Officials in china’s Ministry of Agriculture may cheer the country’s huge vegetable and fruit production as evidence of China’s clout as the world’s second-largest economy, but farmers are finding continued growth challenging. A faulty land use system and the high costs of distributing agricultural products are growing tests they face.

China is the world’s largest vegetable producer with land reserved for growing vegetables covering more than 300 million mu, or 200,000 square kilometers, in 2012. That year, vegetable output reached 700 million tonnes. Fruit produced in China the same year came to 144 million tonnes, estimates cnagri.com, a consultancy devoted to agricultural research.

China’s agricultural ministry could tout these figures as major achievements of the past two decades. Throughout the years, people have been consuming more fruit and vegetables.

China is a major vegetable exporter in Asia, with onions and spinach among those sold to neighbouring countries. The country has enjoyed a huge trade surplus from vegetable sales, helping boost the country’s massive foreign reserve. The eastern province of Shandong is a key centre of vegetable production, while China’s northwestern Shaanxi province is among its most productive fruit regions.

However, Ye Zhenqin, head of crop production department in China’s China may be the world’s top vegetable producer, but thin margins and the allure of the cities are driving farmers away Size Isn’t Everything By Ma Xiaomei agricultural ministry, warns that vegetable plantation techniques are not as good as those used by some of the foreign rivals.“Efforts need to be made to improve productivity, rather than seeking to expand the size of land for growing vegetables,” Ye was quoted by Farmers’ Daily. “The growth model has to be changed.”

But a shortage of manpower is a rising concern. The country’s urbanization drive has drawn farmers, seeking higher incomes, to the cities. Policies have also led to declining interest among farmers in growing vegetables and fruits. Beijing sets minimum prices for grain and oil crops purchased from the farmers, encouraging them to focus on the main crops which are of vital importance to the country’s social stability.

“Growing vegetables appears to be because of personal interest nowadays,” said Ren Xiaozhen, a senior farmer in Pudong in Shanghai. “We grow spinach and eggplant and eat them ourselves. We don’t necessarily deal with vegetable businesses.” The faulty distribution system, a legacy of the country’s planned economy, has also affected growth prospects in the sector.

After harvest, the vegetables have to go through a lengthy process before hitting the wet markets or the supermarkets, with exorbitant logistics and distribution costs. Profit margins for both farmers and distributors are very thin as the country has few powerful agricultural conglomerates that have integrated plantation, transportation, logistics and marketing. Yet, the demand is there.

People are keen on fresh food as many of them prefer to purchase vegetables and other food items at the wet markets.

A report by global consultancy Nielsen showed that wet markets remain China’s most popular channel of vegetable and fruit sales. This finding means that there’s room for farmers and distributors to strengthen the marketing of their own fresh vegetables and fruit, rather than simply supplying those to the retail chain stores.

According to Nielsen, 91 percent of the total 8,300 Chinese respondents said they shopped at wet markets, although a large number of them also made their purchases at the hypermarkets and supermarkets.

All signs are showing that an increasing number of farmers would give up growing vegetables and fruits because the businesses are losing lustre, especially as there is more income to be had from working in cities. Needless to say, this is a part of the agricultural industry that should have huge potential, especially as growing demand for fresh fruit and vegetables has accompanied increasing calls for better quality food.

China’s fruit and vegetable industry could become a highly lucrative business if any of the players could either cut distribution costs or successfully build a popular brand for their products and so sell at a higher premium.