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Citizen Economy on the Rise

Modern Management Milks an Agro Cash Cow


Modern Management Milks an Agro Cash Cow


Armed with just a middle school education, Lee Chuan-tian applies business management models and automated cultivation to provide livelihoods for more than 200.



Modern Management Milks an Agro Cash Cow

By Wen Yeh
From CommonWealth Magazine (vol. 393 )

On March 18 disconsolate farmers watched as floodwaters from torrential rains across northern Taiwan lapped over the ridges dividing their vegetable fields, causing substantial agricultural losses.

But Lee Chuan-tian, head of Ba-De City Vegetable Production and Marketing Unit Three in Taoyuan County, wasn't worried in the least as he gazed out a second-floor window of the team's produce-collection facility across six hectares of white greenhouses stretching to the horizon, standing fast against the downpour's onslaught.

The team's enormous produce-collection facility sits amid rice paddies and vegetable fields less than 10 km from central Taoyuan. At its front gate sits Lee's new Western-style farmhouse, creating a stark contrast with the ramshackle one-story traditional farmhouses scattered across the surrounding countryside.

Lee's 31-hectares of vegetable fields account for one out of every 20 heads of leafy greens sold in the greater Taipei area.

"Nationwide, our vegetables are sold at 28 Geant and RT-Mart locations, and at Geant you can even see my photo," the 52-year-old Lee says with a little embarrassment.

Produce departments at the two huge retailers sport dedicated counters for the unit's produce, above which complete details of the origins of the vegetables are prominently displayed, emphasizing that they are fresh-picked each morning at 5 a.m. and rushed to the point of sale within four hours.

Breaking the grip of chiseling middlemen and introducing modern business management earned Lee and his team recognition from the Council of Agriculture as one of the country's top ten production and marketing units in 2005, as well as the Council's Shen Nong Award in 2006.

In fact, Lee is the only member of his unit who is actually a farmer; eleven other team members are outsiders to the agricultural sector.

Team members include former small vendors of pork and chicken in traditional markets, plumbers and electricians, a retired factory manager, a photo processing shop owner and even two members of the Council of Agriculture's youth vocational training program, assigned as part of the council's Wandervogel ("Stray Birds") program. The team's sole woman, Lee Chen-jun, is a former manager at a foreign company who gave up her high-salaried white-collar job two years ago to go into agriculture with Chen Ying-tsung, a former transport company employee.

Over the past 10 years, Lee Chuan-tian has forged this band of farming neophytes into a crack agricultural strike force.

Lee Chuan-tian (second from right), head of Ba-De City Vegetable Production and Marketing Unit Three, turned his vegetable fields into an industrial production line operation, and gained a niche in major islandwide retail outlets.

Mechanized Greenhouse Production Boosts Turnover

Lee Chuan-tian's team members are not vegetable farmers in the traditional sense, but more like middle managers supervising a vegetable production line.

"Our unit members seldom go out into the fields. They're managers," says Lee. "We have engaged a labor force of more than 200."

Erected outside the entrance to Lee's greenhouse complex is a giant billboard seeking vegetable pickers that reads: "Always Seeking Day Laborers Due to Overproduction." But Lee has noticed the large number of people seeking work recently, an obvious indicator of the sorry state of the economy.

"Others have halted cultivation, but we're actively buying land to expand," Lee says, noting that the production and marketing unit has snapped up 10 hectares of agricultural land over the past two years.

While many farmers can barely make ends meet, this production and marketing unit has managed to continually expand and turn a profit, largely thanks to "collective strategy, a high level of automation and dealing directly with distribution channels," says Lee, who despite having only a middle school education has a keen eye for analyzing business strategies.

Having grown up in the family farming tradition, Lee is acutely aware of the squeeze wholesalers put on farmers. The production and marketing unit was completely reliant on wholesalers as recently as 10 years ago.

"We now provide zero produce to the wholesalers," Lee says.

To increase profitability and reduce the middleman squeeze, Lee began by improving the grade of the produce while leading the charge to transform the production and marketing unit's business model to give equal weight to both production and marketing, rather than focusing solely on production guidance as in the past.

The unit first set aside NT$158 million for the construction of a 31-hectare greenhouse complex and shifting production to leafy produce with shorter growing times such as baby cabbage, celery, leafy bok choy and spinach.

Lee developed his own automated fertilizer and pesticide application system, controlling watering and nutrient levels from his office, thus greatly saving on labor and reducing pesticide usage.

"We only enter the greenhouses when planting or harvesting," Lee says.

Since the greenhouses are rarely opened, pests have less chance of making their way in or being tracked in on the clothes or shoes of workers, resulting in a reduced need for pesticides. The unit's produce immediately received GAP ("Good Agricultural Practices") certification – the Council of Agriculture's seal of quality assurance for farm products.

Just as corporations strive for high cash flow, Lee's farm strives for high produce turnover.

Two years ago, Lee invested NT$300,000 in the development of Taiwan's first machine for the automated transplantation of leafy vegetable seed plugs, "reducing production time by a third." Leafy bok choy, which used to take a month to mature, can now be harvested in just 18 days.

Unit Three's massive greenhouse operation is impervious to the effects of high temperatures, torrential rains or typhoons; and can reliably deliver produce on a daily basis.

"In summertime, we're even designated by the Council of Agriculture as a vital farm for the stability of the vegetable supply," Lee boasts of his 11-member team's key role in the summertime vegetable supply for northern Taiwan.

Collective Strategy Breaks the Middleman Squeeze

Unit Three's competitive edge lies in its collective battle plan.

Entering the team's collection facility is like stepping into a miniature distribution warehouse: conveyor belts, forklifts, cold storage room, production history packaging room – the place has it all.

Lee runs a tight ship. The team's 11 members must deliver the produce they've been assigned to the team's collection facility by 5:10 each afternoon. "A minute's tardiness is a NT$100 fine."

Within the hour, automated packaging machines have filled 600 cardboard boxes with 9,000 kg of leafy greens, which are immediately loaded onto waiting trucks for delivery to auction markets in Taipei and Taichung.

Lee, whose position as unit leader is unpaid, sits in his office discussing the amounts of veggies to be readied for packaging and delivery the following day with clients and the accountant. The amounts of each type of produce to be readied for packaging and delivery the following day are elucidated on an A4 sheet hung outside his door.

With standardized production processes and complete documentation of the origins of its produce, Unit Three has successfully established a niche in the distribution outlets of large-scale retailers.

"By simply scanning the barcode on the packaging, consumers can trace the produce back to a specific unit member and the time and place it was picked," Lee says.

Most farmers have a tough time finding a distribution outlet with the large-scale retailers for their produce, but "customers are lining up for Unit Three's produce," Lee says.

Amid a high unemployment rate that refuses to come down, Ba-De City Production and Marketing Unit Three manages to provide livelihoods amounting to nearly NT$30,000 monthly for more than 200 previously laid off or retired workers, despite its heavy reliance on automated production.

"It's not a question of a bad economy," Lee declares, "only whether you are competitive."

Translated from the Chinese by Brian Kennedy

Chinese Version: 李博添 企管戰術打造現代菜園