How to solve the core problem of agricultural information asymmetry
In recent years, the concept of "internet agriculture" has gradually become popular, and at the same time a number of fast-growing startup companies have emerged, such as Tianyoutian, Yimutian, Joyvio, Liannong, Meicai, Fandian Lianmeng, Youpei Liangpin, Fengshou Xia, and others. There are information platform models, as well as O2O, B2B, and B2C models, and basically each has its own approach and market space. In fact, overall, no matter which model, what they mainly solve is still the core problem of "information asymmetry" in the agricultural industry. They let more information about products from producing areas spread through the internet, and let more buyers and ordinary consumers purchase products with high cost performance.
When we look deeper into this industry, we find that the problem of "information asymmetry" has only achieved the convenience of contact between the consumer side and the industry side, and has not solved the problem of mutual trust between the consumer side and the industry side. As the income level of the Chinese people gradually rises, the upgrading of agricultural product consumption has always been a market with huge potential but one that has also been seriously neglected. Regarding this contradictory issue, at the 2016 China International Great Health Exhibition, we interviewed Tianyoutian CEO Zhang Ning. He said that in the course of consumption upgrading, Chinese consumer groups care more about products that reflect their taste, such as houses, cars, clothing, coffee drinks, restaurants, and so on, while neglecting the basic needs of daily meals such as grain, vegetables, and fruits. Or perhaps these are the things that can only be put on the consumption list last in the course of consumption upgrading. But in fact, when we now talk about health, about quality living, and about lifestyle, we should start from the most basic needs. Moreover, what we eat is the main factor in physical health, and the proportion of consumption it occupies is also extremely small. For example, for rice, most of the rice we buy in supermarkets in daily life is about 2 yuan per jin, and the amount of rice consumed per person per year will not exceed 200 jin. Even if we calculate based on eating relatively good organic rice, at a market price of 10-15 yuan, the annual cost is only 3000 yuan, which is only enough to buy a somewhat better set of clothes. So how to cultivate this market potential and how to change consumers' health concepts has a major driving effect on the upgrading of China's agricultural industry.
Indeed, compared with developed countries such as the United States and Japan, China's agricultural product consumption industry still has a relatively large gap. In the United States, there is an organic food supermarket chain, Whole Foods Market, which is famous for providing high-end organic foods (Ganicfoods) and is a supermarket beloved by people in the United States who pursue a high-quality life, with annual revenue of more than 3 billion US dollars. In Japan, ordinary families also have very high requirements for the rice they eat daily, which has also forced the entire Japanese agricultural industry to have very high standards in rice production, and the most basic rice sold on the market is of very good quality.
But in the Chinese market, why are there so few good products? Do consumers really have no demand for this? We specifically consulted an expert who has studied the agricultural product industry for many years, and he told us several deep-seated core problems:
1. Grain cultivation is individualized and scattered, and has not formed effective technologization, scaling, and industrialization.
China's grain cultivation is still mainly based on farmers' cultivation on their own land. With the opening of China's land transfer policy, although some medium and large agricultural bases have been established, their cultivation model is still essentially difficult to turn into large-scale production. Compared with some countries with agricultural industrialization, our cultivation costs are still relatively high. In addition, the Chinese government's price protection policy for domestic grain has also, to a certain extent, made it difficult for Chinese grain prices to compete with major foreign grain-producing countries in the international market. It has entered a vicious cycle in which most of the grain consumers buy is imported from abroad, domestically grown grain has a price but no market, farmers' income is low, and no one wants to plant the land.
2. The grain traceability system is immature.
There have always been loopholes in green and organic certification for grain, with immature system construction and inconsistent certification standards. At the same time, however, the market is flooded with more and more products that have passed green certification or organic certification, and the price differences are huge, so consumers cannot understand it and do not dare to buy.
In fact, as long as you ask people in the industry, you will know that every place has specialized agricultural institutions to provide green and organic certification, and it can be obtained as long as certain channels are used. But an organic certification certificate does not mean that all products sold by this company are green and organic; it can only mean that the samples they sent to the testing institution barely meet domestic safety standards. And anyone who knows a little about agriculture knows that under China's existing natural environmental conditions, growing organic products requires huge upfront costs and time cycles, and the yield is relatively low. In order to obtain profits, enterprises cannot and will not truly provide organic products.
To put it plainly, "organic" is just an advertising gimmick, meant to satisfy consumers' inner needs.
3. Regional agricultural product producing areas have weak brand awareness.
Due to the suitability of natural conditions, grain and agricultural products in our country all have some producing areas with geographical indications, such as rice from Wuchang in Northeast China, rice from Panjin in Liaoning, millet from Qinzhou in Shanxi, black beans from Shenmu in Shaanxi, coix seed from Xingren in Guizhou, and so on.
These producing areas with long histories naturally create good geographical brand recognition in consumers' minds. This has also given many unscrupulous sellers an opportunity. They use the name of the local brand but deceive consumers with cheap goods produced elsewhere or imported from abroad, which not only harms consumers' interests but also damages the image of these regional brands.
4. Consumers' blind consumption awareness leads to many health hazards in the grain processing stage.
Grain is originally the most important entry-point food for health and safety. With the improvement of people's consumption level, everyone has clearly developed a heightened awareness of the need to upgrade their choices regarding water, air, vegetables, and meat, but they are increasingly neglecting grain, and do not correctly recognize the importance of traditional grain to the human body's comprehensive nutritional needs.
In order to satisfy consumers' taste, many methods have been added in the grain production and processing stage. For example, for rice, spices are mixed in to pursue fragrance, and to pursue taste, husking and processing strip away many nutrients. This is also why in the past ordinary people ate the grain they grew themselves and were very healthy, while now they eat better and better, yet their physique is not as good as before.
5. Low-price market competition leads to evil practices by brand owners.
The low level of attention given to grain in consumer awareness has also caused vicious competition in the overall market price. Rice costing a few jiao or a bit more than one yuan can be seen everywhere on supermarket promotion stands, and it is very popular. Little do people know how much shady manipulation lies behind this. The profit on grain is already relatively small. In order to make money, sellers do not hesitate to purchase sufficiently cheap old grain that has been stored for a long time from various places, mix in a small amount of new grain, and sell it, and mix poorly processed varieties with new varieties for sale, making it very difficult for consumers to detect.
In response, Tianyoutian CEO Zhang Ning also said that, just as this expert said, China's agricultural product industry indeed has various loopholes of one kind or another, creating the current situation of mutual distrust between the consumer side and the industry side. Consumers cannot buy good products, and their desire for consumption upgrading decreases; sellers cut prices to sell, and stop at nothing for profit. Blind satisfaction and blind compromise make the entire industry more and more chaotic. It is precisely based on this that Tianyoutian, as a startup company, proposed a participatory experiential interactive consumption concept of "plant it yourself, eat it yourself." What we want to solve is how to let consumers truly eat ecological and green products, and how to make the industry side willing to spend effort providing such products, so as to achieve mutual integration and exchange of information between both sides.
Moreover, we learned that every Tianyoutian user can receive a piece of land for free. Tianyoutian will communicate information with users in advance, such as what grain to plant, in what way to plant it, roughly how much cost will be invested, how much grain one mu of land will produce, and what range the final cost price of the grain will be in. In this way, with information exchanged between both sides and all planting stages open and transparent, users get the most affordable and safest products, and the production side will also sincerely invest effort to produce truly ecological, green, high-quality products for users.
For internet agriculture companies like Tianyoutian, there is still a long way to go in the future, and there are still many problems to be solved on the agricultural industry chain side. But with the changed way of thinking of "user-centered," being able to bring truly good products and safe products to consumers, and integrating the relationship between users and the production side, I believe it will bring more and more hope to Chinese agriculture, and will also gradually raise Chinese consumers' demand for high-quality basic agricultural products.