The Hungry Dragon: China Land Grab Claims ‘Exaggerated’

Via Agrimoney, an analysis of China’s overseas agricultural acquisitions:

Claims of Chinese “land grabs” in Africa, to grow food for importing, have been overstated – for now – although “this could be a longer term motivation”, Standard Chartered said.

China, a county with 9% of the world’s farmland, has attracted a string of negative headlines over claims that it is aiming to tackle its problem of feeding its 1.3bn people, 20% of the world’s population, by importing food from a swathe of farms purchased abroad.

Studies have identified China as the major purchaser of farmland abroad, a trend which has attracted caution for the threat it poses to domestic food security, and welfare of rural communities, and prompted countries such as Argentina and Brazil to place limits on foreign ownership of land.

However, the scale of Chinese investments in Africa, where high poverty levels make the threat posed by food exports particularly high, have “been exaggerated”, Standard Chartered said, citing “limited evidence of Chinese land grabs in Africa”.

‘Does not make economic sense’

While Chinese investments in African agriculture had taken place, with private enterprises making investments of $3.5bn in the continent from 2006-12, the extent of deals had often been exaggerated.

China’s ZTE Agribusiness, which was reported to have bought 3m hectares of land in the Democratic Republic of Congo to grow oil palm, was actually investing $880m in 200,000 hectares of land worldwide, of which 100,000 hectares might be in Congo, according to Standard Chartered.

Furthermore, what agricultural investments the country did make were “not generally” for producing food to export to China.

“Domestic infrastructure bottlenecks contribute to high transport costs and mean that even given high grain prices, exporting grain back to China does not make economic sense,” StanChart analyst Sarah Baynton-Glen said.

“Where Chinese production of agricultural goods in Africa is exported, such as sugar from Sierra Leone and vanilla from Uganda, these are not bound for China, but rather take advantage of duty-free incentives for export to Europe.”

 ‘Longer-term motivation’

Given the “relatively small size” of Chinese investments in African agriculture, “it is unlikely this is part of a short-term strategic intent related to Chinese food security”, Ms Baynton-Glen said.

Indeed, China’s agricultural imports from Africa are currently of non-food goods, such as hides, cotton, tobacco and wood, and account for a modest 4% of total China-Africa trade.

However, given that Africa has 60% of the world’s uncultivated land, on World Bank estimates, importing food from Africa “could be a longer-term motivation”.

“Given Africa’s potential, China is likely to turn more towards it.”

 ‘Food exports essential’

This could work to the benefit of both parties, given the benefits that a better-developed agriculture sector could present to Africa, of which more than half its population is involved in farming, and where only 10% of cropped land is prepared using tractors.

“Developing Africa’s food export potential is essential for African economic growth, given the central role agriculture plays in the continent’s economy,” Ms Baynton-Glen said.

“China has the technological know-how to improve the competitiveness of Africa’s domestic production, increase farmers‟ profits and make food more affordable.”

This entry was posted on Friday, May 4th, 2012 at 9:49 pm and is filed under Uncategorized.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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About This Blog And Its Author
Seeds Of A Revolution is committed to defining the disruptive geopolitics of the global Farms Race.  Due to the convergence of a growing world population, increased water scarcity, and a decrease in arable land & nutrient-rich soil, a spike of international investment interest in agricultural is inevitable and apt to bring a heretofore domestic industry into a truly global realm.  Whether this transition involves global land leases or acquisitions, the fundamental need for food & the protectionist feelings this need can give rise to is highly likely to cause such transactions to move quickly into the geopolitical realm.  It is this disruptive change, and the potential for a global farms race, that Seeds Of A Revolution tracks, analyzes, and forecasts.

Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has long held a keen interest in natural resource policy and the geopolitical implications of anticipated stresses in the areas of freshwater scarcity, biodiversity reserves & parks, and farm land.  Monty has lived, worked, and traveled in more than forty countries spanning Africa, China, western Europe, the Middle East, South America, and Southeast & Central Asia, and his personal interests comprise economic development, policy, investment, technology, natural resources, and the environment, with a particular focus on globalization’s impact upon these subject areas.  Monty writes about freshwater scarcity issues at and frontier investment markets at