How long until vegetables go direct from field to table?

In recent years, farmers' cooperatives in some cities have opened direct-sales stores in communities to sell vegetables, so that the vegetables grown by farmers go straight from the fields to the dining tables of city residents. This should be a good thing that benefits both residents and farmers, but many vegetable direct-sales stores are losing money. Why, even though the number of distribution links has been reduced, have operating costs gone up? How much farther does the direct vegetable sales road from field to table have to go?

To find out, our reporter conducted an exclusive interview with Yang Jianguo, a well-known vegetable expert in China and chairman of Jiasheng Agriculture.

Reporter: I saw a report that Harbin, starting in June 2013, encouraged cooperatives in vegetable parks to go directly into communities and set up vegetable direct-sales stores, and that 15 community vegetable direct-sales stores were established that year. But after a year, only four or five stores were actually profitable, and even those had only thin margins, so overall performance was not good. Why is that?

Yang Jianguo: The reason is not complicated. No matter how the format changes, the vegetable prices in direct-sales stores are not much cheaper, and some are higher than the vegetable prices at morning markets, so wage earners are unwilling to buy.

Reporter: With fewer distribution links, why have costs not come down?

Yang Jianguo: The monthly rent for any one store is tens of thousands of yuan, and a store needs at least four or five employees. By contrast, vendors in farmers' markets number only one or two people, and their rent is much cheaper. Another point is that the purchasing cost of some stores is also higher than that of farmers' markets.

Reporter: Do you think the direction of cooperative vegetables going directly into communities is correct?

Yang Jianguo: The direction is fine, but many practical problems need to be solved, and we need to start from several aspects.

First, at the source of the goods, do not purchase from wholesale markets. Instead, reach supply agreements directly with production areas, or simply invite large-scale agricultural product producers to open stores in communities, with government subsidies, bypassing wholesalers and retailers.

Second, improve business philosophy and service awareness. Many direct-sales store managers are farmers, lack market-oriented business concepts and have poor service awareness, so training and guidance for them must be strengthened.

Third, compete in a differentiated way with farmers' markets. Position the stores around green and safe agricultural products, mainly targeting wage earners and white-collar workers, and distinguish them from ordinary farmers' markets, so that even if prices are higher, consumers can accept them.

Reporter: Do you have any good cases you can introduce?

Yang Jianguo: Jiasheng Agriculture is building China's largest green vegetable production base and is also building its own specialty stores. The specialty stores adopt an O2O model, offering two ways to buy products: “online ordering + in-store pickup/delivery” and “in-store self-purchase.” Store management and operations are handled by someone who knows the community well, possibly a community resident themselves. In this way, the direct-supply store becomes an “intelligent CRM” that knows customers best: the staff know how many people are in each household and what kind of products they like, and can offer more targeted shopping suggestions. In addition, the store also provides a remote monitoring system for agricultural products and an agricultural product traceability system. Customers can remotely view the interior of the base's greenhouses in real time online and at the direct-supply store, learn about the growth conditions of fruits and vegetables, the production and management conditions of the base, and so on. After purchasing a product, they can scan it on the traceability system and immediately know which greenhouse the product came from, when the seedlings were planted, where the fertilizer came from, when and by whom it was harvested, packaged, transported and brought into the store, and so on. Any product quality problem can be traced back to its source.