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China to invest billions in South American farmland improvements

The Chinese government plans to invest more than 100 billion yuan (15 billion U.S. dollars) over the next five years to improve farmland for the nation’s food security, according to the Ministry of Land and Resources (MOLAR).

The investment aims to improve about 4 million hectares of land and replenish an additional 670,000 hectares of arable land in its major grain producers — Hebei, Jilin, Heilongjiang, Jiangsu, Anhui, Jiangxi, Shandong, Hubei provinces and Inner Mongolia and Guangxi autonomous regions.

An extra grain production capacity of 10 million tons will be added to China’s agriculture industry every year if the plan goes smoothly, according to MOLAR, which supervises land use in China.

Beidahuang Group, a company based in Northeast China’s Heilongjiang province, expressed its intention to invest in an agricultural cooperation project with Argentina’s Rio Negro Province.

China’s Beidahuang Land Cultivation Group, a state-owned farm company based in the northeastern Chinese province of Heilongjiang, has been ready to plant soybeans and other crops in the Patagonian province, south Argentina with a very low land occupancy charge after three years’ negotiations, according to Argentina government authority recently.

Beidahuang, which spawns nine separate companies plus agricultural investigation centers, is China’s top food grain production group. In 2010, it produced some 17.5 billion kilograms of grains including 15 billion kilograms of cereals, which is sufficient, the company says, to feed 75 million people for a year.

The Chinese company will invest $1.5 billion over 20 years to grow farm produce, including soybeans and corn, and export those crops back to China. The project will use advanced irrigation facilities to develop 300,000 hectares of arable lands for agriculture use, and construct supporting power generators and port expansions.

According to the assistant general manager of Beidahuang Land Cultivation Group, Wang Wei, the reason why Argentina has planned to provide so much fertile land to China was that although the country was abundant in land resources, their domestic farm cultivation technology was not so advanced. This would make the whole country’s agriculture develop quite slowly. Therefore, they are striving to exchange Chinese technology with their farmland.

In the view of Xia Youfu, an agriculture expert, Argentina’s ultimate purpose was to break the agricultural technological monopoly of the U.S.

“The first batch of personnel arrived in Argentina on April 26. Two agricultural experts were also dispatched on June 26. So now all is ready except what is essential,” said Pan Hongjun, deputy director of Beidahuang Land Cultivation Group Overseas Developing Department.

According to the agreement reached by the two sides, the Beidahuang Group is in charge of providing irrigation facilities and technical personnel. On the other hand, the Argentinian government will offer them 234.5 thousand hectares of land, almost twice the size of Tongzhou District in the Chinese national capital of Beijing. In addition, the land use charge is very low, almost free of charge.

What’s more, to show their sincerity, the Argentina government also gives the company additional 3000 hectares of high yielding experimental fields.

Till now the Beidahuang has started to conduct planting experiments on the farmland provided by the Argentina government. They primarily plan to grow soybeans, corns and other crops. In the next few years, they would gradually expand the grown acreage to 234.5 thousand hectares, making it the overseas agricultural plantations of the Chinese enterprise.

This project, expected to start this year, will be the first investment in Argentina’s agriculture by Chinese companies, according to the media.

Chinese investment is flooding into Argentina as the Asian giant expands its global commodity hunt from the raw materials used in industry to the foodstuffs needed to feed its 1.3 billion citizens.

Heilongjiang Beidahuang Group had also announced a joint venture with Argentina’s Cresud SA to buy land and farm soybeans. Cresud is one of Argentina’s top agriculture firms with control over more than 1 million hectares (2.47 million acres) of farmland that produce grain, cattle and milk.

China already buys the bulk of Argentina‘s soybean exports, its top crop and largest source of export revenue. Soybeans are mainly used as livestock feed in China, where meat consumption is rising along with personal incomes. At the same time, urbanization is shrinking the amount of arable land available in China.

Contact the Gateway to South America team  to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Uruguay and Chile, providing expert advice on property acquisition and investment tours.

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www.gatewaytosouthamerica.com

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