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Agriculture

China buys 3 million hectares of Ukraine farmland; 5% of country


Ukraine city scene

Ukraine city scene

Ukraine to be China’s largest overseas farmer. Three million hectares will eventually be used to provide grain and meat for Chinese consumers

China will plough billions of yuan into farmland in Ukraine that will eventually become its biggest overseas agricultural project.

The move is a significant step in China’s recent efforts to encourage domestic companies to farm overseas as China’s food demand grows in pace with urbanisation.

Under the 50-year plan, Ukraine will initially provide China with at least 100,000 hectares – an area almost the size of Hong Kong – of high-quality farmland in the eastern Dnipropetrovsk region, mainly for growing crops and raising pigs.

The produce will be sold to two Chinese state-owned grain conglomerates at preferential prices. The project will eventually expand to three million hectares.

Ding Li, a senior researcher in agriculture at Anbound Consulting in Beijing, said the deal was a big move for China compared with earlier overseas agriculture.

In April 2009, China had slightly over two million hectares of farmland abroad, he said. “So three million hectares would mean a very big project.”

The agreement was signed in June between the Xinjiang Production and Construction Corps and KSG Agro, Ukraine’s leading agricultural company, XPCC said in a statement.

XPCC, also known as Bingtuan, is a quasi-military organisation established in Xinjiang in the 1950s to reclaim farmland and consolidate defences against the Soviet Union, whose “granary” at that time was, ironically, the Ukraine.

The statement did not reveal the value of the investment, but the Kyiv Post reported last month that it would be more than US$2.6 billion. The newspaper called it an “unprecedented foreign investment” in Ukraine’s agriculture sector.

This would make it China’s biggest reported lease or purchase of farmland overseas. The Beidahuang Group, China’s largest agribusiness, based in Heilongjiang province, and the Chongqing Grain Group have made similar moves to expand abroad.

The farming project was an important part of China’s food security programme and a response to the central government’s strategy of outsourcing the production of food to farms overseas, the statement said.

It would also help the XPCC expand, and provide jobs abroad for Chinese labourers and boost their incomes, it said.

China has made substantial agricultural investments elsewhere, notably in South America. Beidahuang acquired 234,000 hectares to grow soya bean and corn in Argentina, while Chongqing Grain paid US$375 million for soya bean plantations in Brazil and US$1.2 billion for land in Argentina to grow soya beans, corn and cotton.

Although China’s domestic grain output had grown for 10 straight years, Ding said demand for imported grain had also grown. It imported nearly 14 million tonnes of cereal and cereal flours last year, an increase of more than 150 per cent from 2011.

The trend is making it more difficult to fulfil Beijing’s ambition for the country to remain 90 per cent self-sufficient in food production.

“As urbanisation speeds up, consumption has led to greater food demand and domestic grain prices have stayed above global prices,” Ding said. “Therefore, China has been importing more and more grain.”

A country with well-developed agriculture, Ukraine is one of the world’s top 10 wheat exporters.

Professor Tian Zhihong, a specialist in international agricultural trade at China Agricultural University, said Ukraine offered a number of advantages for the XPCC, such as excellent soil and experience in international trade.

The XPCC investment would also help upgrade farm technology in Ukraine, which was still relatively basic, Tian said. Chinese agricultural co-operation with Ukraine started in 2011, when the then vice-premier Zhang Dejiang signed a memorandum to create a model farm in Ukraine.

Last year, the Export-Import Bank of China approved a US$3 billion agricultural loan to the country. A fund for joint construction projects was set up, with contributions of US$600 million expected this year.

XPCC is also investing in Ukraine in other ways. It has signed a memorandum earlier this month with the Autonomous Republic of Crimea on infrastructure investments in the peninsula, including an expressway, a government housing project and a bridge across the Strait of Kerch.

Source: SCMP – “Ukraine to become China’s largest overseas farmer in 3m hectare deal”
 
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About chankaiyee2

Author of the book "Tiananmen's Tremendous Achievements" about how with the help of Tiananmen Protests, talented scholars with moral integrity seized power in the Party and state and brought prosperity to China. The second edition of the book will be published within a few days to mark the 25th anniversary of Tiananmen Protests All the parts in the first edition remain in the second edition with a few changes due to information available later and better understanding. There are also some changes for improvements of style. The new parts are Chapters 12-19 on events in China after the first edition was published: The fierce power struggle for succession between reformists and conservatives; Xi Jinping winning all elders’ support during his mysterious disappearance for 2 weeks in early September, 2012; and Xi Jinping Cyclone. Chan Kai Yee's new book: SPACE ERA STRATEGY: The Way China Beats The US An eye-opening book that tells the truth how the US is losing to China. The US is losing as it adopts the outdated strategy of Air-Sea Battle while China adopts the space era strategy to pursue integrated space and air capabilities: It is losing due to its diplomacy that has given rise to Russian-Chinese alliance. US outdated strategy has enabled China to catch up and surpass the US in key weapons: Hypersonic weapons (HGV) that Pentagon regards as the weapon that will dominate the world in the future. Aerospaceplane in China’s development of space-air bomber that can engage enemy anywhere in the world within an hour and destroy an entire aircraft carrier battle group within minutes. Anti-satellite (ASAT) weapons, anti-ASAT weapons, stealth aircrafts, drones, AEW&C, etc. The book gives detailed descriptions of China’s weapon development based on information mainly from Chinese sources that the author monitors closely. U.S. Must Not Be Beaten by China! China is not a democracy. Its political system cannot prevent the emergence of a despotic leader or stop such a leader when he begins to bring disasters to people. A few decades ago, Mao Zedong, the worst tyrant in world history did emerge and bring disasters to Chinese people. He wanted to fight a nuclear war to replace capitalism with communism but could not bring nuclear holocaust to world people as China was too weak and poor at that time. If a despot like Mao Zedong emerges when China has surpassed the US in military strength, world people will suffer the misery experienced by Chinese people in Mao era. China surpassing the US in GDP is not something to worry about as China has the heavy burden to satisfy its huge population, but China surpassing the US in military strength will be world people’s greatest concern if China remains an autocracy. US people are of much better quality than Chinese people. What they lack is a wise leader to adopt the correct strategy and diplomacy and the creative ways to use its resources in developing its military capabilities. I hope that with the emergence of a great leader, the US can put an end to its decline and remain number one in the world. China, US, space era strategy, air-sea battle, space-air bomber, arms race, weapon development, chan kai yee

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