Simplot's profit-making plan is also expected to help Chinese farmers meet the challenges brought by the country's WTO entry.

R. Kent Ernest, Simplot's international sales and marketing director, said, "Simplot will strengthen co-operation with local Chinese farmers and help sharpen the competitive edge of China-produced agricultural products."

Simplot purchases potatoes from 5,000 Chinese farmers in northern areas of Beijing. With new orders from the US firm, more Chinese farmers will grow potatoes for Simplot, which is expected to considerably increase their incomes.

Fears Vs Anti-Risk Models

However, looking at the overall picture of China's agricultural industry in the future, there are fears: Chinese farmers' income will decline, due to the relatively low quality of products, high costs and poor marketing.

Ernest stressed: "Simplot's operation model in relations with local farmers may be a good method to follow in the effort to help resolve some agricultural problems arising after China's WTO entry."

The Simplot model is said to enhance the anti-risk and profit-making capability of Chinese farmers by centralizing individual growing.

About Simplot

Simplot is one of the world's largest agribusiness companies, and potatoes make up about half of the company's US$3.5 billion annual revenues.

As a major supplier of French fries for the world's two largest fast food chain stores - McDonald's and KFC - Simplot is the only foreign company to have localized potato growing in China.

All the French fries provided to McDonald's restaurants in northern China are locally produced by 5,000 Chinese farmers in areas north of Beijing and processed by Beijing Simplot Food Processing joint venture, said The-han Chow, chief representative of Simplot China.

These farmers are now working on 2,000 hectares of land, and the annual output reached 30,000 tons last year.

Details Under the Contract

Dan Cushing, general manager of the Beijing Simplot joint venture, said: "The efforts of Simplot in China has helped local Chinese growers improve their infrastructure, farming techniques and obtain continuously growing incomes."

Under the contract between growers and Simplot, growers should use designated potato seeds, chemical fertilizers, standardized irrigation facilities and adequate farming techniques to produce potatoes up to the company's requirement.

(People's Daily February 4, 2002)