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.

2. ”Land grabbing”
• Spike in food prices (2008,and again in late 2010)
caused world wide social unrest
• Vast amounts of media reports on the ”land
grabbing” phenomena; China in Mozambique
• China highly criticised

3. China: land scarce
• 20% of the world’s population, but only 7 % of the
world’s arable land
• Less than 40% of the world average land per capita
ratio
• Land is converted into industrial and urban usage
as well as deforestation and environmental
degradation taking its toll
• In 2004 China became a net-food importer

4. • Inflation 3-6%
-agflation at over 20 %
Mainly food driven.
• Vulnerable: poor urban workers unable to restort to
subsistance farming
• One of the biggest threats to economic and social
development are the fragilities within the Chinese
agricultural sector and its ability to meet growing
needs

5. Vertically integrating supply
• Circumvent the volatile international market –
substitute for domestic production
• Diminishing returns to scale -adding land, an input
normally regarded as fixed
• As opposed to traditional FDI, these types of
investments would be resource seeking rather than
market seeking

6. 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, and
specific details on the farms and the locations of
these farms

7. Questions
• To what extent is China really involved in the
Mozambican agricultural sector?
• How pressing are China’s food security matters?
• Is vertically integrating food production in
Mozambique really a viable solution to address
Chinas domestic needs?
• What is the nature and underlying drivers of Chinese
involvement in the Mozambican agricultural sector?

8. Findings of my study
• Reports regarding Chinese agricultural investments
and interests in Mozambique are greatly
exaggerated
• Drivers for the Chinese interest that does exist in the
Mozambican agricultural sector are not due to a
direct concern for domestic food security

9. 1. To what extent is
China involved in
Mozambique’s
agricultural sector?

10. «Nothing new»
• Training and technical expertise through three projects:
1. Agricultural Technical Cooperation project
1976 -1998
2. Second Technical Cooperation project for agriculture
1983-1985
3. Third Agricultural Technical Cooperation project
1986-1989
• None of these historical projects involved leasing land for
commercial or strategic use.

11. Trade in agricultural products
• Agricultural trade between China and Mozambique is
very limited.
• China is not a major destination for Mozambican
agricultural exports
• Mozambican agricultural production currently does not
overlap to a great extent with Chinese food demand
• Mainly wood and only a limited amount of food
products.

12. Three areas China is
rumoured to be involved in
(1) Land leases and farming investments in the
Zambezi Valley
(2) The construction of the Mpanda Nkuwa Dam
(3) The Agricultural Technology Centers

13. 1. Land leases in Zambezi
• Large land leases (driver: food security)
• Thousands of Chinese settlers would immigrate to
Mozambique for farming purposes
• MoU signed in 2006/2007, giving China the rights to
lease land in the Zambezi valley
• $800 million to be invested in large scale farms
• No evidence supporting these claims. The Mozambican
National Directorate for Land has not heard of any such
land leases or requests by China or Chinese companies

14. China in the Zambezi valley
• 2007 Monetary Assistance
GPZ (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, Zambezi
province: capacity 150 tonnes /day
2. Maize processing factory in Ulongue, Tete province:
capacity of 25 000 tonnes of cereals per year
3. Cotton processing factory in Guru, Manica province

15. Where did these rumours come from?
Possible Sources
• 1997-1998: request for some Chinese farmers to
migrate to Mozambique to work with local farmers
→ technological spill overs.
• Declined due to nationalistic sentiments in the
Mozambican government.
• Discussions on this deal are long dead (at the very
best dormant).

16. 2. The Mphanda Nkuwa Dam
• $2.3 billion loan to construct the controversial Mphanda
Nkuwa 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 and
operate the dam
• China has withdrawn their offer to finance the dam as a
result (the Exim bank is an export credit agency,
financing tied to the use of Chinese goods and services)

17. 3. Agricultural Technology Center
• 2006 FOCAC summit: 10 agricultural centers across
Africa
• “promote technology transfers and scientific research
in order to raise agricultural productivity on the
continent”
• Umbeluzi, Boane District -covering 55 ha
-55 million RMB
• Lianfeng Farm from Hubei province & Mozambican
Ministry of Science and Technology

18. Jan 2010
Officially opened in July 2011

19. • Optimistic estimates: five-fold increase in
rice productivity
• “Mozambique’s increased rice production is
clearly destined for export to the Chinese
market, since rice accounts for just a tiny
fraction of the Mozambican diet…”

20. Clearly?
• The centers are established on the basis of African
countries 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 rice
shortages during the 2008 food crisis (Alveranga)

21. Zamcorp
• Established in 2006
• To promote the Zambezi valley by identify
opportunities for investment, agriculture being one
of the top priority areas
• will use Macau as a platform for reaching Chinese
investors
Zamcorp
Mozcapital
Private,
Mozambican
Sogir
Public,
Mozambican
Geocapital
(35 %)
Private, Macau

22. Wait, who are these guys?

23. 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: market
orientated operations (Mozambique)
• $1.2 million (Gates Foundation through CAAS)

24. Wanbao farm output 2007-2010
Year Area under
cultivation
Tonnes / ha Production
2007-2008 20 9 180
2008-2009 30 9 270
2009-2010 40 9.5 380
Directorate of Agriculture in Gaza, 2010

25. Getting facts and figures right
• Technology Center vs. Agricultural Technology
Center -impression that China is investing hundreds
of millions in farming activity
• Double counting due to time lags
• Mixing up the currencies
• Investments vs. Aid; opaque and intertwined
• Google translate pitfalls!

26. 2. China’s food security
situation

27. China’s food security situation
• Estimates for 2020: 700 million tonnes of unmilled
grain (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% exluding
China, India and Brazil. Including the three countries
the fall in cereal production is reduced to 0.9%

28. • At the forefront of agricultural technology, eg.
hybrid rice
• 12th five-year plan: Bio-technology and stimulating
foreign investment in agriculture
• Although it is clear that imports will have to increase
in the coming years, China is doing relatively well in
feeding herself.
• The picture is not as grimm as painted by the
media.

29. China’s official stance
• National Food Security and Long-term Planning
Framework (2008-2020): China will maintain a self-
sufficiency rate of 95%
• NDRC: China will not seek food security by leasing
land overseas. Not a reliable policy for food security
• “will work extensively to improve international
cooperation in order to establish a reliable and
stable system of procurement”

30. 3. Is vertically integrating food
supply a viable strategy for
food security?

31. Is V.I. food supply viable?
• Vertically integrating food supply does not isolate a
country from dependence on other countries
→increased dependency on host country
• Riots in Maputo 2008 and 2010 over fuel and food
prices.
• Example of Madagascar
• Investment law unclear

32. 4. What are the drivers
behind China’s interest in
Mozambican agriculture?

33. Possible drivers
• Imports will have to increase
→Global stability of food supply in China’s interest
• China possesses expertise, in particular with regards
to hybrid rice technology
• Policy for ODI into agriculture fall under the general
“Go Global” strategy (not some national food
security plan)
• Agricultural ODI only 0.9% of total (2006) and 3-4% in
later years.

34. Conclusion
• Despite the fact that China operates under such
grave land constraints China is still able to provide
95% of all its domestic food demands, and this is a
remarkable achievement
• We ought to view China’s outward agricultural
expansion as a result of her agricultural success,
rather than driven by the looming limitations,
whereby Chinese companies (both public and
private) see an opportunity and niche in a
relatively unexploited market for both aid and
profit

35. Thank you