Tuesday, September 24, 2013

China's Shocking Land-Grab in Ukraine Is The Tip of the Iceberg

I've been reading about how China inked a deal to farm 5% of all the land in the Ukraine (9% of all arable land).

Quartz reports:
Under the deal between China’s Xinjiang Production and Construction Corps, or XPCC, and KSG Agro, an Ukrainian agricultural company, crops and pigs raised in the eastern region of Dnipropetrovsk will be sold at preferential rates to two Chinese state-owned grain firms. The project will launch with 100,000 hectares and eventually expand to three million.

Here are some graphics that caught my attention.

First, the size of China's land lease in units you can actually get your mind around ...

This is just the latest overseas agriculture acquisition for China, which just last month bought Australia’s biggest cotton farm.

And in South America, the Chinese agro-firm Beidahuang acquired 234,000 hectares to grow soybeans and corn in Argentina, while Chongqing Grain paid $375 million for soybeans plantations in Brazil and $1.2 billion for land in Argentina to grow soybeans, corn and cotton.

The South China Morning Post reports that China has over 2 million hectares of land abroad that it uses for agriculture. This was before the latest Ukranian acquisition.

So why is China doing this? Because it's the only hope China has of feeding its population, which is developing a larger appetite as its wealth increases. 

The fact is, although China's domestic grain output had grown for 10 straight yearsChina imported nearly 14 million tonnes of cereal and cereal flours last year, an increase of more than 150% from 2011. Food security is China's Achilles' Heel.

Also, China isn't the only one doing this. Check out the next table ...

China's Ukrainian deal isn't on here, which will put it on the top of the list. China's Ukrainian deal is a lease, not a purchase, and I'm not sure if those are broken out differently in the data for this Ritchie King/Quartz graphic.

Again, from Quartz's story ...
Saudi Arabia, South Korea, the United Arab Emirates, Britain, the US and other countries have been buying up foreign farmland, especially after the global food price spike of 2007 to 2008 that spurred global riots. According to a report last year by the nonprofit Grain, the main target of these purchases has been Africa but also Eastern Europe, Latin America and Asia. Between 0.7% and 1.75% of the world’s farmland is being transferred from locals to foreign investors.
Quartz seems to be quoting from a report by the Proceedings of the National Academies of Sciences of the United States of America. The study found between 0.7 and 1.75% of agricultural land is being transferred from local to foreign hands. Along with the countries listed above, the report also names South Africa, Israel, India, and Egypt as foreign land buyers. 

And the "greener pastures" include Congo, Sudan, Indonesia, Tanzania, Mozambique, Ethiopia, and Australia, according to the report.

The report from the PNASUSA (I hope that's their acronym, because the full name is just way too much of a mouthful) says that along with land, foreign countries are grabbing something else, too: Water.

This story is getting more interesting all the time.

Update: Here's another interesting chart to keep in mind on world agriculture: http://hbr.org/2013/10/seven-reasons-why-africas-time-is-now/ar/1?

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