”Land grabbing”• Spike in food prices (2008,and again in late 2010)caused world wide social unrest• Vast amounts of media ...
China: land scarce• 20% of the world’s population, but only 7 % of theworld’s arable land• Less than 40% of the world aver...
• Inflation 3-6%-agflation at over 20 %Mainly food driven.• Vulnerable: poor urban workers unable to restort tosubsistance...
Vertically integrating supply• Circumvent the volatile international market –substitute for domestic production• Diminishi...
What facts?• Very little actual field research on the topic• Most information is gathered from media reports(Loro Horta)• ...
Questions• To what extent is China really involved in theMozambican agricultural sector?• How pressing are China’s food se...
Findings of my study• Reports regarding Chinese agricultural investmentsand interests in Mozambique are greatlyexaggerated...
1. To what extent isChina involved inMozambique’sagricultural sector?
«Nothing new»• Training and technical expertise through three projects:1. Agricultural Technical Cooperation project1976 -...
Trade in agricultural products• Agricultural trade between China and Mozambique isvery limited.• China is not a major dest...
Three areas China isrumoured to be involved in(1) Land leases and farming investments in theZambezi Valley(2) The construc...
1. Land leases in Zambezi• Large land leases (driver: food security)• Thousands of Chinese settlers would immigrate toMoza...
China in the Zambezi valley• 2007 Monetary AssistanceGPZ (Gabinete do Promocão do Zambezi Vale)• $50million-19 million to ...
Where did these rumours come from?Possible Sources• 1997-1998: request for some Chinese farmers tomigrate to Mozambique to...
2. The Mphanda Nkuwa Dam• $2.3 billion loan to construct the controversial MphandaNkuwa dam on the Zambezi river.• In exch...
3. Agricultural Technology Center• 2006 FOCAC summit: 10 agricultural centers acrossAfrica• “promote technology transfers ...
Jan 2010Officially opened in July 2011
• Optimistic estimates: five-fold increase inrice productivity• “Mozambique’s increased rice production isclearly destined...
Clearly?• The centers are established on the basis of Africancountries demand rather than Chinese desires• Mozambique has ...
Zamcorp• Established in 2006• To promote the Zambezi valley by identifyopportunities for investment, agriculture being one...
Wait, who are these guys?
Wanbao Farm in Xai Xai• Hubei Friendship Farm (Wanbao):experimenting with Chinese hybrid rice• First planting 2007• 300 ha...
Wanbao farm output 2007-2010Year Area undercultivationTonnes / ha Production2007-2008 20 9 1802008-2009 30 9 2702009-2010 ...
Getting facts and figures right• Technology Center vs. Agricultural TechnologyCenter -impression that China is investing h...
2. China’s food securitysituation
China’s food security situation• Estimates for 2020: 700 million tonnes of unmilledgrain (World Bank)• 2020 target: 540 mi...
• At the forefront of agricultural technology, eg.hybrid rice• 12th five-year plan: Bio-technology and stimulatingforeign ...
China’s official stance• National Food Security and Long-term PlanningFramework (2008-2020): China will maintain a self-su...
3. Is vertically integrating foodsupply a viable strategy forfood security?
Is V.I. food supply viable?• Vertically integrating food supply does not isolate acountry from dependence on other countri...
4. What are the driversbehind China’s interest inMozambican agriculture?
Possible drivers• Imports will have to increase→Global stability of food supply in China’s interest• China possesses exper...
Conclusion• Despite the fact that China operates under suchgrave land constraints China is still able to provide95% of all...
Thank you
Myth and Reality: Chineese involvement in Mozambique Agricultural Sector
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Myth and Reality: Chineese involvement in Mozambique Agricultural Sector

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The second SIANI expert group meeting on China’s global land-investments was held at the Stockholm Environment Institute (SEI) in Stockholm on 27 January 2012. This report provides a brief summary of the content of discussion, and is intended to refresh the memories of those that participated and give those not present an idea of the topics discussed.

Here, you may also download the presentation by Sigrid Ekman.

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Myth and Reality: Chineese involvement in Mozambique Agricultural Sector

  1. 1. ”Land grabbing”• Spike in food prices (2008,and again in late 2010)caused world wide social unrest• Vast amounts of media reports on the ”landgrabbing” phenomena; China in Mozambique• China highly criticised
  2. 2. China: land scarce• 20% of the world’s population, but only 7 % of theworld’s arable land• Less than 40% of the world average land per capitaratio• Land is converted into industrial and urban usageas well as deforestation and environmentaldegradation taking its toll• In 2004 China became a net-food importer
  3. 3. • Inflation 3-6%-agflation at over 20 %Mainly food driven.• Vulnerable: poor urban workers unable to restort tosubsistance farming• One of the biggest threats to economic and socialdevelopment are the fragilities within the Chineseagricultural sector and its ability to meet growingneeds
  4. 4. Vertically integrating supply• Circumvent the volatile international market –substitute for domestic production• Diminishing returns to scale -adding land, an inputnormally regarded as fixed• As opposed to traditional FDI, these types ofinvestments would be resource seeking rather thanmarket seeking
  5. 5. What facts?• Very little actual field research on the topic• Most information is gathered from media reports(Loro Horta)• Difficult to find names of actual companies, andspecific details on the farms and the locations ofthese farms
  6. 6. Questions• To what extent is China really involved in theMozambican agricultural sector?• How pressing are China’s food security matters?• Is vertically integrating food production inMozambique really a viable solution to addressChinas domestic needs?• What is the nature and underlying drivers of Chineseinvolvement in the Mozambican agricultural sector?
  7. 7. Findings of my study• Reports regarding Chinese agricultural investmentsand interests in Mozambique are greatlyexaggerated• Drivers for the Chinese interest that does exist in theMozambican agricultural sector are not due to adirect concern for domestic food security
  8. 8. 1. To what extent isChina involved inMozambique’sagricultural sector?
  9. 9. «Nothing new»• Training and technical expertise through three projects:1. Agricultural Technical Cooperation project1976 -19982. Second Technical Cooperation project for agriculture1983-19853. Third Agricultural Technical Cooperation project1986-1989• None of these historical projects involved leasing land forcommercial or strategic use.
  10. 10. Trade in agricultural products• Agricultural trade between China and Mozambique isvery limited.• China is not a major destination for Mozambicanagricultural exports• Mozambican agricultural production currently does notoverlap to a great extent with Chinese food demand• Mainly wood and only a limited amount of foodproducts.
  11. 11. Three areas China isrumoured to be involved in(1) Land leases and farming investments in theZambezi Valley(2) The construction of the Mpanda Nkuwa Dam(3) The Agricultural Technology Centers
  12. 12. 1. Land leases in Zambezi• Large land leases (driver: food security)• Thousands of Chinese settlers would immigrate toMozambique for farming purposes• MoU signed in 2006/2007, giving China the rights tolease land in the Zambezi valley• $800 million to be invested in large scale farms• No evidence supporting these claims. The MozambicanNational Directorate for Land has not heard of any suchland leases or requests by China or Chinese companies
  13. 13. China in the Zambezi valley• 2007 Monetary AssistanceGPZ (Gabinete do Promocão do Zambezi Vale)• $50million-19 million to purchase agricultural machinery-31 million to set up three processing factories:1. Rice processing factory in Gogodane, Zambeziprovince: capacity 150 tonnes /day2. Maize processing factory in Ulongue, Tete province:capacity of 25 000 tonnes of cereals per year3. Cotton processing factory in Guru, Manica province
  14. 14. Where did these rumours come from?Possible Sources• 1997-1998: request for some Chinese farmers tomigrate to Mozambique to work with local farmers→ technological spill overs.• Declined due to nationalistic sentiments in theMozambican government.• Discussions on this deal are long dead (at the verybest dormant).
  15. 15. 2. The Mphanda Nkuwa Dam• $2.3 billion loan to construct the controversial MphandaNkuwa dam on the Zambezi river.• In exchange for access to land lease rights in the region(Horta)• Mphanda Nkuwa Hydroelectric Company (HMNK)awarded the concessional contract to build andoperate the dam• China has withdrawn their offer to finance the dam as aresult (the Exim bank is an export credit agency,financing tied to the use of Chinese goods and services)
  16. 16. 3. Agricultural Technology Center• 2006 FOCAC summit: 10 agricultural centers acrossAfrica• “promote technology transfers and scientific researchin order to raise agricultural productivity on thecontinent”• Umbeluzi, Boane District -covering 55 ha-55 million RMB• Lianfeng Farm from Hubei province & MozambicanMinistry of Science and Technology
  17. 17. Jan 2010Officially opened in July 2011
  18. 18. • Optimistic estimates: five-fold increase inrice productivity• “Mozambique’s increased rice production isclearly destined for export to the Chinesemarket, since rice accounts for just a tinyfraction of the Mozambican diet…”
  19. 19. Clearly?• The centers are established on the basis of Africancountries demand rather than Chinese desires• Mozambique has a supply-demand deficit in rice• In 2008 rice imports were 380 000 tonnes(China: 330 000 tonnes)• Mozambique turned to China first to cover its riceshortages during the 2008 food crisis (Alveranga)
  20. 20. Zamcorp• Established in 2006• To promote the Zambezi valley by identifyopportunities for investment, agriculture being oneof the top priority areas• will use Macau as a platform for reaching ChineseinvestorsZamcorpMozcapitalPrivate,MozambicanSogirPublic,MozambicanGeocapital(35 %)Private, Macau
  21. 21. Wait, who are these guys?
  22. 22. Wanbao Farm in Xai Xai• Hubei Friendship Farm (Wanbao):experimenting with Chinese hybrid rice• First planting 2007• 300 ha with provision to extend to 10 000 ha• Cooperation with Wanbao group: marketorientated operations (Mozambique)• $1.2 million (Gates Foundation through CAAS)
  23. 23. Wanbao farm output 2007-2010Year Area undercultivationTonnes / ha Production2007-2008 20 9 1802008-2009 30 9 2702009-2010 40 9.5 380Directorate of Agriculture in Gaza, 2010
  24. 24. Getting facts and figures right• Technology Center vs. Agricultural TechnologyCenter -impression that China is investing hundredsof millions in farming activity• Double counting due to time lags• Mixing up the currencies• Investments vs. Aid; opaque and intertwined• Google translate pitfalls!
  25. 25. 2. China’s food securitysituation
  26. 26. China’s food security situation• Estimates for 2020: 700 million tonnes of unmilledgrain (World Bank)• 2020 target: 540 milion tonnes produced domestically• 2010 target: 500 million tonnes→2008: 512 million tonnes→2010: 546 million tonnes (NBS)• Growth in global cereal production -1.6% exludingChina, India and Brazil. Including the three countriesthe fall in cereal production is reduced to 0.9%
  27. 27. • At the forefront of agricultural technology, eg.hybrid rice• 12th five-year plan: Bio-technology and stimulatingforeign investment in agriculture• Although it is clear that imports will have to increasein the coming years, China is doing relatively well infeeding herself.• The picture is not as grimm as painted by themedia.
  28. 28. China’s official stance• National Food Security and Long-term PlanningFramework (2008-2020): China will maintain a self-sufficiency rate of 95%• NDRC: China will not seek food security by leasingland overseas. Not a reliable policy for food security• “will work extensively to improve internationalcooperation in order to establish a reliable andstable system of procurement”
  29. 29. 3. Is vertically integrating foodsupply a viable strategy forfood security?
  30. 30. Is V.I. food supply viable?• Vertically integrating food supply does not isolate acountry from dependence on other countries→increased dependency on host country• Riots in Maputo 2008 and 2010 over fuel and foodprices.• Example of Madagascar• Investment law unclear
  31. 31. 4. What are the driversbehind China’s interest inMozambican agriculture?
  32. 32. Possible drivers• Imports will have to increase→Global stability of food supply in China’s interest• China possesses expertise, in particular with regardsto hybrid rice technology• Policy for ODI into agriculture fall under the general“Go Global” strategy (not some national foodsecurity plan)• Agricultural ODI only 0.9% of total (2006) and 3-4% inlater years.
  33. 33. Conclusion• Despite the fact that China operates under suchgrave land constraints China is still able to provide95% of all its domestic food demands, and this is aremarkable achievement• We ought to view China’s outward agriculturalexpansion as a result of her agricultural success,rather than driven by the looming limitations,whereby Chinese companies (both public andprivate) see an opportunity and niche in arelatively unexploited market for both aid andprofit
  34. 34. Thank you

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