In the Hutong
Analysis of China’s resource dependence – a primary driver of the nation’s effort to extend its commercial ties overseas and to create an expeditionary People’s Liberation Army – tends to focus on mineral wealth. But in a superb analysis of China’s growing food imports, T. Marc Schober, who blogs at Farmland Forecast, calls to our attention how strategic commodities are now starting to include corn, soybeans, and even meat.
The article is a worthy read by itself, but the part that hooked me was this:
…China committed $5 billion for agricultural development in Africa in 2008. China is sending expatriate farmers to Africa to cultivate the land and export the grain directly back home to ensure a consistent supply of grains. According to the Chinese Ministry of Commerce, over one million Chinese are farming in Africa dispersed throughout 18 countries.
We could wax philosophical and talk about the growing importance of Chinese peasants as an export commodity, or about how Americans offshore manufacturing while Chinese offshore their farming, but we would be missing the point.
At some stage, the traditional labor-intensive agricultural practices that China has employed will not be adequate for its offshore farms. The need for more advanced farming methods and hardware designed to increase yields in water-constrained environments is going to grow. All of this is to suggest that China’s grain giants (like China Cereals and Oils Import and Export Corporation, COFCO, the Archer-Daniels Midland of China) or their contracted suppliers (also Chinese-owned) are likely to need to make major investments in agricultural technology in the coming five years.
Some of those investments will go to global leaders in green revolution technologies, like Israel’s Netafim, but in the long run China will need to develop its own AgTech giants, if for no other reason than a reluctance to spend billions on foreign-supplied tech that will just be put on a boat for Africa.
Just as we have watched alternative energy companies grow in China, I expect to see a wave of AgTech firms emerge in the coming decade, supplying not only local needs but also the growing demand from China’s offshore farms.
This all assumes not only growing demand in China, but also that China will be unable to fulfill its requirements more economically using standard imports. The pressure is on the commodity-producing nations to keep costs below China’s own offshore resources.