Breeding Solutions
A county in southwest China develops an unexpected industry to overcome poverty
get their money back with a reward.
Xu has developed an eco-friendly system on his family farm. He grows the fodder in the field, feeds the cattle with it, treats the waste they generate and fertilizes the field using the organic fertilizer made from the waste.
Fan Chun, Deputy Director of the Fengdu Beef Cattle Industry Development and Service Center, said there are over 1,000 family farms in the county like Xu’s, with about 20-30 cattle heads each. There are also smaller farms owned by individuals and large-scale farms.
A full chain
The Chongqing Hondo Agriculture Group (Hondo) is one of the leading beef cattle enterprises in Fengdu. It runs several large-scale farms and has more than 100,000 cattle heads.
Zhu Gangquan, founder and General Manager of Hondo, used to be a middle school teacher who taught biology and English. Then he went to Wuhan, a city in central China, to become an entrepreneur, selling information technology (IT) products. In 2009, hearing about the preferential policies in Fengdu to develop the beef cattle industry, Zhu decided to go back and establish Hondo.
He received an investment of 3 billion yuan ($427.2 million) from the company whose IT products he sold. And his beef cattle business grew, despite challenges such as lack of water and environmental protection issues. Today, Hondo provides jobs to over 1,000 people in Fengdu, paying each employee 4,000 yuan ($570) per month.
“Poor families can participate in every link of our industrial chain. They can sell their homegrown forage grass to us, grow their cattle and sell the meat to us, become our employees or participate in the cold-chain logistics,” Zhu said. “The beef cattle industry has become a silver bullet for our poverty alleviation.”
According to official statistics, more than 20 percent of the families in Fengdu are engaged in the industry, which contributes 18 percent to the increase in farmers’ incomes.
In 2016, the State Council, China’s cabinet, issued the 13th Five-year Plan (2016-20), which said poverty can be addressed through developing industries with local characteristics and every poor county should have its unique products.
“From a national perspective, the beef cattle industry is conducive to the supply-side structural reform of agriculture as farmers no longer have to stick to farming. Instead they can rent out their fields while getting jobs in my company to earn a double income,” Zhu said. “This year, Chongqing has contributed one 10th of China’s total beef imports, which is an amazing number. It makes Chongqing an example of an inland area opening up”
Currently, Hondo is tapping market potential all over China. It has bases in different parts of the world to purchase premium beef and beef cattle. It plans to extend its industrial chain and make its initial public offering early next year.
Nevertheless, Zhu also sees bottlenecks for the growth of the industry. Financing is still a difficult issue for enterprises as they lack collateral. Besides, the national productivity for the beef cattle industry is low and the strategic reserves of beef in south China are insufficient. An imbalance between beef production and consumption is also an issue.
Ecommerce boost
E-commerce, an integral part of the 13th FiveYear Plan for poverty alleviation, plays a big role in Fengdu’s beef cattle industry as well. The county’s rural e-commerce public service and logistics center was established in 2017 as part of a national e-commerce project for rural areas covering 737 national-level poverty-stricken counties.
Hondo’s market share in the fresh food category on five e-commerce platforms including Jd.com and Tmall accounts for 50 percent, which partly mirrors e-commerce’s contribution to the development of the beef cattle industry in Fengdu.
In addition, Youniumalls.com, China’s first e-commerce platform for the beef cattle industry, opened on October 31. Established by a private enterprise in Chongqing and a stateowned enterprise in Fengdu, it aims to realize online transactions in live cattle and byproducts to boost the poverty alleviation drive through consumption and e-commerce.
More than 500 cattle farmers have registered with the platform and the volume of transactions so far has reached 10 million yuan ($1.42 million).
Xiong Huajiang, General Manager of Juswin, a private stakeholder, said farmers, especially individual beef cattle raisers, will benefit the most as the platform provides them with a channel for sales. By integrating logistics, insurance and transportation, it can reduce their purchase costs by 10-15 percent while increasing profits by 5 percent. It will also improve transaction efficiency and allow guarantee transactions for users with a good credit record, which will solve their financing and cash flow troubles.
“Moreover, the platform will track the information of all the beef cattle in the future to provide big data services,” Xiong said. “It will help to solve the imbalance between production and consumption as the data will tell farmers how much beef cattle they should raise to meet the market demand.”