Tag Archives: chinese
China Corn Imports Could Reach 20-30 Million Tonnes
Reuters | September 6, 2013 China could import 20 million to 30 million tonnes of corn a year to cover growing supply shortages, a researcher with a government think tank said on Thursday, as much as four times current levels. This would be around a quarter of globally traded corn and up to twice as much as number one importer Japan buys, a boon to exporters like the United States, Ukraine and Argentina. While Xu Xiaoqing, the head of the rural department at the State Council’s Development and Research Centre, didn’t give a timeframe, his comments to a conference are another sign that China is relaxing its policy of being self sufficient in the feed grain. The think tank, an agency of the country’s cabinet, doesn’t decide policy but does directly advise and issue policy recommendations to Chinese leaders. “For corn, we can maintain basic self-sufficiency and whenever there is a shortfall, we could import – there would be no problem importing 20-30 million tonnes,” said Xu. “But we should keep self-sufficient in staple grains of wheat and rice.” Imports are expected to rise to 7 million tonnes in 2013/14, 3.3 percent of China’s total domestic output of 211 million tonnes. Xu’s comments reflect a wider debate in government about the country’s food security goals in the light of soaring demand, rapid urbanisation, declining farmland and a shortage of agricultural labour. Agriculture minister Han Changfu on Sunday told state media that corn imports would have to rise gradually in order to meet feed demand, reversing his 2012 vow that China would not allow itself to become dependent on foreign supplies. China could tweak its grain security strategy by allowing its corn self-sufficiency rate to fall to around 80 percent, Xu said. China has long vowed to maintain a 95-percent rate of self-sufficiency in major staples, but imports of rice and corn have been steadily rising, and analysts also expect the country to start sourcing large quantities of meat from overseas. Xu said China’s demand for beef has risen more than twice as quickly as domestic production in recent years, driving up prices. He said meat consumption would continue to rise as China urbanises, and imports could be increased. Continue reading
Investing In Aussie Agriculture
28 AUG 2013 Matt Woodington It may have been a pretty dull spectacle in general but for those in the business of agriculture, the first election debate between Kevin Rudd and Tony Abbott was exciting for the mere mention of their industry. For Australian agribusinesses, Asia’s rising middle classes and their growing appetite for better, or simply different, foods is a tantalising opportunity but investment in the sector is needed. Indonesia is currently the biggest importer of Australian agricultural products, with Japan, South Korea and parts of the Middle East not far behind, but demand is on the increase throughout Asia, as more wealth leads to a taste for the kind of grains and proteins Australia produces in droves. Meanwhile, as the mining boom subsides, plenty of questions linger around how the hole it leaves behind in the Australian economy will be filled. Just like Australia can’t feed Asia by itself, agriculture won’t replace mining but it could certainly play its part. “It’s coming back into focus, I think the fact that it even gets a mention in the first debate between the leader of the opposition and the prime minister, shows the rejuvenation and increasing interest in agriculture and agribusinesses generally,” says Tim Burrow, a director at the Agribusiness Association of Australia. Australia’s export pedigree Although it’s a relatively small food producer on a global scale, Australia punches above its weight as an exporter, because it only uses roughly a third of its produce. “We export a lot of protein, whether it be animal protein in the form of beef or vegetable protein in the form of good quality wheat,” says Burrow. “There will be particular types of grain, meat or sugar that Asian people wish to have, just like we import quite a lot of food because it’s what we want and other countries or farmers are better at producing it.” Chinese demand for wheat and dairy products is growing fastest, as its middle class expands and mistrust of local food sources remains an issue. According to CBA analysts, China has contributed 33% to the growth of global fresh milk consumption since 2010 and 80% to whole milk powder growth, often used for infant formula. However, Chinese dairy demand still lags that of comparable developed-Asian countries. “For example, Chinese per capita cheese consumption grows as incomes grow. If China’s rate of per capita dairy consumption matched the developed-Asia average, Chinese cheese consumption would surge 8.4 times to 3 million tonnes, equivalent to a 16% uplift in global demand,” according to a CBA analyst note. “Despite Chinese investment in dairy genetics and infrastructure, recent local feed shortages – evidenced by swelling imports for corn, wheat and soybeans – supports CBA Commodities’ view that future growth in Chinese dairy consumption will be largely satisfied by imports. “The New Zealand and Australian dairy sectors have an opportunity to satisfy Chinese demand.” Agricultural consolidation New Zealand has stepped ahead of Australia with its free trade agreement with China, but CBA believes demand will continue to outstrip supply. New Zealand is the lowest cost dairy producer in the world, with Victoria in second place. Costs are much higher even in places like North America where farmers rely more on grain fed cattle yards, rather than good old fashioned grass. The world’s biggest dairy exporter, Fonterra of New Zealand, was recently forced to assure China and other importers over the safety of its milk following a botulism scare after bacteria was found in whey powder used in its infant formula. One of Australia’s biggest infant formula producers is Bega Cheese, which derives around half its earnings from exports. Bega, whose earnings increased 13% in the 2013 financial year, also owns around 18% of Warrnambool Cheese and Butter Factory, in which Murray Goulburn also has a 14.5% stake. Reports suggest the two shareholders could be positioning themselves for a takeover approach and while another domestic tie-up could stem from Ruralco’s interest in Elders, what’s causing more of a stir at the moment is the continuing trend of overseas buyers picking off Australia’s biggest agribusinesses. ABB Grain was bought by Canada’s Viterra in 2009, which is now part of Glencore, while AWB was sold to another Canadian company Agrium a year later. The major deal currently on the table is a $3.4bn offer for GrainCorp from US company Archer Daniels Midlands, which would see another of Australia’s biggest grain companies fall into foreign hands. The proposed deal, which is due to be resolved by November, has caused controversy and frustration among those that fear Australia is losing control of too much of its agricultural real estate. “What we haven’t really seen in the agricultural sector unfortunately is a merger of two big Australian companies to become a global player,” said Burrow. “We simply don’t have enough investors in Australia to grow the agricultural sector fast enough to meet the opportunity demand out there. So we need international investors, whether it comes from the UK, US, China, the Middle East or wherever it might be. “At a corporate level they are very open to international investment, at an individual personal level, we all get a bit concerned about who’s going to own our own food chain.” Understanding the investment challenges One of the big challenges for individual investors is getting to grips with the short-term volatility of agribusiness, which is considered a highly cyclical sector due to its pronounced ups and downs. Weather plays an important part and not just the weather in Australia either. Dairy farmers were hit hard by the periods of drought between 2001 and 2009, particularly in Northern Victoria. The struggles of Australian farmers may have helped their northern hemisphere counterparts, however, as demand for their goods would have gone up due to the fall in global supply. Likewise, if conditions for growing wheat are perfect everywhere in the world at any given time, then the lavish supply would cause prices and therefore the earnings of producers to fall. With those variations at play, keeping costs to a minimum is a priority for agribusinesses, which is why some have moved to mechanical harvesting, used for grapes for example, and more dairy farmers are employing robots in the milking shed. Agribusinesses will have been relieved to see the value of the Australian dollar fall, which should have a broadly positive impact on the industry. A lower dollar makes Australian goods cheaper for overseas buyers and gives the companies a chance to increase margins. Tasmanian Salmon farmer Tassal is one company to have put its export business on hold until the dollar reached a more palatable level, although it has done rather well from its domestic operations. Burrow believes that agribusinesses are best suited to long term investors, while the possibility of more takeover activity in the sector could be an attraction. The offer for GrainCorp represented a 49% mark up on its closing share price the previous day. The broader industry faces plenty of other challenges; the need for more investment in infrastructure to access remote regions and facilitate more export traffic, and fixing the shortage of qualified agricultural people coming through Australia’s universities are among them. “Agriculture needs focus, it needs a political statement on it because it requires the space to develop rapidly to meet the demands,” said Burrow. “I just think it’s good that the political platform at the moment is recognising the importance of agriculture.” Continue reading
Brazil And China Scramble For Agricultural Influence In Africa
Agriculture is central to Chinese and Brazilian development efforts – how trailblazing are their methods? Agricultural experts from China offer tips on rice planting to farmers in Dakar, Senegal. Photograph: Zheng Zheng/Xinhua[/color] China and Brazil have identified agriculture as central to their development efforts in Africa, confident in the belief that they can make valuable contributions based on their own agricultural success. China trumpets its ability to feed 20% of the world’s population on roughly 10% of the world’s arable land, while Brazil can boast of agribusiness-led commercial production of soya bean and ethanol as well as its promotion of smaller-scale farming. Last month, José Graziano da Silva, the director general of the UN’s Food and Agriculture Organisation, stressed the importance of south-south co-operation in advancing agricultural development in developing countries. “It is time for Latin America to increase its contribution to African development,” Graziano told African and Argentinian agriculture ministers in Buenos Aires, Argentina. What has been the experience of Brazil and China in agriculture in Africa; do they offer a new paradigm of south-south development co-operation? A collection of essays published last month by the Institute of Development Studies concludes that there is no single Chinese, Brazilian or African position. “China and Brazil have very different interests and priorities, and within these countries there are intense contests between different approaches, reflecting domestic political dynamics,” says the IDS bulletin China and Brazil in African Agriculture . “On the other hand, Africa’s 55 countries are hugely diverse, and any new development encounter arrives on the back of a very complex agrarian history and political economy.” The case of Brazil is particularly interesting, since it offers two distinct models. The first consists of large-scale farming for the production of soya and ethanol, backed by the ministry of agriculture, livestock and food supply, which describes itself as the ministry for agribusiness. The second emphasises integrated rural and social development in Brazil’s poorest regions through programmes designed to ensure the provision of technical support and credit for family farmers. Both approaches are evident in Africa. The ministry of agrarian development (MDA), a supporter of the family farm sector, has drawn on Brazil’s More Food programme, focusing on improving farmers’ access to equipment, machinery and agricultural technologies, including tractors, through the provision of concessional credit. Ghana, Zimbabwe and Mozambique have been given credit and signed a technical co-operation agreement. Shipping of machines and equipment will begin this year. The challenge, says the study, is to avoid subsidised technologies that end up benefiting wealthier farmers. At the other end of the spectrum is the involvement of agribusiness. In Ghana, for example, the Brazilian company Constran is building an ethanol plant, designated for export to Sweden, partly to get round European tariffs on Brazilian ethanol imports. So the $306m (£196m) project involves Brazilian technology and European investment in an African country. Competing visions such as these mirror Brazil’s complex agrarian economy, says the study, and the outcomes will depend on how African governments, farmers, entrepreneurs and civil society organisations absorb, shape and apply the models on offer. While Brazil is a new player in Africa, China has been involved in African agriculture for more than 40 years. Lila Buckley, senior researcher on China at the International Institute for Environment and Development in London, writes that Chinese agriculture co-operation tends to be heavily technocratic, reflecting China’s own experience. It has established more than 40 agricultural demonstration centres on the continent and provides agricultural assistance combined with infrastructure development. The latter includes dam construction with technical training, the provision of inputs and storage facilities, and facilitating links between agricultural ministries and communities. While the Chinese official line is that China’s agricultural experience can be of benefit to Africa, Chinese NGOs have offered more critical perspectives. A project officer at a Chinese NGO told Buckley: ” Aid is supposed to help local people develop by introducing China’s experience. But people forget to ask whether this is appropriate or not. Chinese people don’t understand African history or the development situation.” There is also concern about the suitability of China’s intensive agriculture model, which has achieved increased food production but only at the cost of the heavy depletion of water and soil, intense fertiliser use – which causes high pollution – and heavy energy consumption. The emphasis on technology transfer above other factors also worries some experts. “The Gates foundation is spending $1bn on agriculture technology,” an agriculture policy adviser at the Chinese Academy of Science told Buckley. “But not all technology is necessarily useful for Africa. In China, rural development started with land tenure reform, not with technology.” Buckley notes that, despite rhetoric of mutual benefit, China has generally taken the lead in designing and implementing agriculture projects, with only passive participation from African partners. This has led to frustration on both sides and project failures, as in the case of the Xai-Xai irrigation scheme in Gaza province in Mozambique. When the scheme failed, one Chinese participant complained: “We are here to help farmers, but the farmers are not interested in agriculture.” Kojo Sebastian Amanor concludes that south-south co-operation – though frequently framed as path-breaking – builds upon pre-existing forms of international development, neoliberal frameworks, and the expansion of capital in Africa.[/font][/color] Continue reading
