2014 Agricultural Land Reform Breaks New Ground: Capital Injection Powers Up E-commerce
In 2014, agriculture was no longer a neglected niche industry in the business world. On the contrary, land reform policies activated investors' enthusiasm in the capital world, making upstream industries a hot concept stock. And downstream agricultural product sales, in the development of the internet economy, also showed impressive momentum.
■ Reform
In 2014, the major events in the agricultural sector must start with land, because in this year, the issue of rural land transfer, which drew the attention of both the agricultural sector and the capital world, made new policy progress.
On November 20, the Central Committee's "Opinions on Guiding the Orderly Transfer of Rural Land Management Rights and Developing Moderately Scaled Agricultural Operations" (hereinafter referred to as the "Land Transfer Opinions") was officially released to the public. This was the first document in recent years targeting land transfer, indicating that land transfer had truly received the Central Committee's attention and marking a comprehensive acceleration of land transfer.
Prior to this, discussions and explorations regarding rural land transfer had already gone on for more than 7 years, and related institutional progress had been updated repeatedly since the concept of land transfer first emerged. The most pivotal moment was in 2007, when the 17th National Congress of the Party proposed establishing a market for the transfer of rural land contractual management rights, which was the first time the state encouraged rural land transfer; in 2013, the Central Committee's No. 1 Document proposed for the first time encouraging industrial and commercial capital to enter agriculture.
"The issuance of the 'Land Transfer Opinions' this time is a shot in the arm for those who truly want to do agriculture. Previously we had been walking in a state of exploration, but now this document tells us that what we are doing is correct." Since 2010, Wang Lingguang, chairman of Henan Jiajiayou Agricultural Technology Co., Ltd., which has transferred more than 10,000 mu of land in Zhoukou and other areas of Henan, said.
In his view, this document first emphasized the need for moderate-scale operations in the land transfer process, and there was a signal in this directed at the 'encouraging industrial and commercial capital to enter' proposed in 2013. A set of data from officials of the Ministry of Agriculture showed that as of the end of June 2014, the area of contracted cultivated land transferred nationwide was 380 million mu, accounting for 28.8% of the total contracted cultivated land area, of which the area of contracted land flowing into enterprises had reached 38.647 million mu (accounting for more than 10%), showing an upward trend year by year. The entry of industrial and commercial capital accelerated the pace of land transfer, but many of them lacked understanding of agriculture, ultimately harming agriculture instead.
In addition to the land transfer system known as the "new land reform," another relatively important policy in the agricultural sector in 2014 was the issue of land rights confirmation discussed at the beginning of last year, which was also a prerequisite for land transfer. The 2014 Central Committee No. 1 Document proposed that "land ownership belongs to the state, farmers enjoy contractual rights, and management rights can be freely transferred," with the three rights separated, ensuring farmers' interests.
■ Capital
In 2014, leading enterprises in the business world, represented by Legend Holdings, Alibaba and Evergrande, collectively made cross-sector investments in agriculture.
Analysts in the agricultural sector believe that the surge in agricultural investment is closely related to the intensive release of agricultural policies in the past two years. For more than ten consecutive years, the Central Committee's No. 1 Document has always focused on issues concerning agriculture, rural areas and farmers. The policy tilt allowed these business giants to see business opportunities in the agricultural sector.
Thematic investment centered on reform dividends mainly gave rise to concepts such as land transfer, ecological agriculture and food security. These newly hot concepts provided sufficient room for imagination in the market and boosted the overall valuation of the agricultural sector.
The 2013 Central Committee No. 1 Document proposed for the first time encouraging industrial and commercial capital to develop planting and breeding industries in rural areas. Subsequently, Legend announced it would "go farming," planting blueberries and kiwifruit. In May, Legend officially announced its entry into the modern agriculture field and established Joyvio Group. In 2014, Legend Holdings stated externally that it had already invested over a billion yuan in its agricultural segment, and said that as a long-term strategy for Legend Holdings, there was no upper limit on investment in the agricultural segment, and as long as it fit the segment's positioning and there were suitable investment opportunities, it would invest without hesitation.
Alibaba also "played a very big game" in the agricultural sector, planning to invest 10 billion yuan over the next 3-5 years in the Thousand Counties and Ten Thousand Villages plan, namely establishing 1,000 county-level operation centers and 100,000 village-level service stations, driving rural entrepreneurial opportunities and promoting the "Taobao Village" model nationwide.
Evergrande Group's investment strategy in 2014 was truly eye-catching. Leveraging its marketing strategy, it successively launched Evergrande Ice Spring, grain and oil, and milk powder, which could be called three fires lit in the agriculture and animal husbandry industry. Liu Yongzhuo, vice president of Evergrande Group, said the company planned to invest more than 100 billion yuan in the modern agriculture sector, and had already invested nearly 7 billion yuan. It laid out five types of production bases in the Greater Khingan Mountains ecological zone: the Evergrande rice production base, the Evergrande double-low pressed rapeseed oil production base, the Evergrande non-GMO pressed soybean oil production base, the Evergrande animal husbandry production base, and the Evergrande infant formula milk powder production base.
■ New Ways to Play
In 2014, the F4 (Farmer4) group, composed of 4 young people from the agricultural sector, became a hit. They were of uneven heights, dressed casually, and sang an off-key version of "Meteor Rain" on a stage with thousands of audience members; the highest-priced concert tickets were set at 1,880 yuan, yet the concert was packed to capacity.
When many people still did not understand why all this was happening, the local specialty agricultural products they each led were already selling briskly online.
The members of "F4" are Zhong Wenbin, founder of Xinnongtang, Zhao Yi, founder of Xiangtu Xiangqin, Chen Tongkui, founder of Huoshan Village Lychee, and Liu Jingwen, founder of Vijidani. In June 2014, they, as fellow entrepreneurs in the agricultural sector, formed an alliance.
In half a year, they did quite a lot. Besides using the internet to sell local specialty agricultural products from their hometowns across the country, they also held their own concerts in Shanghai and Beijing, went to record "Day Day Up," and participated in "Zhengyi Lun" hosted by media personality Yang Jinlin. The local specialties from all over the country also, as this group's circle expanded, fully realized their own value.
Chu Orange was completely sold out in 2014. In 25 days, more than 9,000 tons of oranges were sold out. The operator of Chu Orange said this was not hunger marketing.
Chu Orange landed in Beijing in 2012 through the fresh food e-commerce website Benlai Life. Benlai Life put out the labels "Chu Orange" and "Inspirational Orange," with prices 2-3 times higher than ordinary oranges. But since then, Chu Orange has been in short supply nationwide.
The biggest troubles Chu Orange encountered in 2014 were "out of stock" and "anti-counterfeiting." At the same time, the price was speculated up to more than 20 yuan per jin. But the media rushed to report the booming sales of Chu Orange, showing that outside expectations for Chu Orange only increased.
In 2014, the concept of agricultural e-commerce was no longer new, but there were always people who could play new tricks through different methods.