Urbanization threat

A side effect of the fast pace of industrialization and urbanization was turning a number of grain farmland areas into manufacturing facilities and residential housing.

The Beijing-based Chinese Academy of Agricultural Sciences estimates that the country has lost about 6 million hectares of farmland in the past decade and suggests that the government develop farmland in the Xinjiang Uygur autonomous region, the Ningxia Hui autonomous region and Heilongjiang province.

Li Guoxiang, deputy director of the rural development institute at the Chinese Academy of Social Sciences, said it is too early to transfer unused land into reserve farmland.

"The precondition for this move is China has to build more water projects and service facilities to support agriculture sectors in these western regions, because they tend to be short of water and have undeveloped infrastructure compared with traditional farming provinces such as Hunan and Jiangxi," Li said.

China feeds more than 20 percent of the world’s population despite having less than 10 percent of the farmland and less than 6 percent of the water resources, according to the Ministry of Agriculture. Li said increasing agricultural investments overseas can help China ease the pressure to find more natural resources in the country and strengthen its food security.

Currently, most of China’s overseas agricultural investment is dominated by State-owned enterprises such as China National Agricultural Development Group Corp and Chongqing Grain Group Co Ltd.

They have focused on cooperative agricultural resource developments in Russia, Southeast Asia, Africa and South America, but the size of their investments has remained relatively small in comparison with the United Kingdom, Japan and South Korea.

Yu Bin, director of the department of macroeconomic research at the State Council Development Research Center, said it is necessary for Chinese grain companies to strengthen their engagement with developing countries such as Brazil, Indonesia and Tanzania, which are eager to attract foreign investment and rich in natural resources such as fertile land and water.

Chongqing Grain Group began growing soybeans in Brazil’s northeastern state of Bahia in 2008, and in 2011, it shipped 400,000 tons of soybeans to China that were processed into 80,000 tons of cooking oil.

Its next move will be to grow soybeans on a 130,000-hectare farm in Argentina’s Chaco province next year with a total investment of $420 million. The first phase will cover 106,000 hectares of farmland.

The Heilongjiang Agricultural Reclamation Administration also plans to build several foreign reclamation areas on 2.7 million hectares to grow soybeans, wheat and rice in Brazil, Russia and Southeast Asia by 2015.

But Chinese companies’ agriculture “going out” strategies often are viewed as a threat to other countries’ food security as most of them are eager to own land in those investment destinations.

After discovering the economic potential of a developing agriculture industry and surging international grain prices in the past three years, the governments of Brazil, Ghana and Zambia all have prohibited foreign companies from buying farmland from their companies or regional authorities. Overseas companies in these countries must form joint ventures with local businesses in order to carry out grain production.

“Under such circumstances, Chinese companies should forget about buying farmland overseas. Renting land could be a flexible solution to carry out production and avoid political risks such as land and property purchases being overturned by a newly elected government, which frequently occurs in Africa,” Yu said.

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