#39: How China’s Buying Farms Across the World to Feed Its People!
In the past two years alone, Chinese companies have increased their efforts to lease or buy farmland and agribusiness assets in Africa, Latin America, Southeast Asia, Central Asia, and even the US!
China's quest for food security is reshaping global agriculture.
Facing a vast population and limited farmland at home, Beijing has turned to acquiring farms, agribusinesses, and supply chains abroad to feed its people.
In the past two years alone, Chinese companies have increased their efforts to lease or buy farmland and agribusiness assets in Africa, Latin America, Southeast Asia, Central Asia, and even developed markets like Australia and the United States.
Why? Rapid urbanisation and industrial growth are paving over fertile fields, and climate change is bringing more droughts and floods that threaten harvests in thee domestic terrains.
As a result, Chinese leaders now treat food supply as a national security priority, keeping grain stockpiles at historically high levels and looking overseas to secure additional food sources.
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Domestic factors make it hard for China to rely solely on homegrown food.
Only about 13% of China's land is suitable for farming, a share that fell by a whopping 6% over the past decade (check references below).
Pollution has also tainted soil and water in some regions, reducing yields. Meanwhile, diets are changing:
A growing middle class is eating more meat and dairy - Meat consumption in China has more than tripled since 1990. And raising all those pigs and chickens requires vast quantities of feed
Which means China needs even more grain and soy to feed livestock
But one crop – soybeans – remains a glaring vulnerability.
China imports around 100 million tons of soybeans annually to meet its needs, far more than it can grow domestically.
And, in 2023, roughly 76% of China's soybean imports came from Brazil, underlining how dependent China is on foreign farms for key staples.
Even grains like corn and wheat, which China aims to be self-sufficient in, are increasingly imported from abroad to make up shortfalls or build strategic stockpiles.
By 2022, China was spending a record $98.3 billion on agricultural imports, making it the world's top food importer.
This has pushed China to invest directly at the source – foreign farmland and food suppliers – to gain more control over its food supply.
Chinese state-owned giants and private firms are leading this global farm drive. A prime example is COFCO (China National Cereals, Oils, and Foodstuffs Corporation), a state-run agribusiness behemoth.
Over the past decade, COFCO snapped up major international grain traders – notably, full takeovers of Noble Agri and Nidera by 2016 – and gave it control of huge grain sourcing networks.
COFCO now handles over 100 million tons of overseas grain and oilseeds annually through these acquisitions.
It has become the largest exporter of soybeans to China from Brazil and a leading shipper of grain from Argentina and the Black Sea region.
In effect, China bought its way into the top tier of the global grain trade. Other Chinese agribusiness giants have made similar moves.
ChemChina's $43 billion purchase of Switzerland's Syngenta in 2017 secured advanced seeds and agrochemicals, bolstering China's food production toolkit.
Chinese meat processors have also gone overseas. 2013 WH Group (Shuanghui) acquired US pork producer Smithfield Foods.
By owning everything from farmland to food processing companies in multiple countries, China's firms – often backed by state-linked financing – aim to guarantee that Chinese plates stay full even in times of crisis.
Notably, China's approach is not simply a matter of grabbing land and shipping food home in a neo-colonial fashion – it's more nuanced.
Early alarmist reports about massive Chinese "land grabs" often turned out to be overstated. The research found that many headline-making deals in Africa never materialised.
By 2014, Chinese investors had acquired only about 240,000 hectares of African farmland, not the millions initially reported.
In many cases, ambitious plans fizzled when companies encountered poor infrastructure or local land rights conflicts. Chinese companies learned from this pushback and adjusted their strategy.
Rather than risk a political backlash by buying massive estates outright, they increasingly focus on buying into agribusiness firms and infrastructure:
Ports
Mills
Logistics
For instance, when a private Chinese firm bought just 300 acres in North Dakota in 2022, it sparked outrage in the US. Because the parcel lay near an Air Force base.
American lawmakers quickly proposed banning Chinese land purchases, underscoring the political sensitivity.
A similar wariness exists in Australia, where Chinese investors are now the most significant foreign landholders (about 7.6 million hectares, mostly under lease), prompting stricter scrutiny of farm acquisitions.
In response, Chinese entities often opt for long-term leases or joint ventures instead of outright ownership. They work closely with host governments to present mutually beneficial projects.
As scholar Deborah Brautigam argues, many Chinese farm investments abroad are driven by commercial opportunities and host-country invitations, rather than a centralised plan of land conquest.
Still, the sheer scale of China's agri-food outreach is unprecedented. Even if each deal is negotiated case by case, collectively, they form a broad strategy to diversify China's food imports. China has poured resources into agriculture across the developing world.
In Africa, for example, it has established dozens of "friendship farms" and demonstration centres, providing technical aid alongside commercial ventures.
At the 2024 Forum on China-Africa Cooperation summit, President Xi Jinping pledged ¥360 billion (about $51 billion) in support for Africa, including agricultural modernisation and trade initiatives.
Fears that China would buy up Africa's arable land have largely not materialised.
But Chinese firms are farming in countries like:
Zambia
Tanzania
Mozambique
Uganda
Typically, they grow rice or maize or run sugar and palm oil plantations. The bigger impact in Africa has been through training, infrastructure, and markets.
African governments see both opportunity and risk:
Chinese investment can help upgrade farms
But they remain wary of any large-scale land deals
China's footprint in Latin America is substantial. Brazil has essentially become China's soy basket. In recent years, roughly three-quarters of China's soybean imports have come from Brazil.
Chinese companies invest heavily in Brazil's farm infrastructure to cement this partnership.
COFCO is opening a giant grain terminal at Brazil's Port of Santos. By 2026, it will handle up to 14.5 million tonnes of soy, corn, and sugar a year.
It is buying train fleets and building silos to move crops to port more efficiently. In Argentina, Chinese firms own major port terminals on the Paraná River.
Chinese agribusinesses have also made deals in Peru, Uruguay, and Chile. These range from fishing rights to dairy farm investments aimed at funnelling food commodities to China.
Asia is another focus of China's food security drive. In Southeast Asia, Chinese companies have acquired stakes in oil palm plantations in Indonesia and Malaysia.
They have funded rice mills and contract farming in Cambodia, Thailand, and Vietnam.
In Central Asia, China tried to lease large tracts in Kazakhstan and elsewhere for grain production. However, a fierce public backlash in 2016 forced a rethink.
Now, the emphasis is on softer involvement – building agro-industrial parks and logistics hubs. For example, a joint China-Kazakh logistics centre at Lianyungang port helps funnel Kazakh wheat and grains to global markets.
Perhaps the most striking case is China's agricultural foray into Russia. 2,00,000 Chinese farmers have resettled or begun farming ventures in Russia's Far East.
Over 200 Chinese companies are investing in agriculture there. Moscow and Beijing are developing a "New Land Grain Corridor" to link Russia's grain belt with Chinese markets by rail.
This collaboration has already boosted trade:
In the first nine months of 2023, Russia exported 3.52 million tons of grain to China
Up from 2.2 million tons in the same period a year earlier
The Russia-China food nexus benefits both sides. All these regional efforts tie back to one goal: Diversifying China's food imports across as many sources as possible.
So, no single disruption – drought, war, or trade embargo – can leave China hungry. Indeed, certain food commodities are especially critical in China's strategy:
Soybeans:
Soybeans are used primarily as animal feed and cooking oil. By volume, they are China's number one import crop. Domestic production is far too low for China's needs.
So, it secures soy abroad (mainly from Brazil and the US) to support its massive pork and poultry industries.
Grains (Corn & Wheat):
Corn is vital for livestock feed and industrial starch. China has historically been self-sufficient in rice and wheat, but recently began importing more corn to feed pigs and refill reserves.
After the war in Ukraine disrupted grain markets, China opened up to Brazilian corn, quickly making Brazil its top corn supplier in 2023.
It also buys wheat from multiple countries to diversify sources and blend with domestic grain.
Meat:
Pork is the staple meat in China. Swine disease outbreaks and surging demand have led China to import pork and beef in huge quantities.
Chinese firms have bought foreign meat companies (e.g., WH Group's takeover of Smithfield in the US for pork) and invested in livestock operations overseas to gain control.
This secures access to protein while shifting some production abroad.
Edible Oil & Sugar:
China is the world's largest consumer of cooking oil. In addition to soy oil, it relies on palm oil (from Southeast Asia) and rapeseed/canola oil (from Canada and elsewhere).
Chinese companies have invested in palm plantations in Indonesia and Malaysia to lock in this supply.
Sugar is another commodity where China looks overseas; COFCO bought an 80% stake in Australia's Tully Sugar mill, tying foreign sugar output into China's supply chain.
However, China's global farm pursuits have raised environmental and social concerns in many host countries.
Demand from China has been linked to deforestation in Brazil and Indonesia as farmers expand soybean fields and oil palm plantations to meet export needs. Intensive farming projects can strain local water supplies and biodiversity.
There are worries that Chinese agribusinesses may:
Prioritize exports over local food needs
Import their own workers and machinery
Limit job benefits for local communities
Some Chinese-operated farms have also been criticised for poor environmental practices, such as the overuse of pesticides or land degradation.
These issues pressure China to ensure its quest for food abroad does not come at the cost of sustainability and social equity. China's overseas agricultural expansion also has geopolitical ripples.
Chinese land buys have been considered potential national security threats in the US and other countries.
Governments worry that Chinese-controlled farms or food companies could become leverage in a conflict. Or that Beijing might gain undue influence over their food supply chains.
At the same time, China's dominance as a buyer gives it leverage. When China slashed US farm purchases during the trade war and shifted to alternate suppliers, it reshaped global trade flows and reminded Washington of China's clout.
Many exporters welcome China's business but fear dependency on a single big customer.
The interdependence cuts both ways:
China wants to avoid over-reliance on any one supplier
But in doing so, it can make suppliers heavily reliant on the Chinese market
Countries like Russia have embraced this (Russian ag exports to China jumped 44% in 2022 to $7 billion). Others, like Australia and the US, are treading carefully, balancing ag trade with national security vetting.
Globally, China has stepped into a leadership role in food governance – a Chinese official has headed the UN FAO since 2019.
This indicates Beijing's intent to shape international norms on food security as its influence grows.
China's government has acknowledged these challenges and stressed more sustainable practices.
Beijing has pledged to peak carbon emissions by 2030 and achieve carbon neutrality by 2060. This will require greening its food system.
Officials now promote a "Green Belt and Road," encouraging Chinese firms to adopt greener standards in overseas projects.
Some companies have made high-profile commitments:
COFCO signed a deal to import 1.5 million tonnes of certified deforestation-free soybeans from Brazil
With on-farm audits for water use, biodiversity conservation, and labour conditions
China has also engaged in international cooperation on food security. It has signed over 100 agricultural agreements with Belt and Road partner countries.
Since 2019, it has held the top post at the UN FAO to share best practices. At home, campaigns to reduce food waste and improve farming efficiency (e.g., the 2021 Anti-Food Waste Law) aim to ease supply pressure.
These positive steps show China is trying to balance its needs with global responsibilities.
Yet experts note that these measures are insufficient to address the broader challenges.
China's climate pledges are long-term ambitions. But its food security concerns are immediate and growing.
A few sustainable pilot projects or import deals are a drop in the bucket, given China's enormous scale of consumption.
For instance, sourcing 1.5 million tonnes of "sustainable soy" is helpful. But China imports around 100 million tonnes of soy annually – scaling that up will be difficult.
Domestic innovations like higher-yield crops or GMOs, championed in China's latest Five-Year Plan, may eventually boost production.
However, they cannot quickly create new arable land or water resources. Meanwhile, climate change continues to pose unpredictable risks to harvests each year.
In short, while commendable, China's recent reforms and pledges only chip away at a massive problem.
The fundamental challenge of feeding 1.4 billion people sustainably and securely remains a work in progress.
China's global agricultural forays will likely expand in the coming years as it seeks to bridge the gap between demand and supply.
Much thanks to the support from good folks at Zero1 by Zerodha, making the research for this newsletter possible.
Best,
Jayant Mundhra
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References:
China's Food Security: Key Challenges and Emerging Policy Responses
farmlandgrab.org | Farming out: China's overseas food security quest
China pivot from US farm imports bolsters it against trade war risks | Reuters
China and the UK neck-and-neck in Australian ag land foreign ownership league table - Beef Central
China offers Africa $51 billion in fresh funding, promises a million jobs | Reuters
The Sino-Russian Land Grain Corridor and China's Quest for Food Security | Asia Society
China - Food, Agriculture, Biodiversity, Land-Use, and Energy (FABLE) Consortium