Words & Phrases 词汇与词组 - Buying farmland abroad

Taking to heart the centuries-old saying that "man eats by nature," China is seeking to maintain food sufficiency by adopting a "going out" strategy.

 

More than a decade has passed since China's entry into the World Trade Organization (WTO) in 2001. However, in contrast to Chinese oil and mining firms' numerous investments overseas, there seem to have been few similar steps taken by Chinese agricultural companies.

 

Being one the world's biggest food consumers, China remains a food importer and is sometimes rattled by rising global food prices. Analysts say China needs to look at strategies to ensure long-term food security for its 1.3 billion people, such as procuring and renting farmland overseas.

 

Multilayered challenges

 

The Chinese Academy of Social Sciences earlier estimated that China's farm trade deficit will continue to widen to about $40 billion in 2012 following an increase of nearly 50 percent in 2011 to $34.12 billion.

 

China's per capita farmland is less than 40 percent of the global average and water resources are a quarter of the average, giving it fewer comparative advantages in developing farming.

 

Despite China's success in maintaining food self-sufficiency, its increases in output are unable to keep pace with higher consumption at a time of rapid urbanization and industrialization. One good example of this is the fact that China, the world's top rice producer, became a net importer of corn, rice and wheat for the first time in 2011.

 

Chris Fedor, a research associate with the Center on Food Security and the Environment at Stanford University, told the Global Times that food security threats specific to China today are environmental, including lack of water for irrigation, and demographic.

 

"The average age of a Chinese farmer is 60 and works a farm that is on average less than 1/1000th the size of the average US farm. As these farmers grow even older, China will face an enormous, socially transformational challenge," he noted.

 

Advantages of going abroad

 

While relying on domestic supplies for agricultural products, analysts believe that China should also fully utilize the international market, and are urging Chinese companies to actively explore overseas resources to ensure stable supplies of agricultural products.

 

One advantage for Chinese agricultural companies investing abroad is that there are vast surplus areas of uncultivated land in other countries, which are also seeking foreign investment for joint exploration. This means relatively low farming costs and good prospects for profitable and high-yield crops.

 

Russia, for example, which joins the WTO this year, is set to seek more foreign investment in developing its vast Far East Areas. There are Chinese companies that saw such opportunities much earlier.

 

China's Huaxin Group, which began agricultural investment in Russia in 2004, signed another deal with Russia's Armada Company in May to expand their joint land farming and development in Russia's Primorskiy Kray area, which borders China's Heilongjiang Province.

 

"Our company owns 40,000 hectares of land in the area at the moment, which is set to be expanded to 50,000 hectares next month," Liu Ying, from the Huaxin Group, told the Global Times. "Among the 40,000 hectares of land, 25,000 are being used for farming soybean, corn, grain and rice."

 

Liu said crops are exported back to China through China's Dongning land-way crossing port and some are also used for her companies' poultry farming.

 

The Australian and Chinese governments are also conducting a joint study to examine the policy changes needed to allow large-scale investment by Chinese agricultural companies in undeveloped land in northern Australia, the Australian Financial Review said last week.

 

about 40 Chinese companies are involved in overseas farming in more than 30 countries, with investment totaling $2.43 billion, Reuters reported.

 

A bumpy road ahead

 

Huaxin's experience might serve as a lesson to China's other agricultural companies, but a series of challenges have to be dealt with first, the most urgent being the issues of fundraising and insurance services.

 

The China Council for International Trade issued a report last year saying that the money used for overseas investment by Chinese companies is mainly borrowed from banks, suggesting a narrow source of fundraising.

 

Overseas agricultural investment also has to take into consideration political risks in other countries, especially unstable ones. Agreements signed with Chinese companies by previous governments could be rejected by their successors.

 

Analysts said China can learn from other countries about how to reduce risks for Chinese companies. In the US, for example, the government provides insurance services for its companies investing abroad to avert unexpected risks.

 

Meanwhile, since land is a scarce resource, many countries are tightening up their restrictions on procure-ment and rental of their farmland by foreign companies.

 

New Zealand's High Court in April put aside its government's original approval for the sale of 16 farms spread across almost 8,000 hectares in the country's North Island to China's Shanghai Pengxin Group.

 

The high court asked the New Zealand Overseas Investment Office to reconsider its recommendation based on "new criteria for the benefits of foreign ownership."

 

Brett Rierson, director of the World Food Program China office, told the Global Times that he believed all countries should make efforts to create an open investment and trade system.

 

"The more fluid and open systems we have, the fewer chances we have of repeating the 2007 and 2008 mistakes in which we closed our borders for food trade," he warned.

 

Chinese you need:

 

Man eats by nature：靠天吃饭 (kào tiān chī fàn)

Sufficiency：充足 (chōng zú)

Agricultural：农业的 (nóng yè de)

Trade deficit：贸易赤字 (mào yì chì zì)

Farmland：农田 (nóng tián)

Self-sufficiency：自给自足 (zì jǐ zì zú)

Threat：威胁 (wēi xié)

Agricultural product：农产品 (nóng chǎn pǐn)

Surplus：剩余 (shèng yú)

Uncultivated：未开垦的 (wèi kāi kěn de)

Undeveloped：未开发的 (wèi kāi fā de)

Fundraising：筹资 (chóu zī)

Insurance：保险 (bǎo xiǎn)

Investment：投资 (tóu zī)

Successor：继任者 (jì rèn zhě)