YANTAI: Peasant Li Zongpu is from Huiqu Town in Weifang City in East China's Shandong Province. Lately he has been busy helping to harvest green Chinese onions in another town instead of gathering up his own ginger as he used to.

"I am losing money with my ginger this year. So how can I make a living if I don't do some odd jobs here and there?" Li said bitterly.

Li has raised 0.2 hectares of ginger this year, which he thought he could sell for a good price such as last year's 3 to 4 yuan (38 US cents-50 US cents) per kilogram. But the price of ginger has dropped to around only 15 US cents per kilo this year. "And even with that kind of price, there are far fewer companies willing to buy," Li continued.

Similar stories can be heard from many peasants in Shandong, China's largest vegetable and food exporting province to Japan, since that country's new law the "positive list" system on food imports took effect on May 29.

According to that new system, there are now over 97,000 so-called limitation standards for imported farm products on 135 kinds of foods and 724 kinds of pesticide. In the past, there were 9,000 such standards on 130 kinds of imported farm products and 229 kinds of pesticide.

The inspection criteria, believed to be the world's strictest, seem to have made life harder for tens of millions of Chinese peasants, especially those in Shandong where some 40 per cent of food exporters see Japan as their key market. Last year, it exported US$2.64 billion worth of farm produce there.

"Only one gram of pesticide residue is allowed among each 100 tons of agricultural products. But for vegetables like ginger living underground, spraying pesticide just once can lead to more than that amount. I can't imagine what peasants raising leafy vegetables will do?" said Li.

Recent statistics show that many vegetable prices have declined. In Shandong's Shouguang County of Weifang, 80 per cent of peasants make a living planting vegetables. It is estimated they will lose half their incomes, a major hardship for people who are already among some of the poorest in the country.

Sources at the Shandong Foreign Trade and Economic Co-operation Department said that in Shandong, the restrictions are likely to affect the livelihood of at least 5,000 businesses and 5 million people, half of whom are farmers.

The restrictions will consequently put many other local industries at risk, including stockbreeding, fodder, pesticide and transportation, Lu Wei, a senior official at the department, told China Daily yesterday.

Vegetable exporting companies are also worried. Wanxin Food Co in Anqiu County of Weifang, which exports US$20 million worth of products each year, is a typical example. Exports to Japan have decreased by 30 per cent since May, compared with the same period of last year, according to Wang Yifu, the company's general manager.

Furthermore, Wang said, some new inspections have to be carried out at the General Administration of Quality Supervision, Inspection and Quarantine but it takes 15 days to wait for the results compared to one week before.

"Even worse losses can be seen at many small-scale enterprises. Some vegetable-processing companies are being forced out of the market," Wang said.

Standardized planting

Despite the new barriers, there is less misery for peasants and enterprises that carry out more standardized planting. This means such things as the use of bio-pesticides and more advanced seeds from abroad, and having more people working in the fields.

In Laowa Village in Weifang all peasant Wang's green Chinese onions are sold out. Wang said they are all bought by one particular firm and from that company he had also learned how to use ultraviolet lamps, which decreases pesticide residue, and been taught how to use organic fertilizers.

In another major vegetable and food exporting city, Yantai in Shandong, large enterprises are taking the lead in coping with Japan's new inspection criteria.

Yantai is called the Great Vegie Garden for Japan and South Korea. Statistics with Yantai Customs say Yantai is exporting US$800 million worth of food and agricultural products to Japan every year, 10 per cent of China's exports to the nation.

The new system impacts on more than 200 kinds of food and agricultural products with a total yearly export value of US$700 million. In Laiyang County alone there are more than 280 food processing enterprises; more than 100 have been affected by the new system.

Longda Group in Laiyang has been getting ready to deal with the new inspections since September. The well-known company said it exported US$135 million worth of vegetables, aquatic products and other kinds of food to Japan last year.

According to Li Yongqiang, a senior quality control staff member, the company recently bought two advanced pesticide-residue testing machines from the United States. The two machines, that cost more than US$600,000 in total, can test 448 items. In August the company is introducing a third machine, costing over US$300,000, to perfect Longda's residue testing abilities.

Last month the company also sent staff to Japan to be trained in a quarantine institution in Yokohama.

Future worries

Even though companies like Longda had a relatively normal record of exports to Japan in May. officials are still worried.

"Production costs have increased a lot. Besides new facilities, we still have another estimated US$1.5 million of new costs this year, mainly for things like purchasing better crop seeds from abroad and using organic fertilizers," Li said.

"The standards are for all products from China. If one company fails an inspection, all the rest have to be checked again, so we have to worry about small-scale companies too," Li added. "What's more, the Japanese Government now pays for testing fees, but it is possible those costs will be shifted to us in the future. Then, if product prices do not go up, there will be little margin for profit."

Many are pinning their hopes on the Chinese Government, hoping that the Ministry of Commerce and the Japanese Government can come to a better deal as soon as possible.

"The new system has seriously affected Chinese agricultural products being exported to Japan and damaged China's crop farming and livestock breeding industry, which will in turn damage the interests of Japanese consumers," said Chinese Commerce Minister Bo Xilai earlier in talks with Japan.

"It is still too early to calculate the total losses brought to Shandong. We will observe for another period of time before coming to a conclusion," said Lu Wei from Shandong Foreign Trade and Economic Co-operation Department.

Meanwhile, quarantine departments in Shandong have spent more than US$2.5 million to renovate their laboratory facilities as well as developing new methods to speed up residue inspection processes. The province has also trained new technical staff and held a series of talks and seminars with national-level departments and foreign experts.

Some people remain optimistic.

"Our products will be much more competitive abroad once they reach or even surpass Japan's strict standards," said Li Mingli, vice-director of Shandong Plant Protection Station. "With standardized planting methods our quality products will have more market choices."