China Eyes Foreign Farms to Fill its Kitchen Cupboard

January 9, 2014

Pollution, urbanization and the effects of climate change are all driving Chinese firms and officials to look overseas for agricultural investment opportunities - especially for soy.  The country has a goal of 95% self-sufficiency in corn, wheat, and rice in the coming decade, but the country is taking a “two markets, two resources” approach toward food security on other fronts.  Former Chinese Premier Wen Jiabao proposed an increase of agricultural investment in Latin America to US$40 billion by 2017.  Today China’s agricultural investment in the region is still predominantly in trade – mostly in soy, but also in other grains, fruits, coffee and wine.  Chinese firms such as Chongqing Grain Corp., Senhe Hopeful, and China National Heavy Machinery Corp. have all increasingly invested in various phases of agricultural production to expand capacity, reduce costs, and mitigate risk through investing in factories, pressing plants, mills and infrastructure in the region.  Despite this, agricultural investment in the region by Chinese public and private firms is relatively limited compared to ADM, Bunge, Cargill, and Louis Dreyfus which have had a presence in the region for decades making competition difficult.  China is promoting the internationalization of its agricultural firms, especially COFCO and Beidahuang through tax incentives, subsidies, low interest rate loans, diplomatic support, and policy direction, however, the success of its overseas expansion will ultimately depend on the reaction of foreign governments. To read more:

 

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