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

China: land scarce

20% of the worlds population, but only 7 % of the worlds 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

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

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

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

Questions

To what extent is China really involved in the Mozambican agricultural sector?

How pressing are Chinas 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?

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

1. To what extent is China involved in

Mozambiques agricultural sector?

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.

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.

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

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

China in the Zambezi valley 2007 Monetary Assistance

GPZ (Gabinete do Promoco 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

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).

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)

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

Jan 2010

Officially opened in July 2011

Optimistic estimates: five-fold increase in rice productivity

Mozambiques increased rice production is clearly destined for export to the Chinese

market, since rice accounts for just a tiny

fraction of the Mozambican diet

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)

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

Wait, who are these guys?

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)

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

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!

2. Chinas food security situation

Chinas 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%

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.

Chinas 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

3. Is vertically integrating food

supply a viable strategy for

food security?

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

4. What are the drivers

behind Chinas interest in

Mozambican agriculture?

Possible drivers

Imports will have to increase

Global stability of food supply in Chinas 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.

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 Chinas 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

Thank you