Argentina - China buying up farms
2011-07-07 16:48:21
It might sound perverse for a Chinese company to go halfway round the globe to grow soya and other crops on unproductive land in a dry corner of Argentina.
Yet that is what Beidahuang Group, a state-owned farm company based in the north-eastern Chinese province of Heilongjiang, is doing in the Patagonian province of Río Negro.
If it works, the Inter-American Development Bank-backed farming project will spread irrigation technology and expand the frontiers of Argentina’s chief cash crop out of the traditional soya belt in exchange for helping China lock in food supplies for its fast-growing population.
Beidahuang, which spawns nine separate companies plus agricultural investigation centres, is China’s top food group. In 2010 it produced 17.5bn kilos of grains, including 15bn kilos of cereals – sufficient, the company says, to feed 75m people for a year.
Beidahuang’s step into Argentina, which took three years of negotiations, comes at a time when China’s imports of soyabeans and corn are rising to feed China’s growing appetite for meat, and global food prices are at record highs according to the UN.
China invested heavily in three big energy deals last year that have turned Argentina into one of China’s most important toeholds in resource-rich Latin America, wher
e it is seeking to secure energy and minerals – and now food – for its booming economy.
China has been increasingly active in the past five years in outsourcing agriculture, signing a series of overseas deals, including projects in Cuba, Russia, Venezuela, Brazil and Kenya, quietly spearheaded by Beidahuang, whose name means “Great Northern Wilderness”.
The irrigated agriculture project foresees infrastructure investments of $1.5bn over 10 years according to Oscar Gómez, one of the brains behind the project.
Río Negro officials are encouraging the Chinese to look at corn, barley, wheat, potatoes, onions, squash, olives, vines and fruit. “We say soya won’t be profitable ... This is ideal territory for corn, we’re pushing for that,” said Juan Manuel Accatino, provincial production minister in Río Negro.
Officials deny the project is commercial colonisation by China that turns Argentina – one of the world’s most efficient farming nations – into a far-flung allotment. They say that all land will remain in Argentine hands and the Chinese will irrigate five valleys, upgrade the San Antonio port to enable exports, as well as pay market prices for the produce. Labour will be local, not Chinese, and the producers, many of whom today are sitting on unproductive land, will have a guaranteed market for their production, the project’s sponsors say.
Indeed, Mr Gómez says the provinces of Buenos Aires and Tucumán are keen to follow in Río Negro’s footsteps and establish ties with Beidahuang.
A team of engineers from the company has been in Argentina for two months working on the planning and experimental phase of the project ahead of planting later this year.
Beidahuang will invest an initial $20m, rising to $1.5bn over a decade, said Mr Gómez. “I think exports could start in 2012. We are hoping to reach production of 1m tonnes within 10 years.”
The Chinese no longer appear to be interested in being simply Argentina’s top client in an agricultural goods market worth $4bn a year.
Argentina, the world’s biggest exporter of soya oil and third-biggest of soya- beans, as well as one of the world’s top cereals producers, already sells 90 per cent of its soya exports to China, though the relationship was marred by Beijing’s six-month ban on soya imports last year, in retaliation for Argentine trade restrictions.
The IADB has provided a $300,000 loan to fund studies into the environmental and social impact of the project, which is typical of a trend by Chinese investors to seek to deal more directly with Argentine producers and small brokers, rather than big multinationals, says James Knight, a risk analyst who advises Chinese agribusiness investors.
It is not only the Chinese who are looking keenly at Argentina. Prime Indian farmland in the Punjab costs about twice as much as in parts of Argentina, and the Indian ambassador in Buenos Aires is encouraging investors to consider Argentine land for producing soya, pulses and other crops.
Simmar Pal Singh Bhurjee, a turbaned Sikh whose exotic appearance has earned him the nickname the “Prince of Peanuts”, heads the Argentine operations of Olam International, a non-resident Indian company based in Singapore which grows soya, corn, wheat and beans in Argentina as a sideline to its main peanut business.
It has no plans itself to develop soya exports for India but Mr Singh says: “Soya is definitely a growth area. There are (Indian) companies which are ready to invest in Argentina and Brazil ... I think it will grow – it’s only a matter of time.”