TIANJIN - Walmart in China is eyeing fast growth for its "direct farm program," which will bring benefits to 700,000 Chinese farmers by year-end, says Vice President of Walmart (China) Barry Friedman.
"We hope that 1 million Chinese farmers can benefit from the program by the end of 2011, when it can generate one third of farm produce and cereals sold in Walmart China stores," said Friedman Wednesday at the China Tianjin Investment Fair in north China's Tianjin Municipality.
The "direct farm program" is also known as "connecting farmland with supermarkets." Walmart has set up 36 direct purchase bases in over 14 Chinese provinces and municipalities, benefiting 393,000 farmers.
Fu Hui, a purchasing manager for Walmart (China), said the program initiated in 2007 is developing fast.
He said Walmart leases farmers' land, and contracts them to grow farm produce and purchases the products. Contracted farmers can expect an income of 165,000 yuan ($24,302) per hectare a year, compared with the average income from individual farming of 15,000 yuan.
Walmart can use its logistics and transportation system to ensure the produce reaches its supermarkets fresh, he said.
Fu said Walmart has been supported by Chinese government departments and farmers' cooperatives in developing the purchase bases.
According to Jiang Zengwei, vice minister of commerce, 400 million yuan was earmarked from the central government budget to support 200 "direct farm projects" in 2009.
The funds have also helped improve logistics infrastructure and quality testing equipment.
International retail giants like Carrefour and Metro Group have made direct purchases from such bases, too.
Friedman said at Walmart's purchase bases, the company reaches out to individual rural households and farmers' organizations, providing on-site training in food safety management, cultivation and technology among other practical skills.