Alibaba JV plants seeds of change in food habits

A joint project run by local farm cooperatives in East China's Anhui province and the country's e-commerce giant Alibaba Group Holding Ltd is changing the way consumers get fruit and vegetables.

Jutudi, as the project is called, was launched in mid-March by Juhuasuan, a group-buying site under Alibaba, and some local farm cooperatives in Jixi county. The project is offering 1,000 mu (666,660 square meters) of land.

Using Jutudi, farmers can transfer land use rights to Alibaba. The land is then managed by the farm cooperative. Consumers can subscribe for an area of land with specific requirements as to the crops to be grown on it. The farm cooperative then hires professional farmers to cultivate and harvest the crops. The produce is delivered to online subscribers every two weeks.

The service is categorized by area. Consumers can lease 66.6 sq m of land for 580 yuan ($92) a year. They can also choose to pay 2,400 yuan for 333 sq m of land or 4,800 yuan for 666 sq m.

The crops include vegetables, fruit and grain, and it's all insured.

Subscribers can also get fresh eggs and free travel services at designated tourist attractions in Jixi.

The service became popular as soon as it was launched on March 13. More than 3,500 consumers subscribed within the first three days.

A farmer can receive 700 to 800 yuan annually for transferring the right to use the land. Farmers are also paid for taking care of the land and the crops grown on it, explained Zhang Xinguang, business director of Zhejiang Xinghe E-commerce Co Ltd, an enterprise directly under Zhejiang Supply and Marketing Cooperative, which was one of the initial backers of Jutudi.

"Farmers might worry, as this is the first time for such a project to be launched. We suggest they set up a farm cooperative in their hometown for Jutudi. Under the project, land lease payments will be given to farmers once a year. They will also be paid monthly if they grow crops," he said.

"It is not very profitable for me to grow crops on my own piece of land nowadays. It is even less promising to hire people to work for me. It is better to transfer my land use rights," said 80-year-old Hu Sheming, who has transferred his land rights to Zhejiang Xinghe.

"Costs will be lower for this new group-buying project, including delivery and dealers' costs. The project is built on the rising market need for fresh vegetables and fruit. As the market grows, we are sure this new project will be quite profitable in the near future," said Chu Jia, public relations manager of Juhuasuan.

Cao Lei, director of the China E-Commerce Research Center, said Jutudi is another "brave move" by Alibaba, which focuses more on the customer-to-business side. Although the project still has some risks, such as legal issues concerning the transfer of land use rights and cold-chain logistics, Cao said it's still a new channel for e-commerce.

"Apart from the retailing services we have seen on Alibaba for the past few years, we can see that the use of land and even equities may be able to trade on this platform. It is very likely that Alibaba will become a financing platform for companies in the future," said Cao.

Similar services are available at JD, another leading domestic shopping site run by JD.com Inc. On that site, consumers can rent land for their own crops raised through Beijing-based Rising Yard Agriculture Technology Co Ltd or Beijing Ninetowns Tianshi Ecological Agriculture Co Ltd.

A plot covering 30 sq m provided by Rising Yard costs 680 yuan annually for consumers who sign up between April 25 and June 30. Five designated vegetables will be grown on the land and delivered.

At Ninetowns, consumers can rent a site of 33.3 sq m for 1,998 yuan a year. There are 16 free deliveries a year, with 5 kilograms of crops delivered every time.