Virginia A. Hulme
Cover by Benjamin A. Hurd
Virginia A. Hulme
is assistant editor of The CBR. She visited the Seagram Citrus Technology Center in June 2000.
The Seagram Co. Ltd. is helping lay the groundwork for a juice-processing industry in China's Three Gorges area
A commitment to talking out all problems with Chinese partners has become a central aspect of the
project, and one that could be a model for any foreign-PRC interaction.
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A Citrus Glossary Bud: A bump on a scion tree branch where a new branch is about to grow. Budding: The process of inserting a bud into a rootstock. The bud then grows into the fruit-bearing part of the tree. Cultivar: The upper, fruit-bearing part of a tree, chosen for the quality of fruit it produces. The bud and cultivar are the same type of tree. The cultivar must also be compatible with the chosen rootstock. Fertigation: A method of simultaneously irrigating and fertilizing by dissolving fertilizer in water. Rootstock: The lower part of the tree, including the roots, chosen for its resistance to cold, disease, and salt. Scion tree: Source of buds. Also known as the mother tree. Screenhouse: Similar to a greenhouse, but made from mesh. At the Seagram Citrus Technology Center, scion trees and some rootstocks are grown in the screenhouse to protect them from disease. Trifoliate: A three-leafed citrus variety commonly used as a rootstock. |
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| The Seagram demonstration grove in Xinli Township. The channels in the lower field allow water to drain. The lake will be used for irrigation. Photo courtesy of Virginia A. Hulme |
Citrus project takes root
Seagram, which specializes in alcoholic beverages and entertainment, has been a player in these industries in China since 1988. In the early 1990s the company, prompted by Chairman Edgar M. Bronfman, began exploring the idea of establishing an orange juice processing project that had both commercial and goodwill benefits. As a company specializing in foreign drink and entertainment--hardly the Chinese authorities' favorite aspects of opening to the outside world--Seagram was interested in enhancing its image as a contributor to China's economic development.
In November 1997, Seagram, Chongqing Municipality, and the Three Gorges Construction Group (TGCG) signed a memorandum of understanding (MOU) that initiated a research, production, processing, and marketing project to build a modern orange juice industry from scratch. Seagram agreed to invest $11 million to cover the costs of building and operating the nursery, center, and demonstration groves through 2005. (The recent merger of Seagram with France's Vivendi and Canal+ Group is not expected to affect the project.) TGCG; the Zhongxian, Wanxian, and Chongqing governments; the Chongqing-based Citrus Research Institute (CRI); and the Three Gorges Relocation Bureau in Beijing have been involved in the project since its inception. TGCG deals directly with the township governments. It also contracts with farmers, paying them to grow trees until the trees bear fruit and then buying the fruit.
TGCG was originally a joint venture with the Three Gorges Relocation Bureau, under the Three Gorges Commission. It has since been severed from the government as part of the nationwide restructuring process, and functions as a private company.
Even before Seagram appeared on the scene, the Chongqing municipal government and the Ministry of Agriculture had targeted the Three Gorges area for orange juice processing, and the Chongqing and central governments had approached CRI about citrus processing in the region. CRI, under the Chinese Academy of Agricultural Sciences, is located about 60 km north of Chongqing city.
From the beginning, CRI and the local governments responded enthusiastically to Seagram's proposal, and urged building a juice-processing plant immediately. Seagram had to explain that this was not feasible, for several reasons. First, most fruit in China is grown for sale as fresh fruit, and only fruit that cannot be sold is processed into juice. These leftovers are insufficient to fuel a full-time processing plant. Second, the local variety of orange tree produces fruit for only two months a year, not long enough to provide the steady source of raw material necessary for a commercially viable operation.
Seagram also had to convince the Chinese to grow juice oranges. Though farmers would not earn the best fresh-fruit market prices, Seagram assured the Chinese that the eventual processing plant would offer farmers a decent, steady income from juice oranges. (Fresh fruit sells for RMB1-2 [$0.12-0.24] per kg, while juice fruit brings RMB0.6-1.5 [$0.07-0.18] per kg.) This argument resonated with officials faced with the difficult tasks of resettling people displaced by the Three Gorges Dam project and trying to raise rural incomes, and they agreed that the citrus project should concentrate on building orange groves.
Though interested in the proposed citrus project, neither CRI nor the local governments had the money to fund it. But TGCG was able to obtain funding from various levels of government for economically viable projects in the Three Gorges resettlement area.
Finding the right spot
When Seagram first started to explore a citrus project in the mid-1990s, the firm owned Tropicana Products, Inc., which had a packaging plant in Huizhou, Guangdong Province. Seagram initially examined the possibility of buying a grove owned by Dole Food Co., Inc. in neighboring Guangxi Zhuang Autonomous Region, and using it as a base for community outreach to poor farmers in Guangxi. The central government, however, did not consider development of the citrus industry in Guangxi a priority, so Seagram decided to look for a site that was more consistent with Chinese development priorities.
Seagram's search moved north to the Three Gorges region. The climate in this area is suitable for oranges, and until very recently, the region was free of citrus diseases. The region's cool winters control pests and disease, and give the fruit a deeper color than oranges grown in more tropical areas.
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| The Seagram Citrus Technology Center's state-of-the-art greenhouse provides a sterile environment in which to grow rootstocks from seed. To regulate temperature, fans are activated by thermostat and the interior roof can be adjusted to control the amount of sunlight. In winter, the greenhouse can be heated. Photos courtesy of Virginia A. Hulme |
Seagram began surveying the area to find the best location for the center and groves. Zhongxian was chosen for the center site in 1997 because it was suitable for growing citrus and lies within the Three Gorges resettlement region. Seagram wanted to locate the project within this region not only to address the needs of low-income farmers in these counties, but also to qualify for government resources earmarked for counties involved in resettlement. Three percent of Zhongxian's total land area--nearly 5 percent of cultivated land--will be inundated once the reservoir is full. And almost 6 percent of its 1 million people will have to be resettled, according the Resettlement and Development Bureau of the State Council's Three Gorges Project Construction Committee.
Choosing the right location was one way to ensure that the intended beneficiaries of the project became the actual beneficiaries. Only people willing to live in this rural area--usually only existing residents--will choose to wor k at the technology center. By building the center in the countryside, rather than in Zhongxian City, the project also avoided having to employ relatives of local-government officials.
Zhongxian already grows 25,000 mu (1,675 hectares [ha]; 1 mu equals roughly 0.067 ha or 0.164 acres) of the local Jincheng orange variety, but these groves are in need of improvement. Soil samplers selected another 3,000 ha in the county as worth putting under oranges. Next year, the first project groves will be planted 60 miles from Xinli. Most project areas will consist of a patchwork of oranges, rice, corn, and other crops. Eventually, 40,000-45,000 families will participate in the farming of 35 flat and 45 terraced groves. Once the project is up and running, the region could produce 150,000 tons of fruit per year--enough for 70,000 tons of juice.
Construction starts
As the village school occupied the site chosen for the center, the first order of business was to build a new primary school and staff housing. Seagram built the new two-story facility, across the road from the center, to the best local standards.
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| The screenhouse, also a sterile environment, shelters the scion trees. S cion trees provide the buds that, once grafted onto rootstocks, grow into the fruit-bearing part of the orange tree. Fans and a misting system help cool the screenhouse. |
The technical center and nursery were built in a year, though the process was fraught with misunderstandings between Seagram and the Chinese contractor. Whenever disputes arose (usually over the contractor's attempts to cut corners), Seagram had to explain carefully why it wanted things done a particular way or to a certain standard. Gradually, as the contractor began to understand the various reasons behind Seagram's demands, mutual respect grew. People who had raised objections to Seagram's plans in the past saw how well things turned out when done according to plan, and began to agree more readily to Seagram's suggestions. This commitment to talking out all problems with Chinese partners has become a central aspect of the project, and one that could be a model for any foreign-PRC interaction.
The center contains apartments and common rooms for live-in staff, several enormous guest rooms, a kitchen and dining room for staff meals, classrooms, offices, conference rooms, a reception room for officials, a library, a technical assistance center, two laboratories, and a large space for a model processing operation.
The two nursery buildings consist of a greenhouse--where rootstocks are grown from seed--and a screenhou se for scion trees (see Glossary). Both are kept sterile to prevent disease among young trees--canker, one of the most common orange-tree blights, is highly contagious.
Originally, Seagram planned to import the nursery structures. But PRC Customs imposed such large duties on the materials that it turned out to be cheaper to build them in China. Seagram found a qualified Beijing company with an Israeli designer, who used both imported and domestic components to build the facilities on site.
Delays in greenhouse construction have affected the entire project, however. The first greenhouse roof needed to be completely redone. Then a contract dispute between the parts and greenhouse suppliers delayed greenhouse completion, so Seagram had to postpone planting the first batch of trees by four to five months.
Blasting a way out
The soil in the demonstration groves and some of the project groves is shallow, averaging only 30 inches, and soon gives way to mudstone. The shallow soil does not pose a serious obstacle, however, as the most important roots of a citrus tree grow sideways, and only about 24 inches deep. A more serious problem is that the mudstone prevents adequate drainage. To create drainage cracks in the rock, the project has blasted a hole nearly a meter in diameter for each tree.
Upon exposure to the elements, the mudstone begins to break down. The residue is then mixed with sand and composts, including animal and green manures, and used for planting. The pH is a little high for citrus, which needs an almost-neutral soil acidity, but farmers can add sulfur, fertilizer, or organic matter, such as rice hulls, to adjust it. They can also select rootstocks that tolerate acidic soils.
Planting density
The distance between trees was one of the most contentious issues between Seagram and the Chinese partners. US commercial growers consider the equivalent of about 24 trees per mu (358 per ha) to be the ideal density. Chinese farmers often plant 50-60 trees per mu (746-896 per ha), and have been known to plant more than 80 trees per mu (1,194 per ha).
Planting density helps determine fruit yields. Chinese officials, concerned about generating farmer income as soon as possible, argue that more trees will bear more fruit, particularly in the first few years. (Trees start to bear fruit in their fourth year, by which time Zhongxian farmers will have waited three years before seeing any income from their trees.)
Planted at a high density, trees do produce more in the first few years. But when trees are planted too closely, as in most Chinese groves, they tend to grow together into thickets. In such cases, only the tops of the trees receive enough light to bear fruit, causing the yield per tree to plummet. Seagram estimates that after peaking, trees plante d at 24 trees per mu (358 per ha) will taper off to a yield of 134 kg per tree per year, while a density of 55 trees per mu (821 per ha) will result in an average yield of only 20 kg of fruit per tree per year. Many Chinese groves average only 15 kg of fruit per tree per year.
The center estimates it could easily increase yields at least 50-60 percent by introducing new fertilization and care techniques. For instance, to fertilize a tree, farmers now dig a trench around the tree and fill it with weeds and pig manure. This method cuts shallow citrus roots, dwarfing the trees. The center plans to teach farmers to prune the trees to maximize the area exposed to the sun.
Despite the fact that many Chinese citrus experts have visited US groves, some doubt that the techniques and standards used in the United States will work in China. Some believe that Chinese trees will never achieve yields as high as American ones, in part because China's manual pruning and spraying techniques mean that average tree size will be smaller. After more than a year of discussion, the two sides finally agreed that the project groves should have an average density of 40 trees per mu, with a maximum of 50.
Another outstanding issue concerns the Chinese custom of planting secondary crops, such as beans, between trees. According to Seagram consultants, intercropping is possible as long as farmers keep a wide radius around the t ree so as not to damage roots.
Growing citrus
The center's first batch of 150,000 trees will be ready for planting this year. Trees budded this summer (see p.21) will be ready to plant in 2001, and 250,000 trees will be ready for planting in 2002.
The center originally planned to produce approximately 200,000 trees per year. But TGCG asked Seagram to expand its production so that it could take advantage of currently available government funding. As a result, the center will plant two batches of 200,000 trees every year, for a total annual output of about 400,000. (In comparison, a large nursery in California produces 200,000-300,000 trees a year.) By 2002, trees at four different stages of development will be growing at one time-- one batch in the greenhouse and three in the nursery. Finding enough flat space for the huge numbers of potted seedlings poses a challenge.
Originally, the project MOU required all trees to come from the center's greenhouse, because the imported rootstocks and buds are all certified disease free. But because construction delays slowed initial production and TGCG requested Seagram to expand output, CRI will now provide a small percentage of trees. While CRI will do its best to ensure the trees are healthy, it cannot guarantee that all of them will be free of disease. These trees will be planted in more isolated areas as an extra precaution.
Grove management
Each family will receive about 20 trees from Seagram at no cost, as well as training on how to care for them. Specific arrangements will vary from village to village, but in general, individual farmers will provide labor, while management will be cooperative. Coordinated management is important to control disease and pests. For instance, if one family's trees become infected as a result of inadequate fertilization or pesticide use, the disease may easily spread through the whole grove. Thus, the management company or cooperative for each grove will make decisions on when and how to irrigate, fertilize, apply pesticide, prune, and otherwise care for the trees.
TGCG will likely set up a management company to oversee the groves. Bot h TGCG and the Zhongxian government will have important roles in the company. TGCG will manage some groves directly and pay wages to the farmers. Others may have a stronger cooperative initiative and weaker links to the management company.
In general, grove workers will earn wages for their labor, while those who supplied land to the project will be compensated from the fruit proceeds, according to how much land each family supplied. While relatively labor intensive, citrus farming is less so than the unmechanized traditional grain farming still prevalent in the project area. Thus, the groves will be unable to employ all farmers in the area.
A new local employer
The citrus technology center already employs five senior staff: an administrator, an engineer, an accountant, one nursery supervisor, and one demonstration-grove supervisor. The center also employs two kitchen staff and 23 guard, greenhouse, and screenhouse staff.
The nursery now employs 20 workers. By 2001-02, up to 30 more employees will be needed for budding and transplanting. With 800,000 trees in various stages of growth, the project will eventually need 30 budders and 30 tapers and movers, twice a year for six to eight weeks, for budding alone. Three shifts of 10 people will be needed to mix and sterilize potting soil. And twice a year, extra staff will be required for transplanting.
When the nursery is r unning at full capacity, 800,000 pots will need to be cared for and watered at one time. The "Blue Duck Pisser" (BDP), as it is affectionately called by staff, is the center's experimental fertigation device. The BDP will automate watering and fertilizing to some extent, but watering will still require 24 more people.
For unskilled work, such as hoeing, the project pays RMB16 ($1.93) per day, the local going rate. Skilled work, including watering, fertilizing, and applying pesticide, earns RMB18-19 ($2.17-2.29) per day.
Eventually the project will need four supervisors, plus a slew of seasonal employees. Some staff are now hired by the day as needed, but there is work nearly every day. At peak times, Seagram estimates, the nursery will need up to 300 people. Most of these workers will come from the surrounding villages. Local hiring requires a lot of training, but is one of the project's objectives. Seagram also encourages local hires to move up within the organization. For instance, one of the three housekeeping staff is currently learning how to manage the center's inventory.
Technical extension
Seagram is not just supplying trees, but is also setting up a technical assistance center. Technical staff can be divided into three levels based on expertise. The highest level consists of US-based experts brought over from the United States and Chinese experts from CRI and local univers ities.
The middle level consists of center extension technicians. Once the project is under way, extension agents will spend most of their time in the project groves, teaching farmers how to grow and care for trees, as well as how to identify and treat tree diseases. Currently, the center employs two technical extension agents to help in the demonstration groves and with pest and disease surveys. One, a CRI staffer originally from nearby Wanxian, has considerable experience. The other is a graduate student from Southwest Agricultural University. Both are learning on the job, supplementing their formal training.
Each agent will oversee 5,000 mu (335 ha). By the end of this year, the center will hire two more extension staff, and another six by the time the project is in full swing in 2003-04. These technicians should have experience in agriculture, horticulture, plant protection, and/or fruit research, as well as familiarity with the local environment and dialect. The center expects to hire young people from a local agricultural high school to fill some of these positions, but ideal future hires would possess four-year agricultural degrees. Southwest Agricultural University in nearby Chongqing has a strong agriculture program that offers a citrus focus.
The farmer technicians, who will work in the project groves, make up the lowest level of technical outreach. Next year the center will start to hir e farmer technicians, and train them to take care of trees, prevent and fight citrus disease, control pests, and apply fertilizer. They will then pass this knowledge on to other grove farmers. The farmer technicians will receive training both at the center and in their project groves.
Orange aid
With the sale of Tropicana in 1998, the processing phase of the project outlined in the original MOU has been put on hold. Seagram officials say that there is plenty of time to line up an investor for a modern processing plant, as the first fruit will not be harvested for another four years.
Seagram will turn over all facilities to the Chinese side in 2005. The nursery and technical assistance center expect to continue building new groves and improving management in existing groves. To become a viable enterprise, however, the center will have to become more self sufficient. Seagram hopes the quality of the trees will induce farmers to buy them in the future. The extension service should also be able to charge a reasonable fee for its services, enabling the center, nursery, and technical assistance program to operate indefinitely.
If it does continue, the project will have succeeded not only in burnishing Seagram's image in China, but also in proving that careful attention to the concerns of Chinese partners, and the hard work of reaching consensus, can mean the difference between success and failure. In this case, success means the establishment of a modern orange juice industry in China, and higher living standards for thousands of Chinese farmers.
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A Juice-Farming Family The Seagram Co. Ltd.'s citrus project in Chongqing Municipality has already had a positive impact on Lei Xinyu's life. A resident of Xinli Town, he lives less than kilometer from the center, and right next to the demonstration groves. The Lei household, one of 45 participating in the demonstration groves, consists of Lei Xinyu, his wife, his 7-year-old son, and his two parents. Prior to the project's initiation, the Lei family, like most in their area, farmed 3-4 mu (0.20-0.27 ha, about half an acre) of land on a near-subsistence basis. They planted mainly corn, wheat, and rice, and though the land produced more than enough to feed the family, low grain prices in recent years have meant that the surplus was almost useless. On average, the Leis estimate, farming families in the area earn about RMB2,000 ($242) a year. To earn cash, Lei Xinyu spent almost seven years working in the prosperous coastal areas (da gong). Like millions of others from China's interior, he traveled se veral thousand kilometers to places like Guangdong, Fujian, and Zhejiang provinces, where he worked as a construction worker, a guard, a salesman, and at other odd jobs. The work paid off--two years ago he had saved up enough to build a new house. The old house was fairly traditional: one story with three rooms, mud walls, and a tile roof.
The house cost RMB10,000 ($1,208) to build. Most of this went for materials, as the family built much of the house itself. The Lei family is not alone in having benefited from family members' work on the coast (see The CBR, September-October 1999, p.22). Very few old mud houses are left in the area; most are now made of concrete and other modern construction materials. Lei's coastal income has also enabled him to buy a motorcycle, which occasionally does double duty as a local taxi, earning the family extra cash. He figures he can make up to RMB40 ($4.83) in one day as a taxi driver. He also uses the motorbike to take his son to nursery school, otherwise a 40-minute walk. Seagram's project has eliminated the need for Lei to da gong. Though his brother-in-law has asked him to accompany him to Fujian, he prefers to stay home where he can work and take care of his family at the same time. Without the project, he says, he would definitely have to return to the coast. Like most participants, the Lei family ceded about a third of their land to the project. Now they spend two-thirds of their time on the project fields and one-third on their own land. For their labor in the project fields they are paid RMB16 ($1.93) per day--the going local rate for unskilled day labor. The remaining two mu (0.13 ha) still produces enough to feed the family, but participating in Seagram's project has increased the family's cash flow, enabling them to buy more food if necessary. Apart from the wages they earn laboring on project fields, the Three Gorges Construction Group also pays the family an annual land-use fee for the fields they contributed to the project. The family estimates its annual income has risen about 40 percent, to RMB3 ,000-4,000 ($362-483) a year. Seagram estimates that farmers' incomes will remain similar to pre-project levels until the groves start producing, at which point incomes should start to increase. But, Seagram officials point out, one of the main advantages of the project is release from long hours of backbreaking labor for little return. Farmers should achieve at least the same level of income with significantly less work, freeing them up to relax or pursue other money-making endeavors, such as Lei's taxi service. (Seagram has been very conservative in its estimates of projected income to avoid raising expectations too high. Much depends on actual yields and fruit prices.) Whatever the income amounts to, Lei Xinyu and his wife plan to save what they can and invest in their son's education. As Lei's parents depend on the couple to support them in their old age, so the younger Leis will rely on their son. He is their retirement plan. |
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The Life of a Citrus Tree A cultivated citrus tree is made of two elements: the rootstock and the cultivar. The Seagram Citrus Technology Center has chosen a hardy trifoliate rootstock that is not native to China, but is suitable for local soil conditions, pest resistant, and compatib le with the chosen cultivar. The local trifoliate is also hardy and disease resistant, but grows more slowly. The center is experimenting with other trifoliates, including a faster-growing US variety. The key is to find a happy medium among resistance, fast growth, and good fruit production. The project will use three cultivars: Valencia, Hamlin, and Jincheng. Jincheng is a good-quality, local, dual-purpose (fresh fruit/juice) sweet orange. The three types were chosen not only for the quality of fruit they produce, but also because they bear fruit at slightly different times of the year. Hamlin fruits from October to December, Jincheng from December to February, and Valencia from March to June. At the Seagram project, rootstocks are grown from seed in the greenhouse, which can hold 300,000 seedlings, or about two batches. The project is already growing about 300,000-350,000 rootstocks from imported Californian seeds. Every four months, the project will plant 300,000 seeds in the greenhouse. Because seeds must be planted within a few months of harvesting, seeds for the second of the two annual batches will probably come from Australia and South Africa. The project also makes its own sterile potting soil to protect the seedlings from soil-borne diseases. Local peat is broken up and mixed with sand (for drainability) and rice husks (for nitrogen). The mixture is then sterilized by steam. At 12-15 months, depending on whether the seeds were planted in winter or summer, the seedlings are usually old enough to be budded. Budding is necessary to produce a tree that is both disease resistant and that bears good fruit. Seagram imported the first batch of buds from California, but importing buds is expensive, so Seagram has imported scion trees as a permanent source of budwood. The imported scion trees are kept inside the screenhouse to keep them disease free. Jincheng, the local cultivar, is kept outside, as the center cannot be sure the local plants are 100 percent disease free. Seagram also brought in a US expert to teach budding techniques. Budding involves grafting a cultivar bud onto a rootstock. Technicians slice a bud from a scion tree and implant it into a slit in the rootstock. The stem is then wrapped with plastic tape just above and below the bud, to keep it in place. This bud grows into the main, fruit-bearing part of the tree. After the bud takes hold and starts to grow, the top of the rootstock is clipped off. The end result is a tree whose roots and trunk are pest and disease resistant, but whose top bears good-quality fruit. How large the rootstock should be before budding became a contentious issue between the Chinese and US sides of the Seagram project. US citrus growers prefer to bud about six inches up the stem, when the rootstock is a quarter of an inch in diameter. But Chine se farmers tend to bud lower down, when the tree is younger, to speed up the growing process and shorten the interval between budding and the first harvest. US growers argue that the higher the bud, the less likely it is to be splashed with mud containing fungus or other disease. Though the rootstock is disease resistant, the cultivar--which will form all of the tree from the point of budding and up--is vulnerable. At the Seagram project, the young trees will remain in the nursery for up to a year and a half, until they become rootbound and ready for planting. The whole process from seed to planting in the grove takes two to two-and-a-half years. Once planted in a grove, some trees live as long as 50 years, but many are replaced earlier. Ideally, trees are replaced gradually as they sicken or as their yields taper off. Most are replaced within 25 years. --Virginia A. Hulme |
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