From News, page 4, issue no. 374, June 30 2008
Translated by Zuo Maohong
Original article: [Chinese]

China has planned to develop agriculture production abroad to guarantee domestic food security.

Its Ministry of Agriculture (MOA) was drafting policies to encourage domestic companies to rent or buy land abroad for farming, especially for planting soy bean, the EO learned.

The MOA had identified five regions, including Central Asia, Russia, Africa, Southeast Asia, and South America, for five major Chinese state-owned farming companies to invest in.

"[Oversea farming] is necessary, but we have missed the best timing. It's difficult to carry out," said Song Tingming, deputy chairman of China Association of Grain Sector (CAGS).

The Oversea Farming Blueprint
Sudanese Vice President Ali Osman Mohammed Taha signed an agricultural cooperation agreement with the Chinese government during his visit to Beijing on June 11.

Under the deal, China would help build a pilot agriculture center in Sudan and send expertise there to train locals.

Taha had said Sudan welcomed the partnership, adding the project was first proposed by Chinese Chairman Hu Jintao during his visit to Sudan last year; in return, Taha visited China to speed up the materialization of the plan.  

In fact, Sudan was only one part of China's oversea farming blueprint. Faced with increasing pressure on food security, China planned to rent and buy land abroad to expand domestic food supply.

Immediately after top Chinese officials visited Africa last year, the MOA was directed to study an oversea farming plan, the EO learned. A preliminary draft was subsequently prepared and submitted to the State Council early this year.

According to an in-circle source, policymakers agreed that edible oil producing crops, such as soy bean, would be the major ones to be cultivated overseas. The MOA was said to be in negotiations with the Brazilian government to buy land for soy bean plantation. China is the world's top soy bean importer.

Sources said China's oversea farming policy would be based on three principles. First, farming locations should be set in countries on good terms with China, rich with resources, a labor force, and politically stable.

Second, experienced, well-funded, and large companies with a pool of talent should be encouraged to invest abroad. Third, companies should combine domestic resources and their experience in China with the foreign investment environment.

According to an official of the MOA's International Cooperation Department, an improved plan was still under study, and specific policies to encourage oversea farming had yet to be issued.

Food Security
Based on a recent report on edible oil by the CAGS, the yearly volume of soy bean for trade was 75 million tons, and China alone imported 46 million tons of it in 2007.

To remain self-sufficient of soy bean, China needed an extra 13.3 million hectares of farming land, said CAGS deputy chairman Song Tingming.

Yet, China has lost 8.67 million hectares of farmland between 1996 and 2006 due to urbanization, migration, climate change and other factors. The country is now desperately safeguarding the bottom line of having at least 120 million hectares of farmland.

Many researchers believed China would soon lose balance of its food supply. Beijing Orient Agribusiness Consultant chief analyst He Xuegong projected that in eight to ten years, ensuring food supply would become a "very difficult" task for China.

An expert at the Chinese Academy of Agricultural Sciences said China's land resources were out of proportion to its population. He added: "China has no other choice but to invest abroad to ensure food security."

By contrast, there are plenty of water and land resources in Africa, South America and the Far East of Russia.

A United Nation's Food and Agriculture Organization (FAO) report stated that only 14% of the 184 million hectares of cultivable land in Africa was used. Of the cultivable land there, 21 million hectares was degrading fast due to poor management.

As oversea farming involves trade, diplomacy, security and manufacturing risks, several agricultural experts, officials and entrepreneurs agreed that the task should be spearheaded by the central government.

In fact, Chinese had made several attempts earlier in South America, Russia, Australia and Africa, but few succeeded due to a lack of state support.

Doubts remained over the feasibility of oversea farming.

"Given high freight costs, food produced overseas would not necessarily be sold back to China. Whether it will help improve domestic food reserve is still a question," said Gu Yingchun, research fellow of Zhejiang Academy of Social Sciences.

China Agricultural University principal He Bingsheng voiced his concern: "Many countries would limit exports once food price rises. For example, Argentina levies a 44% tax on soy bean exports, and some others even ban soy bean exports." 

Scholar Hou Shuyi believed China should first improve its own land use and take full advantage of it before spending massive capital on buying land abroad.

Missing the Best Chance
"It would be much easier for China only if it took action a decade ago," said Song Tingming, adding that the best time for China to develop agriculture overseas had passed.  

Japan started doing it a century ago, Song said. With 12 million hectares of farmland located abroad, triple its domestic farmland size, Japan has been acknowledged as a successful example in ensuring domestic food supply with oversea agriculture.

The Chinese government only began to realize problems in food issue during the Rural Work Conference in 2003. Food price surges at the end of 2006 were further omens for policymakers. After many visits and investigations by top leaders, the issue was finally added into the government work schedule in 2007.

By then, however, the world was already on the alert over shortages in water and land resources. This realization added obstacle to China's attempt for large scale oversea farming.

"Everybody is watching you. They are ready to criticize you morally, force you out of the market, and stop you from moving forward," said an agricultural expert who requested anonymity.

China's policy toward Africa had once been reproached as the "new colonialism" by the international community, and Chinese migration has beoame a concern for many countries, including Russia.

Market watchers also warned that international speculators might drive up farmland prices if they learned of China's oversea investment plan in agriculture. Reportedly, three investment institutions, including Blackstone, had already invested several hundred million dollars in the agricultural sector, mainly in buying farmland in areas like south of Sahara and Britain.

In response to such concerns, some believed "agricultural cooperation" might be worth trying. The above-mentioned deal between China and Sudan was a demonstration of this concept.

Cooperation between Chinese and foreign companies could also be an option, said Bai Yimin, director of the National Association of Japanese Economy under the Chinese Academy of Social Sciences.

He gave the example of Mitsui Foods, Japan's pioneer company in oversea farming, which had in 2007 bought 25% stake in a Swedish company with a subsidiary trading soy bean in Brazil.

Later, Mitsui also bought up shares in another Brazilian farming companies and thereby extended its coverage from exporting foodstuff to agro-production.