Crops in cyberspace(3)

Logistics gap

"We don't profit from this deal, but we want to keep our promise to the villagers," said Hao Yanguo, the marketing manager of Yuantong Express, when asked about the distribution of the walnuts grown in Nanjiushui.

He said that, with the exception of Worldwide Express Mail Service, China's national express service provider, it is the first time that a Chinese logistics company has come to remote mountain areas to deliver food products. Previously, logistics companies would not visit such a remote place because of the difficult transport conditions and high costs.

To help the villagers, the company offered a price one yuan lower than usual for distribution of each kilogram.

"The company is planning to move a big part of our business into delivery services for agricultural products," he said. "We are still at the exploratory stage, looking for a mode mature enough to help the farmers and ensure our profits at the same time."

Wang Jinlong, vice-president of Yuantong Express, said logistics companies should take the responsibility of connecting farmers with consumers, to help them sell their produce at a better price and increase earnings.

Although the company has offered the lowest price, logistical costs still account for 20 percent of the total income from Nanjiushui's walnuts sales.

Fang Li, the district manager in charge of business in the region where Nanjiushui is situated, said the cost of gasoline accounts for half of the total logistics cost and road tolls take up 20 percent of that figure.

She said it is unclear at present how the government will provide subsidies for logistics services for agriculture products.

"There is no formal regulation of the sector," she said. "The only thing the company can do is try to reduce costs during the operation."

Logistics services for agricultural products are different from those for other goods because the company has to transport large quantities of produce from the point of origin simultaneously to ensure freshness.

"Traditional logistics services are still unable to meet the demand for online agricultural marketing," said Liu. "To some extent, it has limited the rapid development of electronic commerce for agricultural products."

In recent years, many agricultural products have been sold online, especially on Taobao, a major shopping website. Meanwhile, many local governments have opened trading websites for farmers in their regions.

The online sale of fruit, chickens and grains is no longer a rarity in China.

Instances of online marketing of agricultural products will definitely increase in the near future, which will lead to soaring demand for the corresponding logistics services. Thus, the reduction of the costs of those services for agricultural products is key for expansion of the business, Liu said.

"The new agricultural marketing and related delivery services are significant in a country where farmers comprise more than half of the population," she added.