09/24/2013, 00.00
CHINA - UKRAINE

Beijing to buy grain from the Ukraine

Under a 50-year plan, Ukraine will eventually provide China with 3 million hectares, starting with 100,000. Although exact figures are unavailable, Ukrainian sources say that the price tag is at least US$ 2.6 billion. After acquiring land in Argentina and Brazil, Beijing is now looking to the fields of the former Soviet Union to meet its domestic demand.

Kiev (AsiaNews/Agencies) - With a massive investment of over US$ 2.6 billion, the Chinese government will plough up to three million hectares in Ukraine over the next 50 years.

The initiative, which is part of the China 's food security program , is to encourage more Chinese companies to farm abroad to create jobs and meet a growing demand for corn at home.

Ding Li, a senior researcher in agriculture at Anbound Consulting in Beijing, said that the process of urbanisation has increased demand. China had slightly over two million hectares of farmland abroad, he said. "So three million hectares would mean a very big project."

If the agreement signed in June between the Xinjiang Production and Construction Corps and KSG Agro, Ukraine's leading agricultural company, goes ahead, Ukraine should initially provide China with at least 100,000 hectares in farmland in the eastern Dnipropetrovs'k region.

XPCC, also known as Bingtuan, is a quasi-military organisation established in Xinjiang in the 1950s to reclaim farmland and consolidate defences against the Soviet Union, whose "granary" at that time was, ironically, the Ukraine, now among the top ten farm producing nations in the world.

Although China's domestic grain output had grown for 10 straight years, demand for imported grain has also grown. Last year, it imported nearly 14 million tonnes of cereal and cereal flours, an increase of more than 150 per cent from 2011.

The trend goes against Beijing's ambition for the country to remain 90 per cent self-sufficient in food production. Hence, the Chinese government in recent years has tried to encourage Chinese companies to invest in foreign agriculture.

The Beidahuang Group, China's largest agribusiness, has already purchased 234,000 hectares to grow soya bean and corn in Argentina, whilst Chongqing Grain paid US$ 375 million for soya bean plantations in Brazil and US$ 1.2 billion for land in Argentina to grow soya beans, corn and cotton.

Last month, the Ukrainian daily Kyiv Post described the deal with China as an "unprecedented foreign investment" in Ukraine's agriculture sector by the People's Republic, made possible thanks to a loan from US$ 3 billion provided by the Export-Import Bank of China.

 

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