Garrett Baldwin: China is hungry and looking outside its borders for ways to feed its 1.35 billion citizens.
In recent years Chinese companies and investors have become some of the largest players in the vertical supply chain for global agriculture. It’s a Chinese investment trend that will only accelerate as the country’s population increases.
According to the Heritage Foundation, Chinese investors have pumped $27.9 billion into the agricultural sectors of more than 30 nations.
But one aspect of this Chinese investment trend has stirred some concern. The Asian giant has bought vast tracts of farmland in nations across Asia and Africa.
According to a recent study, an amount of farmland equal to the size of France and Germany combined has transferred from local landowners, to foreign investors from the United States, to investors in China.
The tremendous size and scope of this Chinese investment trend soon will have massive implications for the global food supply and the price of commodities.
China’s Agricultural Reach Spreads Across Six Continents
It’s a trend that has the world on edge – even the media.
Last Tuesday, Quartz.com erroneously reported that Chinese investors had signed a deal to acquire rights to farm approximately 11,583 miles, or three million hectares, in Ukraine for 50 years. The deal between KSG Agro and China’s Xinjiang Production and Construction Corps (XPCC) would have leased an area of farmland equal in size to the state of Massachusetts or the country of Belgium.
KSG Agro quickly denied the deal in a press statement on its website. Nevertheless, the incident has heated up the intense international debate over foreign investment in domestic farmland and raised even greater questions about China’s ongoing surge of global agricultural investment.
Though this report turned out to be false, it turned the spotlight again on China’s extensive farmland-buying activity around the world.
One big problem is that the Chinese investors have struggled with how to properly develop the land and collaborate with technology and science companies capable of maximizing production.
Still, buying up farmland is only one way the country has been trying to procure more food. China has invested in all segments of the global food supply chain, from water irrigation projects to large multinational businesses like Smithfield Foods Inc. to small biofuel projects in Ethiopia.
The map shows nations where the Chinese have invested in agriculture:
Source: The Heritage Foundation
The Implications of This Chinese Investment Trend
It may be true that this Chinese investment trend will spur innovation in the agricultural markets, but it has serious social drawbacks.(...)Click here to continue reading the original ETFDailyNews.com article: The Implications Of This Chinese Investment TrendYou are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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