If the way to a person’s heart is through his or her stomach, then it stands to reason that the way into the hearts of Chinese people is through their 1.3 billion stomachs. The number makes businesses salivate. They crave traction with Chinese consumers who might spend a few of their hard-saved Renminbi on food products. What Chinese consumers are truly hunkering after is reliable, safe, healthy, non-toxic foodstuffs; companies that can prove themselves trustworthy will win loyal customers. Israeli companies are particularly well-positioned to deliver the goods.

Chinese consumers, like those around the world, are increasingly concerned with confirming the source of their food to ensure that it is what they think it is. In China, where there have been serious food safety scares, what you eat may have potential life-or-death consequences. This leads to perpetual crises of confidence. Consider the horrific discovery in 2008 of the industrial chemical melamine in milk powder often consumed by the young, resulting in over 50,000 children falling ill with a handful ultimately dying; or antifreeze-tinged vinegar in Xinjiang Province.

In many cases, the illness is caused by residues of chemical pesticides. This past week, Greenpeace reported finding illegal toxins tainting produce in three leading supermarket chains in China. In another recent and well-publicized case, methamidophos, an organophosphate pesticide that can be highly toxic if ingested orally, was discovered in meat dumplings exported to Japan. There are many more cases that fall under the radar, including tainted Chinese Herbal Medicines (CHM)fruit and meat.

According to Chinese government statistics from 2007, between 53,300 and 123,000 people nationally are poisoned by pesticides annually. It’s such a problem that many government officials only eat from organic plots and farmers are known to grow vegetables for themselves without chemicals, which they keep separate from those they will sell to the market.  

Pesticides aren’t just bad for human health – they’re bad for the planet and for productivity, resulting in “lower crop yields, reduced soil fertility and increased susceptibility to attach by new forms of pests and disease.” They add an extra expense to farmers already struggling to make a living, and often come from non-renewable materials.

Not surprisingly, then, consumers are suspicious about labeling, so they actively seek clean, non-toxic foods. They’re willing to pay for it as well: In China—where the eco-food market started in cities and expatriate communities that enjoy incomes higher than most—that premium can be up to 700% over comparable items, according to the International Federation of Organic Agriculture Movements (IFOAM).

The Chinese market for pesticide-free food is expanding. According to “The Greening of China’s Food: Green Food, Organic Food, and Eco-labelling,” 28% of China’s arable land—just over 34 million hectares—is devoted to “eco-foods,” a designation that includes organic certification as well as China’s unique “green” and “hazard-free” categories of food. Organic retailers continue to multiply: nearly all supermarkets in mainland China have doubled their floor space for organic goods.

From 2005 to 2007, China phased out five high-toxic pesticides (methamidophos, parathion, methyl parathion, monocrotophos, and phosphamidon) nationally, creating more than $550 million in new market opportunities for pesticide manufacturers who could address the country’s need for lower toxic replacements. The total value of China’s pesticide market hit $2.1 billion in 2005 (with the five high-toxic pesticides accounting for about 24% of the total). Now the country aims to reduce the market share of all high-toxic pesticides further, opening up opportunities for pesticide producers who can comply.

Israeli companies concurrently exploring and establishing non-chemical pesticide approaches should be looking eastward when developing technologies. Especially because trust among the Chinese already exists for foods produced according to Jewish principles: kashrut certifications have ramped up in China in light of food safety scares, especially during the Olympic Games in 2008. In Israel, organic farms – which avoid chemical additives of all kinds, not just in their pesticides – like Kibbutz LotanKibbutz Ketura and Hava & Adam are leading the charge to produce clean, green, healthy and safe products.

Perhaps most exciting, Israeli initiatives are pushing the boundaries in developing non-chemical pesticide methods. Israelis are innovating in outside-the-box ways. Owls help chase down rodents, turmeric repels pests, and scorpion venom – a project currently in development –dissuades insects. It’s not enough though; Israeli companies should be taking bigger steps—companies like Makheteshim-Agan, the agrochemical chemicals and generics manufacturing giant awaiting potential majority acquisition by ChemChina.

Bio-pesticides are starting to pick up throughout China, and domestic companies in this space will be seeking funding, technological know-how and expertise. For example, Jiangxi Tianren Ecological Industry, which develops natural organic fungicides and insecticides, is an emerging technology developer and ranks as one of the top-10 in Cleantech Group Venture Investment Database to receive VC funding.

Nor is the need for biopesticides a China-oriented phenomenon alone; it is a global cause for which Israeli companies would do well to prepare for. Admittedly, chemical pesticides remain king: of the global pesticide market (valued at approximately $43 billion in 2009), synthetic pesticides represented the greatest market share, valued at $41 billion. Yet there is great opportunity in the biopesticides industry, with rates of 15.6% compound annual growth rate, from $1.6 billion in 2009 to $3.3 billion in 2014.

With the FAO predicting we’ll need to increase food production by 70% by 2050 to feed an additional 2.3 billion people, it is clear that the challenges facing the agricultural sector of the world’s most populous nation are predictors for what the rest of us will soon encounter. First China, then the world. For Israeli companies to move into the business of healthy, safe and sustainable foods for the PRC just makes business sense.

Click here for a PDF and footnoted version of the article

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