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November 28, 2011

China eyes Africa’s farmland

by Felix Njini

China could use its existing trade channels to source food and commercial farmland in Africa due to dwindling agricultural land, rising income and consumption levels at home.

Economic analysts who have been tracking China’s footprints across Africa say the country’s agricultural sector is faced with severe strains.

China has largely focused on Africa’s mineral resources in addition to viewing the continent as a huge market for its products.

Standard Bank’s economic researchers Jeremy Stevens and Simon Freemantle say this could soon change with China looking at Africa as a source of nutrition.

Rising income and urbanization in one of the world’s fastest-growing economies has resulted in a sharp rise in food consumption.

China is now the second biggest food consumer in the world after the USA and economists expect that by 2015, its food expenditure will double to over US$1 trillion.

However, the rapid pace of urbanization and industrialization has swallowed much of the country’s farmland and has diminished water tables. Analysts say China lost nine million hectares of farmland between 1996 and 2006.

Evidence of China increasingly looking for external sources of nutrition abound.

The analysts say China will use existing trade channels to secure external sources of food supplies.

There are fears that a hungry China could stoke competition for commercial farmland across Africa.

From 2001 to 2010, China’s imports of soya beans rose ten-fold to US$25 billion from US$2.8 billion.

Rubber imports swelled to US$17 billion from US$2 billion, the Standard Bank analysts said.

While a disconnect still exists in China-Africa agricultural trade, trade in cotton, tobacco, timber, rubber, fish and oilseeds among others signals a positive shift.

In 2009, agricultural trade between China and Africa was US$4 billion, less than four percent of total trade.

While Africa has welcomed financial and development aid from China, any linkages in agriculture should place greater emphasis on the continent’s food security, the Standard Bank analysts advise.

Signaling its increasing role in Africa’s agricultural sector, China presently has more than 1 100 agricultural experts stationed on the continent.

It has also established 11 agricultural research stations and there are over 60 agricultural invest-sector Chinese activities in Mozambique alone0.

China has found under-utilized crop land alluring and its developmental and technical assistance leverages its abilities to exploit minerals and food production.

“Sub-Saharan Africa’s immense and largely untapped agricultural potential is being increasingly viewed by China as a cog in an unfolding and inclusive food security strategy,” Stevens and Freemantle say.

“For Africa managing Chinese interest in its agricultural sector will be critical.

“The continent suffers from an acute lack of skills and capital in unlocking its inherent potential.

“Yet, as has been evident in many of the land leasing deals signed in Sub-Saharan Africa over the course of the past decade, too often investments are poorly structured, under-valuing the agricultural assets at stake.”

The Food and Agricultural Policy Institute (FAPRI) estimates that China’s soya bean imports will jump to 52 million tonnes in 2018 from 33.7 million tonnes in 2008.

Palm oil imports will rise to 10.8 million tonnes from 5.5 million tonnes in the same period.

China could likely move away from being a net exporter (2.3 million tonnes) of wheat to a net importer (1.4 million tonnes) in 2018.

Its cotton imports will double to 6.1 million tonnes though exports of rice are expected to buck the trend, rising to 739 000 tonnes from 435 000 tonnes.

China’s imports of cotton from Africa rose to US$462 million in 2010 from US$8m a decade ago; oil seeds to US$420m from US$146m.

Imports of timber swelled 200 percent; while rubber imports went up to US$58m from US$12m in 2011.

Imports of raw hides also rose to US$221m from US$6.7m over the past decade.

China’s history in Africa’s agriculture sector is long.

In the 1960s, China helped develop more than 80 farms across Africa.

Mbarali Farm in Tanzania, for example, was able to supply a quarter of the country’s total domestic rice production.

Zambia Friendship Farm, covering 700 hectares, is another example of China’s developmental and technical assistance.

China has another joint operation in Zambia which produces nearly 10 percent of eggs consumed in Lusaka.

All-in-all, there are 15 Chinese farms (10 000 hectares) in Zambia.

China has built an agriculture demonstration centre at Gwebi College, Zimbabwe’s premier agri-related institute of higher learning, and there have been exchanges among technical experts.

Some of the Chinese companies active in Africa include Da Ping Fishery Group in Angola, Sichuan Sanhetian Bio-Tech in Ghana, Shandong Xinwei Grain and Oil in Mozambique, CGC Overseas Construction in Nigeria.

In South Africa, China has Huagiao Phoenix Group, Hainan Qilin Tech in Tanzania, China Africa Agric. Invest Corp in Zambia, Qindao Textile Union in Zambia and An Hui China State Farms Group in Zimbabwe.

In Mozambique, China has pledged US$800m to modernize that country’s agricultural sector.

It plans to help raise Mozambique’s rice production to 500 000 tonnes from around 100 000 tonnes over the next five years.

“Beijing is seeking to build deeper relationships in agriculture with land-rich and politically stable countries-friendly to China. Investments, backed by state-directed assistance in these countries will increasingly look to produce the types of crops, such as soya-beans and cotton, for which demand in China is elevated,” the Standard Bank analysts note.

Southern Times

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