South Africa
n Instit
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Inte
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iona
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African perspectives. Globa
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China in Africa Project
O C C A S I O N A L P A P E R N O 1 0 2
Understanding China’s Agricultural Investments in Africa
N o v e m b e r 2 0 1 1
H e l e n L e i S u n
A b o u t S A I I A
The South African Institute of International Affairs (SAIIA) has a long and proud record
as South Africa’s premier research institute on international issues. It is an independent,
non-government think-tank whose key strategic objectives are to make effective input into
public policy, and to encourage wider and more informed debate on international affairs
with particular emphasis on African issues and concerns. It is both a centre for research
excellence and a home for stimulating public engagement. SAIIA’s occasional papers
present topical, incisive analyses, offering a variety of perspectives on key policy issues in
Africa and beyond. Core public policy research themes covered by SAIIA include good
governance and democracy; economic policymaking; international security and peace;
and new global challenges such as food security, global governance reform and the
environment. Please consult our website www.saiia.org.za for further information about
SAIIA’s work.
A b o u t t h e C h I N A I N A F R I C A P R o J e C t
SAIIA’s ‘China in Africa’ research project investigates the emerging relationship between
China and Africa; analyses China’s trade and foreign policy towards the continent; and
studies the implications of this strategic co-operation in the political, military, economic and
diplomatic fields.
The project seeks to develop an understanding of the motives, rationale and institutional
structures guiding China’s Africa policy, and to study China’s growing power and influence
so that they will help rather than hinder development in Africa. It further aims to assist African
policymakers to recognise the opportunities presented by the Chinese commitment to the
continent, and presents a platform for broad discussion about how to facilitate closer
co-operation. The key objective is to produce policy-relevant research that will allow Africa
to reap the benefits of interaction with China, so that a collective and integrated African
response to future challenges can be devised that provides for constructive engagement
with Chinese partners.
A ‘China–Africa Toolkit’ has been developed to serve African policymakers as an
information database, a source of capacity building and a guide to policy formulation
SAIIA gratefully acknowledges the generous support of the main funders of the
project: The United Kingdom Department for International Development and the Swedish
International Development Cooperation Agency.
Project leader and series editor: Dr Chris Alden, email: [email protected]
© SAIIA November 2011
All rights are reserved. No part of this publication may be reproduced or utilised in any form by any
means, electronic or mechanical, including photocopying and recording, or by any information or
storage and retrieval system, without permission in writing from the publisher. Opinions expressed are
the responsibility of the individual authors and not of SAIIA.
Please note that all currencies are in US$ unless otherwise indicated.
A b S t R A C t
Since 2000 China has started to strengthen its agricultural co-operation with Africa in
trade and other commercial activities. It has also increased its agricultural investment in
Africa. With China’s rapid economic rise, the global economic downturn and its uncertain
recovery, and the challenge of climate change, China’s agricultural investment in Africa has
developed against a backdrop of closer economic ties with the continent.
Although agricultural growth has increased in Africa in recent years, food security
remains a severe challenge. International organisations and programmes, such as
the UN millennium development goals, have called for greater investment in Africa to
reduce poverty and eradicate hunger. Despite international and local concerns, China’s
investment in Africa in infrastructure and agricultural technology and training could facilitate
agricultural growth in Africa. China itself has demonstrated sustainable growth in agriculture,
improvement in the livelihood of small-scale farmers, and success in reducing rural poverty.
The paper analyses the driving factors behind China’s agricultural investment in Africa,
particularly from the perspectives of economic development and market factors, and
concerns about food security. It considers the implications of China’s experiences in terms
of institutions, productivity and technology. Finally, the paper addresses the issues of the
‘Green Revolution’ and ‘green technology’ in the context of China’s agricultural investment
in Africa, and suggests policy recommendations for further studies.
A b o u t t h e A u t h o R
Helen Lei Sun is a research fellow at the Centre for Futures and Financial Derivatives of
China Agricultural University, and a visiting researcher at the London School of Economics.
She has a PhD in Agricultural Economics from the University of Reading of the UK, and an
MSc in Economic History from the London School of Economics.
The views expressed in this publication are the author’s own and do not necessarily
reflect the views of others. The author thanks Dr Chris Alden (London School of Economics,
author of China in Africa)1 for his modification and generous support, Dr Isabelle Tsakok
(former senior economist, World Bank), and Liz Wilson (deputy head of the Agriculture for
Impact Programme, Imperial College London) for their helpful comments.
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C H I N A I N A F R I C A P R O J E C T
A b b R e v I A t I o N S A N d A C R o N y m S
BIT bilateralinvestmenttreaty
CAD China–AfricaDevelopment(Fund)
CATERAR China–Africa Trade and Economic Relationship Annual Report
CDB ChinaDevelopmentBank
ChinaEximBank Export–ImportBankofChina
CNY Chineseyuan
CSFAC ChinaStateFarmsAgribusinessCorporation
FAPRI FoodandAgriculturePolicyResearchInstitute
FDI foreigndirectinvestment
FOCAC ForumonChina–AfricaCooperation
FX foreignexchange(reserves)
HRS HouseholdResponsibilitySystem
MCC MinistryofCommerceofChina
MDG MillenniumDevelopmentGoal
R&D researchanddevelopment
SOE state-ownedenterprise
UNCTAD UnitedNationsConferenceonTradeandDevelopment
UNDP UnitedNationsDevelopmentProgramme
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I N t R o d u C t I o N
Since2000ChinahasaccelerateditsinvestmentinAfricasignificantly.Accordingtothe2010China–Africa Trade and Economic Relationship Annual Report(CATERAR),itsforeigndirectinvestment(FDI)inAfricaincreasedfrom$220millionin2000to$1.44
billionin2009,2reaching$13.04billionby2010.Forthefirsthalfof2011,China’snon-
financialsectorFDIachieved$820 million.3China’sFDIinAfricahasincreasedrapidly
andhasdiversifieditsapproachtoincludecentralgovernment-led,stated-ownedand
private investments.China–Africa relationsbroadlyaddress issuesofpolitics,4 trade
relations,5andanthropologyandsociology.6Chinaisrapidlybecominganimportant
aiddonorandinvestor inAfrica,7andisusingthecontinentnotonlyasasourceof
rawmaterialsandpotentialnewmarkets,butalsotobolster itsownpositiononthe
internationalstage.8
Forsomeobservers,China’sagriculturalinvestmentinAfricahasbeenasourceof
frictionintherelationship,9withspeculationthatChinamayjointheexport-oriented
‘landgrabs’bybigtransnationalfirmsthathaveoccurredsincethefoodcrisis inthe
developing world began with price spikes in the late 2000s.10 However, China also
hasmuchtoofferAfricaintermsoflessonslearntfromitsownsuccessinagricultural
growth,alleviatingpoverty,11andachievingtheMillenniumDevelopmentGoal(MDG)1
initseradicationofextremepovertyandhunger.Indeed,China’sinvolvementinAfrica’s
agriculturalsectorisalreadyevidentwithFDItotalling$30millionin2009.12China’s
officialdatashowsthatagriculturewasjust2%ofitstotalFDIin2009.However,its
investmentsareexpectedtoincreaseinAfrica’sagro-processing,resource-basedagriculture
andagriculturalcommodities.13ChineseprojectsinAfricainvolveawiderangeofsectors
inagriculture.Theseincludeagribusiness,14investmentsanddevelopmentprojects.15
China’sownexperienceinagricultureisperhapsasimpressiveasitisrelevanttomany
countriesinAfrica.Chineseagriculturehasbeenfundamentallyimportanttoitseconomic
development.Before reformstarted in1979,Chinawasanagricultural society,with
morethan80%ofitspopulationlivinginruralareas.Themajorityofthesepeoplewere
poor,andhungerandpovertywerewidespread.China’seconomicreformstartedinthe
agriculturalsectorandledtorapidagriculturalgrowthandpovertyreduction,itssuccess
gainingworld-widerecognition.Chinaclearlydemonstratesthatpovertyandhunger
canbemitigatedsignificantlybyempoweringagricultureinitseconomicdevelopment.
Indeed,theWorldBankstatesthatChina’sagriculturalgrowthwasthree-and-a-halftimes
moreeffectiveinpovertyalleviationwhencomparedwithgrowthinothersectorsofits
economy.16Chinareducedthenumberofpeoplelivinginpovertyinruralareasfrom85
millionin1990to35.97millionbyendof2009,therebyachievingthetargetofhalving
theproportionofpeoplelivinginpovertyaddressedbytheUnitedNationsDevelopment
Programme(UNDP).Globally,thegreatestreductioninpovertyoccurredinEastAsiaand
thePacific,wherethepovertyratedeclinedfrom78%in1981to17%in2005andthe
numberofpeoplelivingonlessthan$1.25declinedbymorethan750 million.Muchof
thisdeclinewasinChina,wherepovertyfellfrom84%to16%,leaving627millionfewer
peoplelivinginpoverty.17
In contrast, agricultural growth in Africa has been slow. Poverty in Africa is
predominantlyrural.18Inmostoftheregion’scountries,agricultureemploys60–80%of
thelabourforceandishometothevastmajorityofthepoor.19Thelast30yearshave
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seenminimalgains,andinsomecasesmarkeddeclines,inagriculturalproductivityand
foodconsumptionperperson.Africa’ssolutionforeradicatinghungerandreachingthe
MDG1remainsitshighestchallenge.Globally,thenumberofpeoplelivinginabsolute
povertyhasbeenindeclineforaround25years,yetinAfricathiscontinuestoincrease.20
Althoughover70%ofthecontinent’spoorliveinruralareasanddependonagriculture
fortheirfoodandlivelihood,financialdevelopmentassistancefrominternationalaid
programmesandorganisationshasdecreasedoverthepasttwodecades.21In2004Africa’s
agriculturalsectorreceivedjust4%ofOfficialDevelopmentAssistance(ODA),compared
with17%in1977.22Therehasbeenlimitedinvestmentinruralareasduringthisperiod,
includinginruralroads,withmostsmallfarmersreceivingverylittleaid.23
AgriculturalinvestmentisimperativefortargetingtheMDG1,particularlyinAfrica.
TheUNFoodandAgriculturalOrganisation(FAO)estimatesthatanextra$30billionper
yearneedstobeinvestedinagricultureandsafetynetstoensurethattheMDG1target
ofhalvingthenumberofhungryismetby2015.Africancountrieshavethehighestrate
ofmalnourishedandundernourishedpeopleintheworld.China’sinvestmentinAfrican
agricultureisparticularlytimelyinlightoftherecentstrengtheningofChinaandAfrica’s
economicco-operation.However,existingresearchlacksevidenceonthecorrelation
betweenChina’s investment andAfrica’s agricultural growth andpoverty reduction.
Giventhepaucityofdata,itishardtoassesstheimpactofChina’sinvestmentinAfrica,
exceptinananecdotalsense.ItisimportanttounderstandwhyChinahasacceleratedits
agriculturalinvestmentinAfrica,andtheextenttowhichChina’sinvestmenthashadan
impactonAfricanagriculturalgrowth.
A N A ly S I N g C h I N A ’ S A g R I C u l t u R A l I N v e S t m e N t I N A F R I C A
Underits10thFive-YearPlanforNationalEconomicandSocialDevelopment(2001–05),
Chinaadoptedastrategyofinternationalco-operationtostrengthenitsoutwardeconomic
development,referredtoasits‘goingout’(zou chu qu)strategy.Theagriculturalsectoris
animportantcompositionofits‘goingout’strategypolicyanditsgoaltoensuredomestic
foodsecurity.24,25Chinahasprovidedaid toAfrica, including itsagriculturalsector,
since1956.26TheaidprogrammesinAfricanagricultureweresubsumedunderChina’s
diplomacyand,althoughlimited,helpedtopavethewayfortheircurrentagricultural
co-operation.27
China has carried out a series of policies encouraging well-established Chinese
enterprisesandprivatecompaniestoundertakeagriculturalinvestmentanddevelopment
projectsabroad,includinginAfrica.RecentlyChineseoverseasfarminghasenhanced
partnershipprogrammesthroughbilateralinvestmenttreaties(BITs).Bytheendof2005
ChinarankedsecondworldwideintermsofthenumberofBITsconcluded,with117
agreementsintotal, including28withAfricancountries.China’sencouragementand
incentiveshavepromotedFDIoutflows,suchasforeignexchangepolices;specialand
general tax incentives;creditand loans; foreignexchangeallowance;and favourable
import and export policies, such as quotas and tariffs. China’s policy to encourage
outwardinvestmenthasencounteredtwomainbarriers.Theseareapprovalprocedures
forinvestmentprojectsandthetransferabroadofforeignexchangeorotherassetsfor
investmentuse.28For instance,Chinese local enterprisesmayneed toprocess their
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approvalproceduresforFDIprojectsatprovinciallevelinordertoinvestorconduct
businessesoverseas.However,somebanks,fundmanagementandinsurancecompanies
areallowedtouserespectivechannelstogatherfundsandpurchaseforeigncurrenciesto
engageinoutwardFDI.Deregulationofsupervisionandpermissionalsoincludesforeign
currentaccounts.ChineseindividualsareallowedtouseChineseyuan(CNY)toexchange
foreigncurrencyatacertainlevelfrombanks.
SincethethirdMinisterialConferenceoftheForumonChina–AfricaCooperation
(FOCAC), held in Beijing in November 2006, China has accelerated agricultural
investmentinAfrica,usingoldtiestobuildnewpartnershipsofco-operation.Atthe
High-levelSymposiumonChina–AfricaCooperativeandInvestment,29heldinBeijingon
September2011,theministeroftheMinistryofCommerceofChina(MCC)ChenDeming
stated that therewereseveral important issues thatneeded tobeaddressed toassist
Africandevelopment.HenotedthatdespiteAfrica’srichresourcesinland,hungerissues
hadyettoberesolved.TheministerstatedthatChinahadadjusteditsaidpolicyinAfrica
inrecentyears,changingitsprioritiesfromareassuchasconstructiontoagricultural
development,healthandeducation–withagricultureandfoodissuesasthetoppriority.30
At present, the key actors and stakeholders of China’s investment in Africa’s
agriculturalsectorincludepolicymakers,academics,state-ownedcompanies,specialised
banksandprivateenterprises.ThestructureofChina’sgovernmentincludesnational-level
andprovincial-leveldepartments,municipalities,aswellasautonomousregions.
Box 1: Key actors and stakeholders of China’s investment in Africa
China’s government (policymakers) in charge of agriculture and commerce, such as China’s
Ministry of Agriculture and Ministry of Commerce.
Provincial municipalities and autonomous regions.
Academics in universities or research institutes, and agro-industries at national or regional
level; relevant co-operative platforms such as China–Africa co-operative forums and
China–Africa development funds.
State-owned agricultural corporations and enterprises, such as the China National
Agricultural development Group Corporation, China State Farms Agribusiness Corporation,
China Oils and Foodstuffs Corporation, and private entrepreneurs.
State-owned banks, such as the Export–Import Bank of China (China Exim Bank) and
China development Bank (CdB).
Source:Author’sown
China’s overseas farming investments comprise two key categories of enterprise
management:privateenterprisesandstate-ownedenterprises(SOEs).OriginallyChinese
SOEs mainly conducted their agricultural business in Africa. Since the mid-1990s
thesehavebeenjoinedbymanyprivateagriculturalenterprises,mostofwhichhave
beensmall-scaleenterprises.Since2005anewfamilyofsmall-scaleprivateenterprises
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haveestablishedthemselvesinAfrica.Theseenterprisesarehighlyflexibleandadapt
quicklytolocalconditions.However,theyarelesscompetitivethantheSOEswiththe
latter’sgreaterfinancialandhumancapitalresourceswhichresultsintrackrecordof
winningstate-fundedaidprojectsinAfricancountries.Forinstance,ChinaStateFarms
AgribusinessCorporation(CSFAC)beganitsinvestmentinAfricaaslongagoas1990,
conductingmainlyaidprojects.InrecentyearstheCSFAChasalsoadopteddifferent
channelsofinvestment,includingFDIinAfrica.Itcontinuestoinvestinaidprogrammes,
whichenablesthecorporationtoobtainloansfromChina’sgovernmentsupportfundsfor
financialaidprogrammeswithrelativeease.TheCSFAChasdemonstratedtheimportance
ofcapitalsupportforsuccessfulagriculturalinvestmentprojects,suchasitsinvestment
intheChina–ZambiaFriendshipFarm.
InrecentyearsChina’sbankshavealsoengagedinAfricanagriculture.ChinaExim
Bank,theCDB,IndustrialandCommercialBankofChinaandotherfinancialinstitutions
haveextendedsubstantialcommercialloanstoAfricancountries.31Supportedbythe
CDB,ZimbabweandChinasignedanagreementworth$585 millionaimedatrevivingthe
southernAfricancountry’sagriculture,healthandminingsectors.32Chineseacademics
havealsobeeninvolvedinresearchrelatedtoAfricanagriculture.Theseincludethe
AfricanStudiesoftheChineseAcademyofSocialSciences,theChina–AfricaResearch
CentreofZhejiangNormal(ShiFan)University,andotherinstitutesatbothnationaland
provinciallevels.
Accelerating China’s outward investment
FormorethantwodecadesnowChina’seconomyhasbenefitedfromitsmarket-oriented
reform in linewith itsopening-uppolicies.Sustainedgrowthhas led toadvantages
in economic scale andcapital resources,whichhaveenabledChina tobuild sound
foundationsonwhichtolaunchits‘goingglobal’strategy.China’sadvancesinagricultural
technology,suchashybridricebreeding,havealsohelpedtoaccelerate itsoutward
investment,togetherwithitsaccumulatingcapitalresourcesandoutwardinvestment
policy.33
Since the 1990s China has carried out its policy of an export-led economic
development strategywhichhas resulted in rapidgrowth inFDI inflows.By2010,
China’saccumulatedFDIinflowsreached$105.7billion,accordingtotheMCC.Thishas
contributedtoitscurrentpositionastheworld’sleaderinforeignexchange(FX)reserves
withreservesof$3197.5billioninJune2011.However,incomparisonwithChina’sFDI
inflows,itsoutflowsremainsmall.TheratioofChina’sinflowstooutflowsis1:0.09.This
isnotonlymuchlowerthanaveragelevelofdevelopedcountries’ratioof1:1.14butis
alsobelowtheworldaverageof1:1.11.34ThusChina’sFDIinflowsandoutflowsshowa
seriousimbalancethatisnotevidentevenindevelopingcountries.
Chinahasaccelerated itsoutwardFDIacross theworldsince2004.China’sFDI
outflowshaveincreasedby123%from2004to2005.TheannualFDIoutflowsincrease
averaged46%between2001and2010.FDIoutflows reached$68.8billion in2010
accordingtotheMCC,andaccountedfor5.2%oftheworldtotalin2010.35In2009
China’sFDIaccounted for5.1%of theworld’s total, ranking itnumberoneamong
developingcountriesandfifth intheworld,accordingtothe2010World Investment
Report.36
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ChinahasalsoincreaseditsFDIinAfricasubstantiallysincethethirdMinisterial
ConferenceofFOCACin2006.
Figure 1: China’s FDI outflows ($100 million), 1990–2008
Source:MCC,2009 Statistical Bulletin of China’s Outward Foreign Direct Investment.MCC,National
BureauofStatisticsofChina&StateAdministrationofForeignExchangeofChina,Beijing,2010
Figure 2: China’s outward FDI stocks in Africa ($10,000), 2003–09
Note:MCCofficialstatisticsfornon-financialsectorsareonlyavailablefor2003and2009.
Source:MCC,2009Statistical Bulletin of China’s Outward Foreign Direct Investment.MCC,National
BureauofStatisticsofChina&StateAdministrationofForeignExchangeofChina,Beijing,2010
AsreflectedinFigure3onpage10,China’soutwardFDIcumulativestocksinagriculture
areonly3.1%.ThisissmallcomparedwithothersectorsinAfricabutisexpectedto
increase,withagriculturalco-operationbecomingapriorityforpolicy-makersinChina
andsomeAfricancountries.China’sinvestmentinAfrica’sagriculturewasmorethan$134
millionin2009,anditestablished50agriculturalenterprisesandover100farms.37China’s
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investmentapproacheshavealsodiversified,forinstancethroughdevelopmentfunds
andfinancialassistance.TheChina–AfricaDevelopment(CAD)Fundwasestablished
on14March2007andisfundedfullybythestate-ownedCDB,whichhasbeenakey
institutioninsupportingChina’sinfrastructuraldevelopmentandthepromotionofbasic
andstrategicindustries.TheCDBhasplayedapivotalroleinfundingnewdevelopment
projectsandadvancingeconomicdevelopmentinareassuchasagricultureandpublic
infrastructure.38
Figure 3: China’s outward cumulative FDI stocks in Africa by industry (%), 2009
Source:China,InformationOfficeoftheStateCouncil,WhitePaperforChina–AfricaEconomicand
TradeCooperation.Beijing:PeoplePublishing(Renmin),2010
3.1% 3.2%3.4%
4.0%
5.4%
13.9%
15.8%22.0%
29.2%
Agriculture
Scientific research and technological services
others
Wholesale and retail
business services
Finance
Construction
manufacturing
mining, quarrying and petroleum
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Box 2: China’s financial investment in Africa
Chinese companies and the CAd Fund launched a project worth over $20 million for cotton
cultivation and processing in Malawi. In 2009, through its ‘company plus farmers’ approach,
this project involved over 50 000 farming households to grow cotton. They processed
17 000 tonnes of seed cotton and produced 6 800 tonnes of lint.
Source:China,MCC,CATERAR (China–Africa Trade and Economic Relationship Annual Report).
ChineseAcademyofInternationalTradeandEconomicCooperation,Beijing,2010
ChinaisenteringitsnewdevelopmenteraforagriculturalinvestmentinAfricaunder
globaleconomicuncertainty.ThispertainsparticularlytothefinancialcrisisintheUS,
asChina’sFXreservesarecomposedmainlyofUSdollarsintheformofUStreasury
bonds.39TheChinesegovernmenthasbeenunderpressurefromWashingtonandother
tradingpartnerstoeasecurrencypoliciesandothermeasures,whichtheyclaimkeep
theCNYundervaluedandswellChina’stradesurplus.40Moreover,Chinahasrecorded
highlevelsofinflation,whichwas6.2%inAugust2011andfarhigherthantheUSrate
of3.8%atthesametime.41ThepresidentoftheWorldBank,RobertZoellick,42cited
inflationasChina’smostimportantissue.HesuggestedthatCNYappreciationwouldhelp
toeaseinflation,because‘anappreciatedcurrencylowerspricesathomeoftheforeign
goods.’ChiefeconomistattheBankofCommunications,LianPing,43saidthattheCNY
appreciationshouldnotbetheonlywaytocurbinflation.Thesefactorsmightalsobe
consideredasoneofthedriversacceleratingChina’soutwardFDIinAfricanagriculture.
Market-driven factors
Chinahasbecometheworld’slargestimporterofseveralagriculturalcommoditiesto
feeditsravenouseconomy.It istheworld’s largest importerofoilseeds,andissetto
increasetheseimports,aswellasthoseofvegetableoil,palmoil,soybeanandrapeseed.
TheFoodandAgriculturePolicyResearchInstitute(FAPRI)hasforecastedthatChina’s
soybeanimportswillincreasefrom33.7million tonnesin2007/08to52million tonnes
by2017/18.FollowingthisperiodChinawillaccountfor78%oftheworld’sgrowthin
soybeanimports,withworldsoybeantradeprojectedtoincreasesignificantlybymore
than27 million tonnes.44China’spalmoil importsarepredictedtoincreasefrom5.5
million tonnesin2007/08to10.8 million tonnesin2017/18.Overall,China’simport
demandforagriculturalproductsisexpectedtogrowatdouble-digitratesoverthenext
25years.45
China’shighdemandforagricultural-processingandlivestock-feedindustriescould
placepressureondomesticsuppliesofcorn(maize).TheChinesegovernmentdoesnot
encourageproductionofbiofuelthroughcorn.Inthelongrun,Chinamaybecomea
netcornimporter,46andshiftfrombeinganetwheatexporterof2.3milliontonnesin
2007/08toimporting1.4milliontonnesin2017/18.Itisalsoexpectedtoincreaseits
cottonimportsfrom3 million tonnesto6.1 million tonnesduringthesameperiod.47
ChinaisalsoincreasingitsinvestmentinAfrica’sbiofuelagriculturalproducts.Itis
makingeffortstodiversifyitsstructureofenergyresourcesintransferringfromfossil
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fuel tobiofuelproduction, tomitigate the impactofclimatechangeand to improve
environmentalconditions.China’sgovernmenthasstatedthatthecountrywilluseminor
crops,suchascassava,palmoilandsugarcane,ratherthanstaplefoodcropstoproduce
biofuel.TheChinesegovernmentstillemphasisessafeguardingfoodsecurityasitstop
priority.Domestically,Chinaisfacingseriouschallengesofmeetingitsfoodconsumption
and biofuel production requirements with the current scarcity of land resources.
Accordingly,China’sgovernmenthasaccelerateditsimportsofagriculture-relatedraw
materialsforbiofuelproductionfromAfrica.
Box 3: China’s investment in biofuel products from Cameroon
In 2006 the state farm of China’s Shanxi Province announced its establishment of a
5 000-hectare rice and cassava plantation in Cameroon. The project will be financed by
FOCAC funds through China Exim Bank at a cost of $62 million.
Source:JanssonJ,Patternsof Chinese Investment, Aid and Trade in Central Africa (Cameroon, the DRC
and Gabon),BriefingPaper.Stellenbosch:CentreforChineseStudies,2009
Chinaistheworld’slargestcassavaimporterandNigeriaistheworld’slargestcassava
exporter.Nigeriaproduces120 000 tonnesofcassavaannually,ofwhich5 000tonnes
areexported toChina.Thecountryhopes toreceive5 billionNigeriannaira(about
$38 million)fromcassavaexportseveryyear.48InadditiontoChina,BrazilandIndiaare
alsointerestedininvestinginAfrica’sbiofuelproduction.Forinstance,Indiahasrecently
pledged$250milliontoaWestAfricanBiofuelsFund.49
Box 4: China’s biofuel investment in Mali
In 2009 Chinese companies invested in a 60-hectare experimental plot to cultivate crops
including wheat, corn and sorghum. Chinese firms have also signed contracts with the
Malian government to establish a joint venture in sugar production. They plan to process
6 000 tonnes of sugar cane daily, and to produce 100 000 tonnes of white sugar and 9.6
million litres of alcohol yearly.
Source:China,MCC,CATERAR,op. cit.
BiofuelproductionhaschangedChina’sagriculturalstructureandhascontributedto
China’sinvestmentinAfricanagriculture.Therapidgrowthofthebiofuelsindustryhas
contributedtomajorstructuralchangesinglobalagriculturalproduction.50Inparticular,
theprofitabilityofgrowingcropsforbiofuelfeedstockisanimportantincentiveforprivate
investmentinthisactivity.51
GiventhesheersizeofChina’smarket,evenarelativelysmallchangeinChina’sfood
consumptionpatternmayhaveamajorinfluenceontheglobalagriculturalcommodities
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market.52ChinaissettoincreaseitsagriculturalinvestmentinAfrica,withtheChinese
governmentencouragingcompaniestoinvest.53
Challenges of global food security
Foodsecurityisbecomingaglobalconcernwiththeincreasingsqueezeonwater,landand
energyresources,aswellasvolatilityinworldfoodpricesandconcernabouttheimpact
ofclimatechangeonagriculture.Growingcompetitionfortheseresources,inadditionto
theoverexploitationoffisheries,isaffectingtheabilitytoproducefoodandexacerbating
theimpactoffoodproductionontheenvironment.54During2006–08foodshortages
becameaglobalreality,withtheescalatingpricesofcommoditiesbeyondthereachofvast
numbersofpeople.Internationalagencieswereunpreparedfortheseshortages,andthe
WorldFoodProgrammewarnedthatrapidlydiminishingfoodstocksmightnotbeableto
addressthecrisis.55By2020itisestimatedthattherewillbeanextra1.5billionmouths
tofeed.56
In2008theworldemergedfromthefoodcrisis.57Thecrisishasforcedtheinternational
communitytoreassesswhether,andhow,thecurrentglobalfoodproductionsystemwill
beabletomeetvariouschallenges,includingreachingtheMDG1targetonhungerand
poverty.ArecentWorldBankstudyshowsthatafurther44millionpeoplehavebeen
pushedintopovertyduetothepriceincreaseofmanyagriculturalcommoditiesbymore
than25%fromJune2010toDecember2010.58
ChinaandAfricawillfacemoreseriouschallengesoffoodsecuritythanotherparts
oftheworld.Chinaistheworld’slargestdevelopingcountry,andAfricaishometothe
largestnumberofdevelopingcountries.ThecombinedpopulationofChinaandAfrica
accountsforoverone-thirdoftheworld’stotal.Thesuccessofglobalagriculturehasnot
beensharedequally.InAfrica,perpersonfoodproductionhasnotbeenabletokeepup
withpopulationgrowth.Poorpeoplearemorevulnerabletomeetthechallengesofrising
foodpricesandshortagesinfoodsupply.Sincemostfoodproductsaretradeableonthe
worldmarket,foodsecuritydependsonthepurchasingpowerofthepoor,ratherthan
onthemanagementofdomesticsupply.59Thefoodandhungerproblemismostseverein
Africa,andfoodinsecurityisworsening.Forinstance,inWestAfricatheGambiaimports
morethan80%ofitsricerequirement.60
Self-sufficiencyinfoodisbelow50%foranumberofcountriesinAfrica.OfAfrica’s
53countries,21arefood-aidrecipients.In2009,265millionpeoplesufferedfromhunger
andmalnutrition,resultinginthedeathof5 millionpeoplefromstarvationanddisease.61
Accordingtothe2009UNMDGreport,in1990,thebaselineyearfortheMDGs,57%of
Africa’spopulationwerelivinginextremepoverty,earninglessthan$1.25aday.62Africa’s
progressineradicatinghungerhasbeenslow,withaslightdecreaseintheproportionof
undernourishedfrom32%ofitspopulationin1990–92to29%in2008.63
Globalpovertymeasuredatthe$1.25-a-daylinehasbeendecreasingsincethe1980s.
Thenumberofpeoplelivinginextremepovertyfellfrom1.9billionin1981to1.8billion
in1990,andtoabout1.4 billionin2005.64AlthoughAfricahasmadeprogress,thishas
beeninsufficienttoputAfricaontargettoachievetheMDG1by2015.
China’sfoodsecurityhasalwaysbeenitsmainconcern,giventhatithastheworld’s
largestpopulationanditslimitedcultivatedlandperperson.Chinahasinsistedonaself-
sufficientfoodpolicyasafundamentalnationalpolicytoaddressitsfoodsecurityissues.
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Althoughthispolicyhasworkedtodate,thecountrywillfaceseriouschallengesinthe
future.Chinaisalsofacingotherchallengesinresponsetoclimatechange,including
environmentalcontamination,aswellasvolatileworld foodprices in thecontextof
globalisation.
CurrentlyChinasuccessfullyfeeds20%oftheworld’spopulationbyusingjustover
9%oftheworld’stotalcultivatedlandand6%oftheworld’sfreshwater.Overthelasttwo
decadestheaccelerationofurbanisationandindustrialisationhasresultedinadecreaseof
agriculturalland.From1996to2006China’sarablelandareasdecreasedby8.71 million
hectares.TheChinesegovernmenthasannouncedthatitwillretainaminimumof121
millionhectaresofarablelandtoguaranteeitsnationalfoodsecurity.65Between1997and
2005therapidprogressofurbanisationandindustrialisationledto9.63 millionfarmers
migratingtotownsandcities.Urbanisationandindustrialisationhavealsoresultedinthe
confiscationofcollectivelandareasinruralChina.Asmanyas40–50millionfarmers
havelosttheircultivatedland.Thiscontinuestoincreaseby3millionfarmerseveryyear,
andby2030thetotalnumberisexpectedtoreach110million.66
China’simprovinglivingstandardsandrisingmiddleclasseshaveresultedinagreat
demandforprocessedconsumablesofmeat,dairyandfish.Withoutanincreaseinfood
supply,thereareseriouschallengesoffeedinganincreasinglywealthypopulation.In
addition,Chinaisdevelopinganagingsociety,especially inruralareaswhereyoung
labourershavemigratedtotownsorcitiesinsearchofwork.Thishascontributedto
adecreaseinagriculturalproductivity.Chinastillhasaround200millionpeopleliving
belowthegovernment’sofficialpovertyline.CurrentlytheChinesegovernmentclaims
thatthecountryhas95%offoodself-sufficiency,apercentagethatsomeexpertssuggest
willbeverydifficulttomaintaininthenexteightto10years.
C h I N A ’ S A g R I C u l t u R A l I N v e S t m e N t S I N A F R I C A
Agriculturalinvestmentiscentraltotheprovisionoffoodandtheeradicationofpoverty
andhunger.Growthintheagriculturalsectorisakeymeansofreducingpoverty,67and
agriculturalgrowthandruraldevelopmentareoffundamentalimportancetoachievingthe
MDG1.Accordingly,China’sgovernmenthasstronglyencouragedagriculturalinvestment
inAfricainanefforttomeetandmaintaintheseobjectives.
Investmentisessentialtoagriculturalgrowth.ChinaitselfhasreceivedsignificantFDI
inflowsinagriculture,from$600milliontoover$1.2billionyearlybetween1998and
2008.68However,therecentdeclineinagriculturalinvestmentindevelopingcountries
hassignificantlyhinderedcountriesandtheglobalcommunity inmeeting theMDG
1 targets.69AUNnewscentre70highlighted the importanceofgreater investment in
agriculturetogenerateincomeandsupportrurallivelihoods.Ofthedevelopingworld’s
1.4billionextremelypoorpeople,70%liveinruralareas–particularlyinAfrica.Thus
ruraldevelopment is themostrapidandmosteffectivewayofreducingpovertyand
malnutrition.71
ChinahasdiversifieditsagriculturalinvestmentinAfricathroughdifferentapproaches.
Theseincludeaidprojects;andinvestmentsbyboththeChinesegovernmentandChinese
companiesininfrastructure,technologydemonstrationandtrainingprogrammes.The
bulkofChina’sfutureeffortsininvestmentdevelopmentwillfocusontheruralsector,
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andlargeinvestmentswillbeneededtoincreaseagriculturalproductionandbuildrural
roads.China’sagriculturalstrategyinAfricahasindeedbroughtanewgrandinvestment
totheagriculturalsectorsofmanynations,andhasthepotentialtochangeagriculture
significantlyonthecontinent.72
Table 1: China’s agricultural investment in Africa
Country Year Farm or investors Dimension (ha)
Type of land use Market
Cameroon 2006 Sino Cam Iko Company
10 000 Rice, vegetables, manioc
Local
Cameroon 2007 Shanxi Province Agribusiness Group
5 000 Rice, manioc, ostriches
Local
dRC 2009 ZTE 100 000 Oil palm World
Guinea 1997 Koba Farm 1 800 Hybrid rice Local
Mali 1961 Farako 400 Tea Local
Mali 1996 Sukala Refinery 6 000 Sugar Local
Mali 2008 Sukala Refinery 10 000 Sugar Local
Mauritania 1967 M’pourie 1 400 Rice Local
Mozambique 2005 Hubei Agribusiness Group
1 000 Rice, cotton, soybean, vegetables
Local
Senegal 2008 35 000 Sesame China
Sierra Leone 1977 Magbass Sugar 1 280 Sugar Local
Sudan 2010 ZTE 10 000 Wheat and corn Local
Tanzania 1969 Mubarali Rice Farm 6 000 Rice, pigs, cows, poultry
Local
Tanzania 1970 Ruvu Rice Farm 800 Rice Local
Tanzania 1970 Morogoro 6 900 Sisal World
Tanzania 2009 Chongqing Seed 300 Rice Local
Togo 2009 Complex Sucier d’Anie
1 200 Sugar cane Local
Uganda 1973 Tilda (original kibimba)
700 Rice Local
Uganda 1987 doha Rice 800 Rice Local
Source:ChaponniereJR,GabasJJ&ZQi,‘ChinaAfricainagriculture:Abackgroundpaperontrade,
investmentandaidinagriculture’.China–DACStudyGrouponAgriculture,FoodSecurityand
RuralDevelopment,Bamako,27–28April2010
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China’s agricultural-aided projects in Africa
ChinahasadoptedseveralapproachesinitsagriculturalinvestmentinAfrica.Agricultural-
aidedprojectshavebeenregardedasplayinganimportantroleinbuildingeconomic
andtraderelations,particularlyintheearlydays.Primaryinvestmentsfromthe1950s
tothe1980swereChinesegovernment-aidprojects.By2009Chinahadcompleted884
plant-aidedprojects,ofwhich142wereagriculturalprojects.Chinastartedcommercial
investmentsinAfricainthe1980s.Thenumberofinvestmentprojectsandtheamountof
investmentsweresmall,owingtothelimitedcapabilityoftheinvestorsthemselves.Ofthe
102projectsChinainvestedinAfricafrom1979to1990,theaverageinvestmentwasjust
$500,000.Comparedwithothersectors,China’sfinancingofagricultural-aidprogrammes
inAfricacontinuestobesmall.
Table 2: China’s aid projects in agriculture and other sectors, 2009
Total Agricultural projects
Industrial projects
Schools Hospitals Stadiums Conference centres
Others
884 142 145 71 54 53 62 357
Source:China,MCC,CATERAR,op. cit.
ChinahasbeenincreasingitsagriculturalaidinAfricaforgrainproductioninparticular.73
Agricultural projects aided by China have promoted agricultural development in
recipientcountries.Brautigam74pointedoutthattheChinesepressroutinelypraisesthe
achievementsofitsforeignaidteams,althoughscantobjectiveandpubliclyavailable
evidenceexistsontheoutcomesoftheseprojects.Lin75alsosuggestedthatinvestment,
ratherthanaid,isaneffectivesolutionfordevelopment.
China’s investment in rural infrastructure
Africa’sratesofagriculturalproductivityarenormallylowduetopoorwaterirrigation
systems and infrastructure. In sub-Saharan Africa, water resources and irrigated
agriculturearenotdevelopedtotheirfullpotential.Currentlylessthan4%ofrenewable
waterresourcesinAfricaareusedforagriculture.Barriersincludethelackoffinancial
andhumanresourcestobuildirrigationandrelatedruralinfrastructureandtoacquire
agricultural technology; and inadequate access tomarkets.This constrainsprogress
towardspovertyreduction.76
Accordingtoofficialstatistics,ChinahasassistedAfricancountries,suchasZambia
andNigeria,inbuildingover500infrastructureprojects.77Zoellick78statedthatChinahas
beenparticularlysignificantasasourceoffinancinginfrastructureinvestmentinAfrica.
AWorldBankreportestimatesthatChina’sinvestmentinAfrica’sinfrastructurefrom
2001–06wasroughlycomparabletothatfinancedbyalltheOrganisationforEconomic
Co-operationandDevelopmentcountriescombinedoverthesameperiod.
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Box 5: China’s agricultural infrastructure investment
Currently Chinese companies are working on the design and construction of 12 major
grain storage facilities in Zambia. Covering a total area of some 30 000 square metres,
the completed grain barns will have a storage capacity of 100 000 tonnes, thereby greatly
enhancing the country’s storage capacity and food security.
Chinese enterprises have built numerous agricultural infrastructure facilities and irrigation
facilities in Africa. The MCC has reached agreements with 35 African countries in supporting
large-scale infrastructure, of which 70% of investments are in Nigeria, Angola, Sudan and
Ethiopia. There are also other investments in Congo, Mali, Mozambique and Tanzania, such
as contracts for infrastructure in bulk commodities worth $8 billion in Congo.
Source:China,MCC,CATERAR,op. cit.
China’s technology demonstration projects and training programmes
Chineseagriculturalprofessionalsarehelpingtoestablishagriculturaldemonstration
basesinAfrica.Chinahasorganisedtrainingonissuesincludingthecultivationofrice,
vegetables,meatprocessing,andtheuseofagriculturalmachinery.Mutuallearningand
knowledgesharingareimportantfordevelopmentandpovertyreduction.
Box 6: Technology demonstration centres
In 2009 the construction of Chinese-aided agricultural technology demonstration centres
commenced in Benin, Cameroon, Ethiopia, Liberia, Mozambique, Sudan, Tanzania and
Uganda. In addition to offering training, production, and administrative and residential
facilities, the centres will help to leverage China’s strong agricultural expertise by inviting
Chinese experts to share their knowledge with local people in order to boost Africa’s
agricultural development.
In Guinea-Bissau, Chinese experts established 11 rice production demonstration areas
covering a total of 2 000 hectares. Yields per hectare reached 8–9 tonnes. There were 530
tonnes of fine varieties yielded and subsequent expansion of the plantation area amounted
to 3 530 hectares. The yields for many new varieties were over three times higher than
those of varieties currently used.
Source:China,MCC,CATERAR,op. cit.
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Table 3: Chinese-aided agricultural technology demonstration centres in Africa
Country Technology centre’s focus
Benin Crop cultivation demonstration and farming technology training
Cameroon Research, technology demonstration and training on agricultural technology
Ethiopia Horticultural plants cultivation and livestock farming technology demonstration and training
Liberia Rice and corn cultivation technology transfer, training, development of plant varieties
Mozambique Soybean and corn cultivation and processing demonstration and training
democratic Republic of Congo
Crop cultivation demonstration and training
Rwanda Rice, juncao, mulberry cultivation, and technology and demonstration training on soil and water conservation
South Africa Research, technology demonstration and training on fresh-water aquaculture
Sudan Crop cultivation and irrigation technology demonstration and training
Tanzania Crop cultivation demonstration, development of improved plant varieties, training
Togo Research and training on agricultural technology
Uganda Aquaculture technology demonstration, technology transfer and training
Zambia Agricultural technology demonstration and training
Zimbabwe Corn cultivation technology demonstration and training
Note:Juncaomeansfungi(suchasmushrooms)andcaomeansgrassinChinese.JuncaotechniqueswereinventedinChinain1983byProfessorZhanxiLin.
Source:China,MCC,CATERAR,op. cit.
Withitslongagriculturalhistory,Chinahasextensiveexperienceinbothtraditionaland
modernagriculturaltechnology.Inparticular,ithascomparativeadvantagesinagricultural
sectorsinvolvinglabour-intensiveproductionsandprocessing,suchasfisheries,gardening
andpoultry farming.Byworld standardsChinese agricultural technologies, suchas
hybridrice,areadvancedandhavecontributedsignificantlytothecountry’sagricultural
growth.AfricancountrieshavealsobenefitedfromChina’sadvancedtechnology.One
suchexampleisGuinea-Bissau,whereChinaStateFarmandAgribusinessCorporation
collaboratedwiththeChinaHybridRiceEngineeringResearchCentreinintroducing
high-yieldinghybridrice.
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Box 7: Expertise and training
From 2007–09 China sent 104 senior agricultural technology experts to 33 African countries
to assist in the creation of agricultural development plans. China also organised extensive
training on topics including the cultivation of rice and vegetables, fishery management,
meat processing, and the use of agricultural machinery.
In 2009 China provided training to 568 African agricultural officials and technicians. Subject
areas included rural economic reform and development, food production, soil and water
conservation and dry cultivation techniques, the development of new cotton varieties, the
use of agricultural machinery and continuing education for agricultural teachers.
Source:China,MCC,CATERAR,op. cit.
TheanecdotalevidencereflectedinBox7suggeststhatChina’sinvestmentinagricultural
researchanddevelopment(R&D)couldfacilitateAfricanagriculturalgrowthandpoverty
reduction.By2012Chinaplanstosend50agriculturaltechnologygroupsand2 000
agriculturalprofessionalstoAfrica.79Exchangingknowledgeandideasisalsoimportant
forsustainabledevelopmentinagriculture.
Giventhepaucityofdata,itisdifficulttomeasuretheimpactofChina’sinvestmenton
reducingpovertyandpromotinggrowthinAfrica.Ingeneral,investmentinagricultural
R&Dandtechnologyareimportanttoimproveagriculturalproductivityandtohelpreduce
poverty.Thirtle,LinandPiesse80foundthatinvestmentinagriculturalR&Dthatraises
agriculturalvalueconsiderablyimprovedratesofreturn,inbothAfrica(22%)andAsia
(31%).ThusagriculturalR&Dpaysforitself,asincreasedproductivityresultsinbroad-
basedgrowth,whichreducespovertyingeneral.Fan81alsopointedoutthatgovernment
expenditureonagriculturalR&Dhas thehighest returnon labourproductivityand
povertyreduction,followedcloselybyinvestmentsinfeederroads.Moreover,investment
inagriculturalextension82developssystemsthroughwhichtechnologiescanbeextended
to and adoptedor adaptedby farmers, and several studieshave shown thepositive
impactof such investmentsonagriculturalproductivityand incomes.83Agricultural
extensioncreatesawarenessoftechnologiesanddevelopments,andstrengthenstheknow-
howandskillsofproducersinusingthesetechnologies.Itcanalsoraisetheabilityof
farmhouseholdstodemandtechnologiesandfurtheradvisoryservicesthatmeettheir
specificneeds.Therefore,investmentsinagriculturalR&D,extensionandtechnology
demonstrationsareimportantforimprovingfarmers’skills,agriculturalproductionand
thelivelihoodofsmallfarminghouseholds.
I m P l I C A t I o N S o F C h I N A ’ S d e v e l o P m e N t e x P e R I e N C e F o R A F R I C A
China’sexperiencehasproventhathigheconomicgrowthandrapidpovertyreductionare
achievable.Indeed,China’sstartingpointwasevenlessfavourablethanAfrica’spositionin
theearly1980s.AfricastandstobenefitconsiderablyfromChineseagriculturalexperience
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in agricultural and rural growth, evidence-based policy-making, pro-poor policies,
institutional reform and government roles in delivering changes and implementing
innovativeprogrammes.84
Chinahasachievedthemostrapidlarge-scalepovertyreductioninhumanhistory.85
BeforeChina’sreformstartedin1979,itfacedseriousfoodshortagesanditsagricultural
economywas in crisis. Since the reformChinahas achieved an average13%yearly
increase in agricultural gross output value up to 2008.86 Between 1979 and 2004,
500 millionpeoplewereliftedoutofpovertyinChina.AccordingtoLiu,87agricultural
andruraldevelopmentwaspivotalinChina’spovertyreductionanddevelopment.African
countrieshavespentdecadestryingtojump-startagriculturalproduction.Insearchof
newapproaches,manyexpertsarelookingforanswersinChina’simpressiveagricultural
achievements.AfricancountrieswanttolearnaboutChina’sdevelopmentexperience,
particularlyaboutovercomingpovertyandsustainingeconomicgrowth.88
Importantly,China’sexperienceshowsthatasuccessfulpatternofprivateandpublic
partnershipcanleadtosubstantialimprovementsinfarmers’livelihood,eradicatehunger
andovercomepoverty.Theaveragenet incomeofruralresidentsperhead increased
fromCNY134($21)in1978toCNY4,761($746)89 in2008peryear.90Duringthis
periodChinacarriedoutaseriesofinnovativeprogrammes,suchasdevelopingitsnon-
grainsectorandsmallhouseholdenterprises,whicharecriticalforincreasingfarmers’
incomeandcreatingemploymentopportunities.Institutions,technologyandproductivity
continuetobeimportantfactorsforChina’ssuccessfulagriculturaldevelopment.
Institutional perspectives
Institutionalsupportisimportantforagriculturalgrowth.Institutionsmatterineconomic
growth,91andCoase92andNorth93highlightedthevitalimportanceofsocialinstitutions
in economic transformation. Growth will not occur unless the existing economic
organisationisefficient.94Inadevelopingeconomy,achangeinemphasisfrom‘getting
pricesright’to‘gettinginstitutionsright’iskeytothetransitionfromaplannedeconomy
toamarketone.95Indevelopingcountriesandtransitionaleconomies,oftenmarketsare
imperfectornon-existent.
Institutional reformcontributed largely toChina’sagriculturalgrowthduring the
transitionaleconomicperiodfromaplannedtoamarketeconomy.96Beforereformstarted
in1979,ChineseinstitutionswererootedinChina’splannedeconomy.InruralChina,
farmersworkedinproductionteams,whichresultedinlowworkincentives.China’s
reformsintroducedaHouseholdResponsibilitySystem(HRS),whichdistributedlandto
individualhouseholdsforcontractperiodsoffiveyears,laterextendedto10andthento
30years.Landwasdistributedaccordingtothenumberofpeopleineachhousehold.The
HRScreatedincentivesforproductionbygivingfarmersfreedomofland-userightsand
decision-making,linkingrewardscloselywiththeirperformance.Underthenewsystem
farmersbecameindependentproducerswhotooksoleresponsibilityforprofitandloss.97
ReformalsobroughtaboutchangesinChineselaw,withthepromulgationofinsurance
lawinthemid-1990sandtheintroductionofinsurancemarkets.
China has demonstrated the critical importance for developing or transitional
economies to introduce innovativeprogrammes, especially for individualhousehold
producers, inill-functioningornon-existentmarkets.Smallhouseholdsareoperated
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typicallybypoorpeople,whouseagreatdealoflabour,bothfromtheirownhousehold
andfromtheirequallypoororpoorerneighbours.98Howlocalgovernmentsareableto
deliverthechangesatgrass-rootslevel,particularlywheremarketaccessispoor,isalways
important.Inthetransitionalperiodfromaplannedeconomytoamarketone,overcoming
poorinstitutionalconditionsandill-functioningmarketaccessweresignificantchallenges
inruralChina.TheintroductionoftheHRSenabledsmall-scalehouseholdproducersto
actasindividualagentsineconomicactivities.Thelocalgovernmentplayedanimportant
roleinco-ordinatingtheeconomicactivitiesbetweensmall-scalefarmersandmarkets.
Bycomparison,inAfricamostsmall-scalefarmersarefacingmajorobstaclesthatstart
inthefieldandextendacrosstheentireagriculturalvaluechain.Thesefarmerscanneither
accessnoraffordbasicfarminputs.99Institutionalconditionsarealsomajorobstacles
forsmallhouseholds’farmingproduction.Africalacksinstitutionalarrangementsthat
enhanceindigenousentrepreneurshipandwealthcreation.Thisisthemostimportant
contributortopovertyanddeprivationinAfrica.100Itsabsenceofefficientorganisations
andinstitutionsminimisedthepositiveimpactofinvestmentsandpolicies.Thisabsence
accountsforthelowrateofreturninagriculturalinvestmentsinAfrica,andthepoor
performanceofthesector.101Asignificantaspectofthisneglecthasbeenthefailuretopay
attentiontotheimportanceofsmall-farmer-orientedinstitutionsinAfrica.Asaresultof
thisneglect,coupledwithgeneralmacroeconomicpolicieswithstronganti-agricultural
andanti-peasantbias,themajorityoftheSouthernAfricanDevelopmentCommunity
stateshaveexperiencedstagnantordecliningtrendsinperpersonfoodandagricultural
production.102
Thesuccessoftheseinvestmentprojectsdependslargelyonsustainableinstitutional
environments.Itisalsodependentontheabilityoflocalgovernmentstodeliverchanges
atgrass-rootslevelandtoco-ordinateeconomicactivitiesbetweensmall-scalefarmersand
supplychains,especiallyinAfrica’sconditionsofpoormarketaccess.
It is hard to envisage how China’s experiences in institutional reform can be
transferabletoAfricansociety.Effectiveimplementationofinvestmentprojectsisalso
relatedtohistorical,social,policy,politicalandculturalaspectsinAfrica.Itisimportant
tounderstandhow ‘China’sphenomenon’works forAfrica in thecontextof itsown
institutionalperspectives.AstheformerpresidentofChina,DengXiaoPing,toldGhana’s
President,JerryRawlings,duringavisitin1985,‘Pleasedon’ttrytocopyourprogramme.
Ifthereisanyexperienceonourpart,itistoformulatepoliciesinlightofone’sown
nationalconditions.’
Productivity and technology
Improvementofagriculturalproductivityiscriticalforagriculturalgrowthandpoverty
reductioninAfrica.AlthoughAfricahasexperiencedcontinuousagriculturalgrowth
duringthelastfewyears,muchofthegrowthhasemanatedfromareaexpansionrather
thanincreasesinlandproductivity.103Lowproductivityisoneofthemajordifficulties
thatAfricaisfacing.Inmostcountries,futuresustainableagriculturalgrowthwillrequire
greateremphasisonproductivitygrowthassuitableareasfornewcultivationdeclines,
particularlygivengrowthconcernsaboutdeforestationandclimatechange.104
ComparedwithAfrica,Chinahaspresentedafundamentallydifferentpicture.With
ashortageofcultivatedlandareasandanenormousnumberof farmers,agricultural
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productivity gains are central to China’s agricultural growth. China’s grain output
reached400billionkilograms in1984, from100billionkilograms in1978. In1984
theChinesegovernmentannouncedthatthecountryhadsolvedthesubsistencelevel
offooddemand.105Chinaisagoodexampleofpovertyalleviationandimprovementin
agriculturaloutput.China’spolicymakersare,however,facedwiththechallengeofhow
tosustaineconomicdevelopmentwithincreasingenvironmentalstress.Today,37%of
China’stotalterritorysuffersfromlanddegradation,andthecountry’sperpersonavailable
landisnow40%oftheworld’saverage.106Degradationincludessoilerosion,deforestation,
salinity,reducedfertilityandsandstorms.Itaffects3.56millionsquarekilometresand
posesadirectthreattoChina’sfutureeconomicprosperity.107
China alsoneeds to considerprotecting itsnatural resources, suchaswater and
soilconservation.Theagricultural ‘GreenRevolution’aimsto implementsustainable
developmentinthecontextofenvironmentalconcernsthatarerecognisedbyinternational
society.Greenagricultureinvolvestheuseof‘greentechnology’todevelopagricultural
production,therebyachievingharmonyamongtheenvironment,economyandpeople.
Agriculturalproductionminimises thewasteofnatural resources,and itscontinued
developmentshouldthusbeconsideredintheattainmentofenvironmentalsustainability.
InAfrica,theconcentrationofthepoorinruralareasandtheriseintheirpoverty
isattributedtolowagriculturalyieldsthatareduelargelytothefailuretoadoptfood
productionmethodsoftheGreenRevolution.108GreenRevolutiontechnologyincludes
the use of pesticides, irrigation projects, synthetic nitrogen fertiliser and improved
crop varieties developed through conventional science-based methods. These skills
and technology need to be adopted in Africa to help offset the worsening effect of
environmentaldegradationinagriculture.Crucially,whethertheGreenRevolutionorany
otherstrategytoboostfoodproductionwillalleviatehungerdependsontheeconomic,
political andcultural rules thatpeoplemake.109When thenewAfricanAgricultural
Revolutioniseventuallyimplemented,itislikelytobebuiltonAfrica’sownindigenous
technologyandknowledgerequirements,andonthenutritionandfoodsecurityneeds
ofitspeople.110Thisischallenging,becausetheadaptionofdifferenttypesoftechnology
needstoconsiderAfrica’sdifferentconditions,ecologyzonesandcrops.
ThereisalsoconcernthatChina’sinvestmentinagricultural-resourcedprojectsmay
posechallengesofmaintainingsustainableenvironmentsinAfrica.Forthisreason,any
promotionofinvestmentsandpolicysupportfordrivingagriculturalproductivityfor
Africanfarmersneedstoconsiderenvironmentalsustainability.
C o N C l u S I o N
ChinahasaccelerateditsinvestmentinAfrica’sagriculturalsector,bothinthevolume
ofinvestmentandinthediversificationofinvestmentmeans.Anecdotalevidenceshows
thatChina’sinvestmentcouldcontributetoagriculturalgrowthandpovertyreductionin
Africa.China’sownsuccessfulexperienceinagriculturalgrowthandpovertyreduction
couldprovidevaluablelessonsforAfrica.
However,Africa’sagriculturalgrowthandpovertyreductionlargelydependsonthe
policiesthatmeetitscountries’conditionsinthecontextofsocial,economic,political
U N d E R S T A N d I N G C H I N A ’ S A G R I C U L T U R A L I N v E S T M E N T S I N A F R I C A
23
S A I I A O C C A S I O N A L P A P E R N U M B E R 10 2
andenvironmentalperspectives.Indigenousinstitutionsandculturewillalsoaffectthe
outcomesofChina’sinvestmentinagriculture.
Asthelargestfoodconsumerintheworld,Chinaneedstosourceagriculturalproducts
and commodities from Africa to help meet the needs of its giant domestic market.
China’smarketdemandcouldalsoresultinprofitandbusinessopportunitiesforAfrican
farmers.Africaisdependentonreceivingfinancialassistancetoimproveitsagricultural
infrastructure,suchaswaterirrigation.Agriculturalproductivitycanbeincreasedbythe
exchangeofknowledgeontechnologyandproduction.
Furtherstudiesareneededonconceptualframeworkandmethodologytomeasureand
monitortheimpactsofChina’sagriculturalinvestmentonAfricanagriculturalgrowth,
povertyreduction,anditsachievingtheMDG1.Theextenttowhichtheinvestment
servestheinterestofboththedonorandtherecipient–andtheextenttowhichChina’s
increasedinvestmenthasactuallyimprovedlivelihoodsandreducedpovertyinAfrica–
arealsoareasforfurtherstudies.
Foodsecurityislinkeddirectlytonationalstabilityandnationalsecurity.Agriculture
has played an important role in China’s diplomacy, especially in its South–South
co-operation.Therefore,China’sagriculturalinvestmentinAfricaisrelatedtoitsoverall
bilateralrelationsinthecontextofsocial,economicandpoliticaldimensions.Further
studiesalsoneedtolookattheroleofagriculturalco-operationbetweenChinaandAfrica
intheirownnationalstrategies.
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