Dim Sums: Agricultural Markets in China

As trade tensions with the U.S. flare up, Chinese companies are setting up giant farms in Africa, Asia and Russia according to Chinese news media. The news echoes an earlier wave of so-called "land grabs" that were over-hyped and mostly ineffectual. Earlier this month, a  Beijing Times Caijing article, " Why are Chinese companies flocking overseas to farm? " explained that the phenomenon reflects China's strategic considerations for ensuring food security and its far-reaching intention to reconstruct international trade. The article connects the farming investments to trade frictions between the U.S. and China, the use of agricultural products as a bargaining chip in "geopolitical games," and the "huge risk" of relying on the U.S. and Brazil for 90% of its soybean imports. An edible oils news site proclaimed that "a new wave of 'going global' in the agricultural and food sector has begun," with more and more companies inve...

The Fufeng Group's acquisition of a 300-acre site in North Dakota to build a corn processing plant is routinely cited as proof that "China" has a plot to buy up American farmland. Fufeng's project was denied approval by Grand Forks officials  based on concerns about spying, but its North Dakota land purchase became part of the narrative has led to growing restrictions on Chinese land ownership in the U.S., including yesterday's announcement of a National Farm Security Initiative at USDA headquarters attended by multiple cabinet secretaries.  Since we're going to create a new national security policy based on our fear of such companies, maybe we should investigate who Fufeng is and what they're up to. You probably have never heard of Fufeng Group (pronounced foo-fung), a company with 17,000 employees headquartered in Qingdao China that manufactures food and agricultural chemical products by fermenting corn. You may have heard of Fufeng's main product, ...

At  a symposium on agricultural foreign investment held by China's Ministry of Agriculture and Rural Affairs  (MARA) this week companies complained about financing difficulties, limited market access, and lack of information about laws, policies and market environments in target countries.  The meeting was attended by representatives of 42 Chinese companies engaged in seed, livestock, fishing, and crop production, as well as officials from powerful government organizations such as the National Development and Reform Commission, Ministry of Commerce, the Foreign Ministry, and various MARA offices and government-affiliated units. Presentations by state-owned grain trader COFCO and seed producer Zhongnongfa Seed Group discussing their experiences and difficulties were featured.  According to MARA's description of the meeting, agricultural enterprises have overcome difficulties in recent years and played an important role in building China's "Belt and Road", building ...

Chinese investment in agriculture around the world is not the unstoppable "land-grabbing" juggernaut often depicted by news media and NGOs. A recent article identifying difficulties encountered by Chinese outbound agricultural investment indicates that the companies are often ill-prepared to do business outside China.  An April 2022 article by the China International Economic Exchange Center repeats a series of complaints cited in other articles over the past decade that, arguably, arise from the insular nature of China's own agribusiness sector: a shortage of personnel with language skills, little understanding of foreign cultures or business practices in the host country, failure to interact with local business and government leaders, and lack of experience with international accounting, finance, law and tax practices. Some related anecdotal evidence not cited in the article: when Chinese companies hire foreigners with international skills and knowledge they are typica...

There was one new Chinese investment in U.S. farmland in 2020, according to the USDA's latest report on foreign farmland holdings --not exactly a "land grab." The USDA report said 194,179 acres of farmland held by "China" was valued at $1.86 billion at the end of December 2020. These holdings were composed of 266 parcels held by 82 investors. The number of Chinese investors increased from 81 to 82 between 2019 and 2020, and their holdings increased by 3,127 acres.  Source: USDA, Foreign Holdings of U.S. Farmland and Farms and Land in Farms . The China land holdings were 0.5% of the total of 37.6 million acres held by foreigners in 2020. Chinese holdings were 0.02% of the total U.S. farmland area of 896.6 million acres reported in a separate USDA release . Chinese holdings of U.S. farmland had been stagnant since 2013 until last year's 3,127-acre increase. The leap in Chinese landholdings between 2012 and 2013 reflected the acquisition of Smithfield Foods by...

China's investment in foreign agricultural projects is booming, according to statistics peddled by Chinese agricultural officials during last weekend's "Belt and Road" summit held in Beijing. China Central TV reported that China has 850 foreign agricultural-related projects in commodities such as rice, corn, soybeans, natural rubber, palm oil, cotton and livestock that reflect "deepening cooperation" with "Belt and Road" countries. According to Ma Hongtao, director of the Ministry of Agriculture and Rural Affairs Foreign Cooperation Office, China has 657 agricultural projects in Belt and Road countries valued at $9.4 billion, up 70 percent from five years earlier. 89 percent of investments are carried out by private entities, the official said. Ms. Ma explained that investments had evolved from an early focus on crop production to a broader collection of processing, transportation, storage, and ambitions to pull along industry development  and...

China's vision for solving global problems through international collaboration in agricultural science under the "one belt-one road" initiative was laid out in an article in State media this week. The head of China's Academy of Agricultural Sciences, Wu Kongming, sees great potential for food production in the abundant water and soil resources and high quality ecological environment of belt-road countries. He said “one belt-one road” agricultural cooperation can promote orderly regional flows of agricultural factors of production and deepen agricultural market integration. Exchange of experience in agricultural development and bringing into play the comparative advantages of each country can maximize the potential for agricultural development, advancing mutually beneficial opportunities for each country, Wu said. According to the article, China's Ministry of Agriculture drew up a vision for banding together various government departments, research institutes, ...

China's foreign investment and cooperation in agriculture must recognize the "deep changes in the domestic and foreign environment," "seize opportunities" and "take the initiative" according to exhortations issued at a Ministry of Agriculture and Rural Affairs meeting of officials responsible for international cooperation held last week . Officials were instructed to guide industries to shift investment to "belt and road" countries and the Indochina region of Southeast Asia. Other edicts were to: establish a complete agricultural trade policy system,  actively participate in negotiations on international rules for trade and investment.  Speed up nurture of a set of major international grain traders and agricultural enterprise conglomerates,  encourage enterprises to optimize their industry and market layout worldwide. The meeting chaired by Minister Han Changfu carefully studied Xi Jinping's thoughts on "rural revitalization...

China voiced its aspiration to catalyze international agricultural cooperation at a meeting of BRICS agricultural officials hosted in Nanjing this month. In his keynote address, China's agricultural minister offered China's model of intertwining government, research institutes and agribusinesses to promote a tangled mix of foreign aid and commercial investment as a model for cooperation in agriculture among emerging "BRICS" countries. On June 16, 2017, China hosted the 7th meeting of agriculture ministers from BRICS countries   (Brazil, Russia, India, China, and South Africa) in Nanjing. The 200 attendees included agricultural officials, scientists, and agribusiness leaders from the five countries, the UN's Food and Agriculture Organization, the International Fund for Agricultural Development, and the New Development Bank. The first BRICS agriculture meeting was held in Moscow in 2010. Other meetings have been held in Brasilia, Pretoria, Delhi, and Chengdu. Th...

China has announced ambitious plans for international cooperation in agriculture that aims to create a new world order in agricultural production, technology, and international trade. " Vision and Action for Building 'One Belt One Road' Agricultural Cooperation ," appeared in its  Farmers Daily  newspaper with authorship attributed to the Ministry of Agriculture, National Development and Reform Commission, and China's State Council. It was posted May 12, 2017, just in time for the "One Belt, One Road" to be held in Beijing May 14-15 with dozens of world leaders in attendance. "One Belt One Road" is China's initiative to revive ancient trade routes between Asia and Europe, and which also run through poor countries in Asia and Africa. In addition to building railways and other logistic infrastructure and investing in factories, China hopes to take the lead in sharing its successful experience in agriculture with the "belt road" co...

China is gearing up for more outbound investment in agriculture and scientific cooperation. China's five-year plan for the rural economy includes four paragraphs on "coordinated utilization of domestic and foreign markets and resources" tucked away among the ambitious initiatives for a makeover of the countryside. The paragraphs have diverse objectives to project China's influence abroad along the "new silk road," create world-beating agribusiness companies to supply China's food needs, gain more control over the flow of imports, and boost China's exports of horticultural crops and aquaculture products. China wants to have more and better international cooperation with everybody in agricultural science to get the best technology and project its influence in the developing world. The plan calls for "deepening" cooperation with "neighboring countries," Africa, Latin America, and central and eastern Europe--with a focus on the ...

China's giant state-owned food company, COFCO,  has begun a $75 million investment in a Ukrainian port facility to cement its growing share of grain trade in the Black Sea region. This follows COFCO's announcement earlier in May that it plans to import a minimum of 1-to-2 million tons of Russian wheat to China in coming years. The facility in the southern Ukraine port of Nicolaev will reportedly have capacity to handle 2.5-million metric tons of grain annually, with 143,000 metric tons of storage. The Ukrainian port will be wholly owned and operated by COFCO for its exports of corn and other grains. According to the description of the investment, this is part of COFCO's "13th five-year plan" strategy to achieve an "unmatched global layout" covering "the entire industry chain." COFCO's expansion is in concert with China's national "one-road, one-belt" strategy of projecting its influence in a string of countries from its ...

As Chinese enterprises growing crops in Russia bring commodities back into the country at an accelerated pace, inspection and quarantine capacity is being upgraded to handle the increased flow of oilseeds and grain. The trade is still relatively small but it provides a window on how China is gradually ramping up its "going out" strategy to grow crops abroad. China customs statistics show that imports of corn, soybeans, and rapeseed crossing into the two districts bordering the Russia Far East totaled 570,000 metric tons for January through October 2015. The volume dwarfs the 100,000-mt total for all of 2014. Soybeans grown in Russia and entering at the Heihe and Suifenhe crossings account for over 280,000 metric tons. About 70,000 metric tons of corn grown in Russia has been imported so far. Corn from Ukraine entering at the Manzhouli border crossing accounts for another 200,000 metric tons. The Manzhouli border crossing reported that 49 rail cars containing rapeseed ...

China imported 380,000 metric tons of corn from Ukraine during May 2015, bringing China's shipments from Ukraine to over 2.1 million metric tons (so far) for the market year that began in October 2014. The Ukrainian corn accounts for over three-fourths of China's corn imports for 2014/15 so far. In previous years, the United States was China's main overseas supplier of corn, but during 2014/15 China has imported less than 100,000 mt of corn from the United States. That volume is comparable to the quantity imported from Laos and half of the volume imported from Bulgaria. How did China come to snub the world's largest corn exporter and open up a corn pipeline from the Ukraine? The Ukrainian corn connection is a calculated strategy to break China's dependence on the United States for corn imports. It is also tied into the grand strategies of "going out" and "one road, one belt" that intertwines infrastructure investments by Chinese companies w...