China’s need for agricultural resources and technology are driving rapid growth in Chinese investment in agriculture and food sectors abroad. According to Chinese investment statistics, overseas ventures in agriculture, forestry, and fisheries soared from $300 million in 2009 to $3.3 billion in 2016. But these totals understate the magnitude of Chinese agricultural-focused foreign assets because the statistics exclude the acquisition of food processing and trading companies classified in manufacturing and service sectors. A more complete count issued by China’s Ministry of Agriculture said the country had over 1,300 agricultural enterprises with registered overseas investments of $26 billion, at the end of 2016. The initial wave of investments during the 2004 – 12 was focused mainly on crop production, fishing ventures, and acquiring raw materials for the Chinese market. Most of these ventures targeted eastern Russia and neighboring Asian countries, attracted by relatively cheap, underutilized land. More recently, some Chinese companies and officials have shifted the thrust of their strategy from farming overseas to acquiring established agribusiness companies based in Europe, North America and Oceania. These include ChemChina’s $43 billion acquisition of Syngenta, a Swiss farm chemical and seed company, Shuanghui International’s purchase of U.S. based Smithfield Foods and China National Cereals, Oils and Foodstuffs Corporation’s purchase of two major agricultural trading companies Noble Agri and Nidera. Chinese companies have also acquired companies or formed joint ventures in New Zealand and Australia, focused on meeting China’s growing demand for dairy, beef, and lamb. The surge of ag investment reflects an alignment of interests between Chinese companies and political leaders as China’s imports of agricultural products grow. The Ministry of Agriculture reported that ag imports exceeded $125 billion for 2017, up from $41 billion 10 years earlier. Interestingly, while China’s spending on foreign agricultural ventures appears large, it is modest when compared to the country’s agricultural imports: In 2016, the country’s foreign agricultural investment equaled just 3% of the value of its agricultural imports that year. Moreover, agricultural investment has lagged behind other sectors in China’s foreign investment surge. Agriculture, forestry and fishing accounted for about 1.7% of China’s foreign investment from 2012 to 2016. By comparison, agriculture’s share of China’s gross domestic product is about 9%. You could either look at this as proof that China’s global investments into global regions, industries and companies are failing. Or you can see this as just the beginning. I feel more growth in Chinese investment is forthcoming and will continue have larger impacts on global trade, particularly in agriculture. For more on China’s global agricultural investment strategy, you can check out USDA’s ERS Amber Waves article HERE.
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