Producing and Procuring Horticultural Crops with Chinese Characteristics: Why Small Farmers Are Thriving and Supermarkets Are Absent in Rural China

The supermarket revolution has arrived in China and is spreading as fast as or faster than anywhere in the world. As the demand for vegetables, fruit, nuts and other high valued products have risen, urban retailers are finding new venues seized on niche and today have over $55 billion in sales, more than a third of the urban food market. However, the experience of many developing countries suggests that there could be serious distributional impacts of the rising of supermarkets. There is concern among policy makers and academics that poor, small farmers might be excluded from market. The main goal of our paper is to understand what types of farmers have been able to participate in the horticultural revolution, how they interact with markets and how supply chains affect their production decisions. Using a unique set of spatially sample communities in the Greater Beijing area, we find small and poor farmers have actively participate in the emergence of China's horticulture economy. Moreover, there has been almost no penetration of modern wholesalers or retailers into rural communities. In the paper we document seven characteristics of China's food economy that we believe account for this unique set of findings.