imported organic products to be certified under Chinese organic standards. All operational stages, such as farming, handling, processing and packing, must comply with Chinese organic standards, even if such operations have already been certified as organic for other systems. Imported organic products must also be inspected by organic inspectors registered with CCAA who have had CCAA-organised training, testing and interviews. So far, no foreign inspectors have been approved, a situation that obviously leads to high costs and other problems for market access.

In September 2010, CNCA issued a draft report on ‘Rules on Importing of Organic Products from Other Countries and Regions’. The document contained proposals that would allow mutual recognition between CNCA and regulatory bodies in exporting countries so that organic products certified outside China could be accepted into the country. At the time of the report’s preparation, the draft document was under internal consultation. The rules were expected to be finalised and approved in late 2010 or early 2011. Currently, CNCA is in the process of negotiating with several governments for bilateral and multilateral agreements regarding organic regulatory recognition. Participating governments include the European Union, the United States, Canada, Japan, Australia and Thailand. The negotiations are not expected to be concluded soon.

Gunnar Rundgren

Source: Organic Food Products in China, Market Overview, ITC 2011, PDF available for download at: www.intracen.org