Cooperatives can ensure safe food

There is no doubt that China has a problem with food safety and that it is in the interest of everyone other than the few causing it to see an end to the threat. So why has the problem persisted? The answer, unfortunately, is: Because the risk of those responsible for food safety scandals getting caught is low and the possible profits are high. As long as this situation continues, basic economic theory dictates that the problem will continue.

The solution is obvious, though. Producers and consumers should be directly connected in a manner that will make the production process transparent and identify those responsible for tampering with food products to make more profits. Of course, one or two small farmers cannot do this. But imagine the following scenario:

Residents of a village who produce a variety high quality vegetables and meat products decide to form a cooperative to ensure that their production process is safe, even environmentally friendly, and they hire an agricultural specialist to advise them how to do it most effectively.

To sell their products, they set up a shop in a nearby city, and take turns to man it. The shop carries the name of the village, and consumers are invited to visit the village to inspect the production process. Since the village's reputation and everyone's livelihood are at stake, all the villagers will be obliged to make sure that the production takes place in an orderly fashion. An open invitation to consumers to come and observe the production process would only strengthen this tendency.

The guarantee of getting absolutely safe food products will prompt quality-minded consumers to buy from the village's shop, which will enable the villagers to charge higher prices for their products in the long run and make more profit without resorting to illegal means.

Over time, other villages decide to follow the model to get a slice of the pie, and some villages even start to cooperate with each other in order to make their production more efficient and to diversify their sales by opening secondary sales and production facilities such as restaurants using only self-produced products, or starting their own dairy.

In the end, even the larger producers get pressured into ensuring the quality of their products or to lose out in the competition. Some supermarket chains, too, may get interested in setting up their own food production line to attract consumers looking for absolutely safe food.

Could this work? The market for this kind of "guaranteed food" is most likely there, because many people in China are willing to go to great lengths - from asking relatives in the countryside to supply homegrown products to buying foreign products (especially milk powder) online - to get safe products.

Is it hard to imagine that enough consumers would be willing to pay a little extra to make sure that they, or their children, get fresh and healthy food to help establish such a market?

This would definitely work on a smaller scale, especially with communal ownership of the production facilities, which would drastically reduce the individual incentive to cheat. On a larger scale, and with a more diversified production process, however, one can look at the Scandinavian cooperative model that began in the 19th century and is still functioning today. There, the landownership and primary production was individual, while the shared production facilities were communally owned. Each farmer had one vote on how to run the communal part of the business, while individual pay out was based on individual production output.

No matter who gives shape to (or starts) this model, individual farmers, large producers (such as certain dairy companies) and even supermarkets, it would be beneficial to all. And a new link between villages and cities could be fostered, with Chinese consumers being able to eat safe and healthier food.

Peter Buskov, via e-mail

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