SWOT Analysis and Development Strategies of Maize Industry in Heilongjiang Province

Gu Wan-rong, Jin Yi, Meng Yao, Wang Jian-guo, Zhao Xian-long, Li Jing, and Wei Shi*

1 College of Agriculture, Northeast Agricultural University, Harbin 150030, China

2 Institute of China Opening Economic Research Center, University of International Business and Economics, Beijing 100029, China

3 Heilongjiang Academy of Land Reclamation Sciences, Jiamusi 154002, Heilongjiang, China

4 Northeast Institutes of Geography and Agroecology, Chinese Academy of Sciences, Harbin 150030, China

Introduction

Heilongjiang Province is one of the most important grain production bases, which has the most high-yield potential region in China, ranking a special strategic position for China's food security. The grain total output of Heilongjiang Province which is a new record in 2010 achieved to 50.13 billion kilograms. Seven consecutive years of harvest which contributes to the whole nation grain production signif i cantly has proved that Heilongjiang Province is a veritable "big barn". In addition, with the development of China's fodder and processing industry, the gap between the maize supply shortage and increasing demand is emerged. China has become a main maize import country reaching 1.57 million tons maize in 2010, which is the largest annual procurement in recent 15 years (Zhou and Wen,2007; Han et al., 2011). At present, the international market of agricultural products is affected by several factors, such as climate change, technical barriers,the speculative capital, which results in fluctuation and risk for domestic maize production. In term of this situation, this paper discussed the opportunity and threat of the external environment, as wel1 as the strength and weakness of the internal environment of maize industry in Heilongjiang Province by using SWOT analysis belonging to the strategic management field. Thereby, it proposed some development strategies for the maize industry development in Heilongjiang Province.

Overview of Maize Industry Development in Heilongjiang Province

Heilongjiang Province is located in the northeast frontier of China. It owns fertile soil and abundant photo-thermal resources, which provide a high-yield potential for maize production. With respect to the planting structure of Heilongjiang Province, the area of all grain productions amounting to 13.73 million hm2increased signif i cantly in 2011. As for the planting area of maize, comparing to the year 2010, the planting area of maize increased greatly to 5.6 million hm2in 2011, an increase of 0.373 million hm2than 2010 (Zhang and Qian, 2010; Wei, 2010). At present,the main production region of maize in Heilongjiang Province is listed as the followings: Harbin, Suihua and Qiqihar areas, which account for about two thirds of the whole province planting areas and 90% of the whole province maize output. As far as maize planting pattern is concerned, one crop per year is mainly adopted in Heilongjiang Province. The other three planting patterns have been done for several years,including maize continuous planting, maize-soybean intercropping and maize-spring wheat interpolating(Zhang, 2010). In term of this situation, the statistics issued by Heilongjiang Province Bureau should arouse our attention. From Fig. 1, we could see easily that the area trend of total grain crops and maize was increasing gradually from the year 1980 to 2010, especially in the year 2005-2010. For example, the total sown areas of grain crops and maize were 1 354.9 and 523.2 million hm2, respectively in 2010. At the same time,Fig. 2 shows that the yield trend of major farm crops and maize also increased significantly from the year 1980 to 2010. The total yield of major farm crops and maize reached 5 012.8 and 2 324.4 thousand tons.All in all, we are facing the prosperous development chance for maize industry in Heilongjiang Province.

Fig. 1 Area trend of total grain crops and maize in Heilongjiang Province (1980-2010)

With China's entry into WTO, the severe phenomenon of domestic maize supply shortage can be seen easily. The domestic maize demand is increasing greatly, and maize exports decrease year by year. At present, China's maize exportation is restricted, while importation is carried out according to WTO agreement quota management system, whose tariff and tariff quota is 1% and 5%, respectively (Ke, 2009; Fred, 2009;Yang and Wang, 2007). As for Heilongjiang Province, the maize commodity rate is relatively high exported 5-6 million tons maize for the other province per year. With the improvement of people's living standard and food structure, the consumption of maize shows a growth trend turning into the consumption of feed-industrial processing, which means a multi-used change for maize. Nowadays, maize is widely used to be a light chemical raw material in processing period, reaching 50% of the total maize output in Heilongjiang Province.

Fig. 2 Yield trend of major farm crops and maize in Heilongjiang Province (1980-2010)

SWOT Analysis on Maize Industry Development in Heilongjiang Province

SWOT stands for strength, weakness, opportunity,and threat. SWOT analysis, which is put forward by Harvard Business School Professor Andrews in 197l for the first time, is used as the most extensive and long-lasting analysis tool in the strategic management fi eld (Zhang, 2008). It is particularly helpful in identifying areas for development. Analysis on Heilongjiang's maize industry development according to SWOT analysis equals to analyze the opportunity and threat existing in the external environment, as well as the strength and weakness existing in the internal environment. According to the research results, we formulated corresponding development strategies for maize industry in Heilongjiang Province, which brought about more than 50 billion kilograms grain production capacity by 2015, to promote the economic development and farmer's income.

Strength

Advantages of resource and scale

The maize planting area has stepped over 10 latitudes(from south to north)and 10 longitudes from east to west in China. The advantageous natural conditions

in Heilongjiang Province, such as short frost-free period and annual precipitation are about 400-650 mm, and its accumulated temperature (≥10℃)is around 1 600-2 800℃, which is appropriate for maize production. There is a broad region for mechanical tillage condition, which provides a good ecological environment for maize production in Heilongjiang Province. All these facilities are conducive to high maize yield and quality construction. Take Heilongjiang reclamation area as an example, there are lots of large-scale planting bases using high yield cultivation technology and standardized management measures,which shows the obvious advantages of scale for maize production in Heilongjiang Province.

Advantages of universities and research institutes There is a solid basis of science and technology, perfect scientific research system in Heilongjiang Province. Scientif i c research institutions can be found in Heilongjiang Province, such as Harbin Institute of Technology, Northeast Agricultural University,Northeast Forestry University, Heilongjiang Bayi Agricultural University and other colleges and universities, as well as the Northeast Institute of geography and Agricultural Ecology Research Institute, Heilongjiang Academy of Agricultural Sciences and other scientific research institutions. All these universities and research institutes have been undertaking a large

number of scientif i c research projects and technology promotion work, which give a strong support for the maize industry development in Heilongjiang Province.Advantages of food security

More attention is put on the food security in Heilongjiang Province. At present, there is a rapid development in ecological agriculture resulting in the increase of sown area for organic and pollution-free maize.Meanwhile, we took Heilongjiang land reclamation region as an example. There were about 84 green food production processing enterprises and 255 green food products, and there were also 55 organic agricultural production enterprises and 200 organic agricultural products by the end of 2009. The average sown area of green and organic reached 115 hm2per year. Generally, the number of national agricultural standardization farm was 20 or so, and 60 national standardization bases for green food production were created. The base number and sown areas took up the whole country 20.5% and 11.5%, respectively in Heilongjiang Province land reclamation region, which has become the largest base of green and organic food production in Heilongjiang Province.

Advantages of geography and market superiority

Heilongjiang Province is located in the center belt of northeast Asia, nearby Russia, Japan and Korea countries, which has a strong overseas market advantage, especially in the north area of Heilongjiang Province. There are more than 3 000 km border and 25 port open countries near Heihe City, which is the most important window and channel for economic and trade between China and Russia, having a pioneering advantage of market policy and transportation. The most important is that the Northeast region and its surrounding areas are the main maize marketing place in China, which will certainly gives a solid foundation for domestic and overseas trade.

Weakness

Low unit yield and lack of high quality maize variety In recent 10 years, the average yield of maize was about 4 000-5 000 kg • hm-2in Heilongjiang Province.The low unit yield is due to the technology and climate problems. Farmers would not like to accept highdensity varieties, which is the major bottleneck for the increase of maize yield. At the same time, lack of high quality maize, such as high-sweet maize, high-oil maize, is also the weakness of maize industry.

Repeated construction of maize processing enterprises

The maize processing industry in Heilongjiang Province is expanding greatly in recent 10 years. Some new maize processing enterprises are putting into production in succession, and the original large maize processing enterprises are also in expansion. There are about 1 300 maize processing enterprises in Heilongjiang Province, having a processing capacity of 1.4 million tons per year. Repeated construction of maize processing enterprises without the supervision of the government has caused many problems. The statistics showed that the operating rate of these maize processing enterprises was less than 50%, which brought about the waste of resources and radical market change.

Imperfect policy support system

The fi nancial support policy is mainly concentrated on the maize production, rather than maize transformation fi eld. Few funding supports are used for the development of livestock breeding industry. Lack of technology and information service has also become the two restrictive factors for the maize industry development.Most of achievements in scientific research have not been transformed into productivity effectively,which means a low conversation rate of science and technology in maize industry.

Unreasonable structure of maize product

More than 80% of the maize processing products are focused on the rough machining or secondary processing products in Heilongjiang Province, such as starch, alcohol, which signifies short industrial chains, low industrialization rate, low added value and a high resource consumption. Now, the exportation rate of maize product in Heilongjiang Province is not high, which ranks in a weak position in the international competitiveness. At the same time, farmer and enterprises know little about the maize futures knowledge. Actually they have no idea about how to make full use of the maize future market for price discovery and risk aversion, which will be an obstacle for the maize industry development.

Opportunity

Big-space developing opportunity in maize processing industry

There is a long chain in maize processing industry.With the increasing shortage of maize supply, we are facing more chances to develop maize planting and processing production. It is worthwhile to pay much attention to maize industry, for dozens of product categories hiding in the maize processing industry. At present, the world has been taking effective measures to develop the maize processing technology for added value. No matter what is at home or abroad, the successful experience of maize industry development has proved the fact that it is a gold industry in the coming 50 years.

New demanding opportunity in maize industry

With the development of stock farming and the increase of animal products, the feed industry demand for maize will increase continuously. Some statistics showed that the growth rate of feed demand will remain at the annual 2%-3% level, and the world feed output will reach 700 million tons by the end of 2015,which means 420 million tons maize as raw materials are needed. From Fig. 3, we could see easily that the output of livestock products in Heilongjiang Province were increasing gradually from the year 1980 to 2010,especially in 2008, though a little decline in 2010. This might be the reason of maize shortage in Heilongjiang Province and couldn't provide maize supply for the output of livestock products, which was actually a good chance for the maize industry development. For example, the output of meat, milk and poultry eggs were 197.9, 558.8 and 105.3 (10 000 tons), respectively in 2010. At the same time, along with the international energy price rising rapidly in international market,there is a significant upsurge for seeking alternative energy, which brings development opportunities for maize industry in Heilongjiang Province.

Fig. 3 Output of livestock products in Heilongjiang Province (1985-2010)

Restructuring opportunity in maize industry

Maize industry development is not only the key of agricultural structural adjustment in Heilongjiang Province, but also is the inevitable choice for the aquaculture development and processing industry.With the development of pasturage aquaculture and the improvement of people's living standard, the demand for maize has been increasing greatly year by year. The maize industry development in Heilongjiang Province is playing a decisive role position in agricultural development, which not only enhancs the actual strength of prefectural region economy and increase the fi nance income, but also ensures the stable income for nearly 10 million farmers and stable employment for maize processing enterprises. Maize industry must be the pillar industry under the government support in Heilongjiang Province in the next few years, which has a broad market prospect and wide space for regulation(Zhong and Qing, 2010; Wan, 2011; Li, 2010; Peng and Xiao, 2010).

Threat

Environmental pollution in production and processing

Maize production in Heilongjiang Province is dependent entirely on chemical fertilizer, pesticide,herbicide and other industrial products, which results in the soil organic matter recycling system damaged greatly and leads to deterioration of agricultural ecological system. At the same time, some maize processing enterprises would not like to engage in recycling work and the pollution is serious during the maize processing.

Competition between China and other main product countries

In recent years, maize industry is growing rapidly.However, China's maize industry is also shocked by foreign maize market. China opened its market after joined WTO, which attracted more competitors. Its domestic maize processing industry in China is also developing rapidly, which leads to the overheat phenomenon. Some people worried that the maize industry chain in China may be manipulated by foreign capitals and multinational corporations in the near future.

Single structure in maize industry

Pursuing the high total grain output is always the key route in the maize industry. However, the single agricultural structure will accumulate many problems.In recent years, Heilongjiang Province gives more emphasis on the development of maize processing enterprises. The maize planting areas has been expanding ceaselessly, and other crop planting areas, such as soybean sown area has been compressed, which will affect the agricultural structure diversification inevitably. If there are any problems happened, the agriculture development should suffer a great loss in Heilongjiang Province.

According to the above analysis, we can get SWOT analysis framework of maize industry in Heilongjiang Province (Table 1).

Table 1 SWOT analysis framework of maize industry development in Heilongjiang Province

Development Principles of Maize Industry Based on SWOT Analysis in Heilongjiang Province

With the development of economic globalization and the progress of science and technology, the factors that affecting Chinese maize industry is changing continuously, such as the severe inf l ation, the hot money speculation, the increasing cost of planting maize and the rising up of international grain price. Facing this severe situation, we must meet the demand of national food and nutrient, maintain the rights and interests of maize growers and processing enterprises and ensure national food security strategy. At present,the strategic principle of maize industry development based on SWOT analysis in Heilongjiang Province Current Heilongjiang Province should be seized firmly.

Principle of stabilizing maize market

At fi rst, we should make full use of macro regulating policy and develop good relationship between the maize imports and domestic maize production.Secondly, we should take full advantages of resources and markets no matter what it is domestic and international, which guarantees the interests of domestic maize growers and processing enterprises.

Principle of seizing autonomous right

Domestic maize price has been risen considerably since 2006. We must maintain the stability of maize market price and formulate a reasonable export-import policy, ensuring the maize supply and the people's normal life. In order to ensure safety of domestic maize industry, maize export restrictions are necessary at any time.

Principle of building brand recognition and information service

Based on the view of nutrition and health, the new maize industry chain should make full use of domestic maize variety resources. Much work should be done to build a brand recognition in domestic maize and its processing products, which has the special characteristics, such as medical using. Meanwhile,we must put more energy on information service,which dealing with the relationship between market information and processing technology information.

Development Strategies of Maize Industry Based on SWOT Analysis in Heilongjiang Province

There is an increasing gap between maize supply and demand. We must give priority to meet the feed industry development, firmly control the increase of grain deep processing industry, in particular strictly control the food for industrial alcohol, fuel ethanol,paint and other non food chain productions. Food deep processing products should be forbidden to export and guide the structural adjustment for maize products.According to the SWOT analysis, five strategies are proposed for the maize industry development in Heilongjiang Province.

Enhance layout of maize production area

According to the scheme of "Special Maize Development Planning In dominant region", there are 40 spring maize planting region (counties or farms)in Heilongjiang Province. We should give priority to the development of special-using maize from maize planting area (more than 23 333.3 hm2)and 28 towns(farms)in south and central region of Heilongjiang Province. According to the actual situation, work must be done to construct the corresponding maize industrial zone, and extend the special-feed maize,high-oil maize and high-protein maize, high-starch maize varieties. The development of maize processing industry should be not only active but careful, and supporting measures and nonsupport measures may be used flexibly according to the different maize processing enterprises.

The comprehensive plan of maize processing enterprises is to integrate industry resources and cultivate large-scale maize deep processing enterprises.Certain policies should be taken to promote small and medium sized processing enterprises for further development, and solve the farmers' maize selling diff i culty and income increase.

Enhance construction of high-yield maize varieties and technology

Water conservancy infrastructure construction for maize production must be constructed to raise the anti-drought ability. Strengthen the construction of water conservancy project to improve farmland irrigated area ratio comprehensively. Meanwhile,we must accelerate the large-scale irrigation district rehabilitation and water saving reform construction, in order to raise yield level per unit area. Drought hazard in Heilongjiang Province is the highest frequency of natural disasters, and we should dig more drought-resistant electromechanical well and recharge well construction, which will improve the water use eff i ciently.

High yield and high quality can't realize without any variety factors, in addition to planting methods,rational high-density planting, scientific fertilization,water-saving irrigation, film mulching, chemical regulation and standardized comprehensive cultivation technology measures. Maize breeding technology should be developed firstly according to different maize ecological planting areas in Heilongjiang Province.

Develop maize deep processing technology

The matched technologies for green maize production and process ought to be researched and extended greatly. The new maize products may give priority to develop maize functional foods and healthy foods.At the same time, the government should help the processing enterprises to establish a base of raw materials, give a clear relationship between processing enterprises and maize production base, as well as encourage the maize processing enterprises to explore the world maize market (Yang, 2010; Ding, 2011;Yang et al., 2008).

Establish risk prevention mechanism

Heilongjiang Province should take relevant measures to ensure the maize reservation ahead of schedule, in case of the happening of unexpected natural disasters and the tense maize supply in international market.When the global maize supply and demand is tight happened, we would be difficult to obtain sufficient maize supplies from the international market. If our country imports maize in large scale, it will push the international maize price for further inflation substantially, also will increase the cost of maize import in reverse. We must stabilize policies and other regulatory measures for the domestic maize market price, which will also protect the farmer's interests.

The balance between maize buying and selling market is disturbed in recent years. The maize price fluctuation and the risk of farmer production and processing enterprises are changeable greatly.Establishing maize industry risk prevention mechanism is important to maize industry development. During the planting and harvesting season, we should issue guidance information for the farmer in advance, and help farmers to guard against market risk (Li et al.,2010; Dai et al., 2011; Gu and Wei, 2011).

In the situation of global economic integration,China maize industry cannot develop without the support of modern financial instrument. The establishment of Chinese maize industry investment fund will make the industry investment and capital market gathered organically, which will provide significant financial support for maize industry and enhance the international competitiveness greatly.The government should encourage and guide the maize growers participate in the future trading through cooperation.

Develop international resources

The current international maize supply is basically controlled by several major international food businesses, which can not provide full services for the domestic maize safety and national interests. Their own large and integrated maize enterprises should be cultivated in Heilongjiang Province, and certain policies should be given to support its going abroad in order to make full use of the land resources (Cheng,2011; Chen and Chen, 2007; Yang et al., 2011), which will develop maize industry for a further step through applying the sustainable "going out" policies.

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