Why China Is Hungry For Foreign Farmland

Courtesy of National Geographic, a brief report on China’s hunger for foreign agricultural land:

Farmland in Crimea, Ukraine, a portion of the 11,500 square miles recently bought by the Chinese government.

China eats about 20 percent of the world’s food, reasonably expected for its 1.3 billion people. But the country only has nine percent of the world’s farmland.

For decades, the disparity was tolerable. China found ways to maximize its domestic food supply with its agrarian society. Now as China’s population continues to rise, fueled by rapid industrialization, the country is running into a wall. Numbers like that simply aren’t sustainable.

It’s a common reality faced by industrializing countries. At a certain point in the development process, nations face a perfect economic storm. Population increases, which fuels consumer demand. Housing more people means building homes where crops might normally grow. And environmental changes tend to limit the food output. South Korea, Egypt and the United Arab Emirates have all been in that position over the past five years. They could use more farmers, but what they really need is more land.

What’s the solution? In short, to buy more land—and to buy it from countries that either don’t need it, or could use the money instead. In 2008, UAE brought 324 hectares (1.25 square miles) of land in Pakistan. A year later, South Korea bought nearly twice that amount in Sudan. This week, China announced the biggest land lease ever: 3 million hectares (11,500 square miles) of Ukrainian land. Or put more simply: 1/20th of all Ukraine.

Deals like this aren’t a win-win. Land is inherently zero-sum, so terrain that China is harvesting in the Ukraine won’t be used to feed the future appetite of Ukrainian people.

But the Eastern European country doesn’t entirely lose, either. The deal will funnel $2.6 billion into Ukraine annually for the next 50 years. China will also send seeds and fertilizer, as well as build some vital infrastructure in Crimea, an autonomous part of Ukraine.

Still, it seems to raise the prospect of a new type of colonialism, where wealthy countries extract resources from poorer ones all under the guise of an economic transfer. According to a study in January, between 0.75 and 1.75 percent of the world’s farmland has been transferred from locals to foreign investors. Those aren’t just transactional relationships. Over the next 50 years (the length of the China-Ukraine agreement) the relationship may play into policy matters, too—when, for example, China tries to build support for a new trade policy or against a military action.

Countries conduct economic transactions everyday, perhaps none more than the U.S., which is one of China’s largest debtors. But Ukraine may be the biggest case study of what will happen when a creditor moves from the financial ether of computers into a country’s literal backyard.

This entry was posted on Wednesday, September 25th, 2013 at 1:16 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. 

Leave a Reply

You must be logged in to post a comment.

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 www.waterpolitics.com and frontier investment markets at www.wildcatsandblacksheep.com.