Opinion / Raymond McFarland
Farmers - innovate or fail
By Ray McFarland (chinadaily.com.cn)
Updated: 2005-10-20 14:26
Raymond McFarland
China, like many other developing countries, is banking on the
elimination of farm subsidies in Western nations to give its farmers
access to a larger and more prosperous market.
However, eliminating such government assistance will have little or no
impact unless Chinese farmers change their thinking and current business
models.
As things now stand, Chinese farmers struggle mightily with only each
other as the main competition. Wait until they face competition in the
domestic market from their Western counterparts, as any cuts in subsidies
will be contingent upon China opening up its farming markets to the
highly efficient and market savvy European Union and United States.
Also, after the elimination of subsidies, Chinese farmers will find
themselves competing with the likes of farmers from India, Brazil, and
Vietnam, and so on, for a lucrative slice of the Western market pie. In
the face of such fierce competition, only countries with sound domestic
farming models will thrive in the subsidy-free global market.
A common sight in China is stall after stall of farmers selling the exact
same products. Sometimes, a brave farmer may develop a new crop variety
that proves successful. Then all the other farmers follow suit, leading
to: stall after stall of farmers selling the exact same products. This is
not good, as it offers little variety and skews the supply-demand ratio,
leading to lower prices while leaving farmers with lighter wallets.
I understand the group mentality is why Chinese farmers set up their
stalls beside each other, as in China, things are done based on the
group. But in economics, this mindset is not the most efficient. It only
leads to a lot of unnecessary competition and low selling prices. Such a
cookie-cutter business mode, which is barely holding up domestically,
will crumble on a more global stage.
(In other parts of the world, especially the West, farmers will set up
their stall alone, separate from other farmers. This both lessens their
competition and gains them more customers.)
Creativity and entrepreneurship are needed. More farmers in China need to
be willing to blaze new paths and take risks, instead of always safely
following the lead of others.
Recently I saw a China Central Television Program about a farmer who now
raises unique-looking goldfish for a living. Before, he was just an
ordinary farmer growing run-of-the-mill crops, like rice and onions. But
he had a vision, took a risk, and now has a very successful business.
The slashing of subsidies will occur, sooner or later depending on
China��s progress in opening up its agricultural market, based on World
Trade Organization agreements. But in the meantime, Chinese farmers can
start capitalizing on the opportunity now.
That will be the difference between the elimination of subsidies serving
as a mere historical footnote or as a catalyst for Chinese farmers in
their drive for meaningful prosperity.
Write to Raymond McFarland at mcstephen23@hotmail.com
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