Farmland

Re: FarmLand

Postby winston » Fri Jul 04, 2008 10:24 am

CHINA DAILY (www.chinadaily.com.cn) -- China denied reports of encouraging its firms to purchase overseas farmland, saying the country is fully capable of ensuring its own food security.
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Re: Farmland

Postby winston » Sat Aug 02, 2008 8:31 am

China Farms Abroad
Brian McCartan
01 August 2008

In its drive for food, China is planting deep roots in foreign fields


As other countries have pushed their industrial bases thousands of miles offshore in search of resources and labor, China is doing the same thing with agriculture, expanding as far away as Africa in its effort to feed its people. This is especially true in Southeast Asia, with its operations extending into Burma, Laos, the Philippines and Indonesia.

As evidence of the country’s growing unease over its ability to feed a population of 1.3 billion, China this week reversed its decade-long defense of free trade principles to join with Indian negotiators to derail the Doha Round of World Trade Organization negotiations. It insisted on safeguard rules for agriculture, and, according to the New York Times, sought to require that developing countries be allowed to impose prohibitively high tariffs on food imports from affluent countries to halt increases in imports that might put farmers in poor countries out of business.

China’s rise as an economic superpower has been at the cost of its traditional agricultural base. Annual gross domestic product growth of at least 6 percent since 1997 has fueled a shift in demographics that has moved millions of rural people off the farms and into the cities. Arable land is disappearing due to the construction of factories and homes, while desertification and pollution also shrink available agricultural tracts. China’s official Xinhua news agency reported in April 2007 that during the 2000-2005 five-year plan the country lost an average of 1.23 million hectares of land annually. Three million hectares of rice land were lost between 1996 and 2006.

The upshot is that China is finding it increasing difficult to feed the people while at the same time growing industrial crops for biofuels and rubber. Recognizing a need to conserve domestic food supplies, for the first time China made a pronounced shift in its economic policy in 2007 from net exporter to net importer of rice and wheat. Export tariffs on both staples were raised while import tariffs were removed to give easier access to the world market. Beijing is also strongly encouraging investment in overseas commercial agriculture projects to meet growing demands for food and raw materials. Chinese multinationals are involved in growing rice, corn, sugarcane, cassava and rubber, among other crops in Africa and even Cuba.

Accordingly, China is involved in an eight-year, 1 million-hectare operation in Indonesia’s Kalimantan state and in Papua New Guinea through China National Offshore Oil Corp (CNOOC), Indonesia's Sinar Mas Group, and Hong Kong Energy (Holdings) Ltd to plant oil palm, sugar and cassava.

This is not an easy path. As a strategist in Shanghai pointed out, “the best way to piss off people is to take their land.” In the Philippines, for instance, strong local objections from senators and farm groups appear to have stalled a plan, announced in January of 2007 by Agriculture Secretary Arthur Yap, under which Chinese companies would invest US$4.9 billion to fund projects that provide access to agricultural commodities. That would have included a US$3.83 billion investment by the Guangdong-based Fuhua Group over five to seven years to develop 1 million hectares of high yielding strains of corn, rice and sorghum, Yap said.

Nowhere is this outbound push for commodities more pronounced than in remote eastern Yunnan Province, where land transport is inconvenient and the search for agricultural supplies is patchy. While China’s cross-border investment in commercial agriculture is growing rapidly in neighboring Laos, albeit not without criticism, investment in Burma is limited by that country’s poor economic and agricultural policies.

A January 2008 report by the American Congressional Research Service said that China made pledges of trade and investment in Laos worth US$876 million in 2007. Direct Chinese investment in Laos was approved at US$1.1 billion by August 2007, according to the Lao Committee for Planning and Investment, making China the second largest investor in Laos after Thailand. Chinese agricultural investment is particularly strong in the northern provinces of Luang Nam Tha, Pongsali, Udomxai and Bokeo.

Agribusiness in northern Laos can be broken down into three general categories. First, there are individual farmers who seek their own markets, usually through relatives across the border in China, and take all the risk. The second method is through village-based farmers’ associations that share the cost of inputs and labor and divide the profits after the harvest. The third category is agribusiness companies working through contracts with individual farmers, associations or government concessions. Companies with large concessions usually obtain them through contacts with Lao district or provincial officials or through the Lao army.

Chinese companies provide seeds, fertilizers, pesticides and sometimes machinery, while local villagers provide the labor. The companies also provide technical support and one or more Chinese supervisors are generally on site. Concession fees are paid for the use of the land and profits are shared based on agreements signed with the companies.

Investment in rubber plantations is by far Laos’s largest commercial agriculture business. China has become the world’s largest consumer of rubber; by 2020 it is expected to consume a third of the world supply. By that time it is estimated there will be 200 million vehicles on Chinese roads. A source close to the rubber industry in Laos noted that of US$26 million invested by China in northwestern Laos, US$20 million was in rubber. In Luang Nam Tha province, more than 10,000 hectares has already been planted, an amount that continues to expand.

Xinhua reported that some 35,100 hectares were planted in rubber in Laos for China. The government news agency noted that exports to China of US$54 million were expected to increase mainly due to rubber exports, with both countries seeking to increase trade to US$1 billion in the next few years.

Other crops grown under contract or concession arrangements are corn, bananas, cassava, agar wood and sugarcane. According to the Vientiane Times, Chinese investors in 2005 signed 15-year contracts to buy sugarcane from 40,000 hectares and cassava from 60,000 hectares of farmland in Luang Nam Tha province. A 2006 report by the Lao-Swedish Upland Agriculture and Forestry Research Program noted that 90 percent of Udomxai’s corn – its main cash crop – was destined for China. The same study said that 13,000 hectares had been planted in corn by 2006.

In 2007-2008 the amount of corn grown in the north increased by 35 percent, according to an individual closely involved in agricultural issues in Laos. Most of that is earmarked for China.

Critics of Chinese investment say that the unregulated nature of the system opens it to exploitation. Some northern farmers complain that their land has been expropriated and given to Chinese companies with little or no compensation, but this so far seems to be the exception rather than the rule, although several individuals knowledgeable about the area who spoke to Asia Sentinel said that the lack of a clear-cut land ownership law in Laos left open the potential for serious land conflicts due to land grabs by unscrupulous officials and businessmen.

Although analysts say the situation is improving somewhat, weak enforcement of environmental laws is also a concern as agricultural projects encroach on forest preserves. The central Lao government announced a moratorium on new land grants in 2007, but this has largely been ignored by provincial officials.

For the average Lao farmer, however, the possibility of increased earning has mitigated fears about doing business with their giant neighbor. Chinese-built roads also have increased access to markets in Yunnan. Previously most of the trade was conducted south over long and often poor mountain roads to Vientiane and Thailand. Farmers can earn as much as $1,200 per acre from rubber about seven times more than from rice.

In contrast, large-scale Chinese agricultural investment in Burma is plagued by economic mismanagement, poor agricultural policies and ethnic politics along the China-Burma border that have left many farmers worse off than before. Farmers in northern Burma, rather than benefiting from cross-border contacts have largely been forced to go it alone.

Although almost all seeds, fertilizers, pesticides and farm machinery come from China researchers in Burma’s northern Shan State and western Arakan State who recently returned from those areas, say farmers are forced to buy seeds and other inputs by government authorities and the military. This is often done in conjunction with decrees to plant a certain type of crop or to force farmers to plant two crops per year on land that can only sustain one.

China has become Burma’s second largest trading partner according to Xinhua. Bilateral trade between the two countries was $1.46 billion in 2006, with Yunnan accounting for $692.08 million. Border trade made up 82 percent of Burma’s exports to China in 2005. Those figures are likely low, however, since the junta rarely includes cross-border exports to China in its figures.

Rice is currently the largest agricultural export to China from the Shan State and will likely remain so. Environmental researchers say that the junta has been forcing villagers to plant hybrid rice seeds from China requiring much higher inputs of fertilizers and pesticides rather than indigenous seeds. They also note that without proper technical assistance local farmers are unable to get the proper yields and the program has not been as successful as hoped, despite the regime’s continued insistence on ordering the planting of the seeds.

NGO researchers claim that the hybrid rice has a different taste than the traditional variety and one that does not appeal to Burmese. In addition to purchasing the rice, the trucks transporting it are generally owned by Chinese as are the distributor companies. A close relationship has been established between the Burmese officers responsible for issuing business permits and Chinese businessmen giving them almost monopoly power over the marketplace and the distribution of farming supplies.

The high cost of the seeds that the farmers are forced to buy and of the pesticides and fertilizers they must use has forced many farmers deep into debt, the researchers say, forcing many farmers to sell their land, often to the same Chinese businesses who sold them the seeds, fertilizers and pesticides. The land is then often turned into commercial farms, assisted by Burmese officials keen to increase agricultural exports, but more often interested in making a profit for themselves off of concession fees and through the border trade.

Rice exports to China were halted in the wake of Cyclone Nargis by order of Northeast Regional Commander Major General Aung Than Htut in late May. Observers note, however, that this is a long-standing order which has been largely ignored and will likely be again once Burmese officials realize the shortfalls in profits from the loss of trade.

Other crops grown for export are maize, sunflower, oranges, tea and sugarcane. The Thai agribusiness giant Charoen Pokaphan Group, dominates the hybrid feed corn seed business in Burma with a 75 percent market share, but according to the United States Department of Agriculture, “feed corn from northern Shan State goes to China as well as one third of corn produced in Nan Sang township in southern Shan State.”

Ironically, in Kachin State, west of Shan State and also bordering China, Chinese fertilizers have contributed to a growing opium poppy crop in the past year along the border. According to the exiled media organization, Kachin News Group, many of these poppy fields are also owned by Chinese businessmen. This accusation has been echoed by human rights researchers from northern Shan State.

Burma’s complex ethnic politics have left large sections of the China-Burma border in the hands of ethnic insurgent armies. Although they currently have ceasefires with the military regime, there is little government influence in the areas they control. Chinese companies have invested in the area of the United Wa State Army (UWSA), the largest ethnic army in Burma and considered to be one of the largest narcotics producing organizations in the world. This investment has been encouraged by the Chinese government as a way of prodding the UWSA to give up cultivating opium, which it claims to have done in 2005.

Rubber has been the main investment in the UWSA area. Large-scale rubber plantations exist around the UWSA headquarters at Pangshang and the Shan Herald Agency for News (SHAN), an exile media organization, claims that 600,000 acres of Wa controlled territory have been planted in rubber. The group claims that two rubber factories have been set up in Namteuk and Pangshang on the border. About a dozen Chinese companies are reportedly involved in growing rubber with the Nong Chang Company from Yunnan the largest investor according to SHAN. Rubber plantation workers have been promised 60 percent of the profits once the trees begin producing. According to a researcher studying the area, this has already begun and China has promised to import rubber from the Wa tax free.

There is also some dissatisfaction among local farmers, who say that the policy to grow rubber has come down from the UWSA headquarters which makes the deals with the Chinese and they are not consulted. Farmers are simply told that they will now be growing rubber. The seven year period between planting and harvesting is a long time for farmers who until recently were growing opium poppies as a cash crop to buy food.

While the average Lao farmer may be wary but eager to do business, Chinese investment and its heavy handed encouragement by the Burmese regime seem to strengthen anti-Chinese feelings in the country, especially in the north. Although the Lao government has taken a largely hands-off approach to Chinese agricultural investment most analysts agree that the average Lao farmer stands to benefit from the investment.

In contrast, the Burmese government’s authoritarian approach only serves to enrich government officials and Burmese and Chinese businessmen at the cost of local farmers. Researchers in northern Burma make it clear that these policies are unsustainable and are impoverishing thousands of poor farmers. Chinese businesses may still benefit from the agricultural produce received, but surely it would be more efficient to have enthusiastic farmers who hope to make a profit, rather than farmers who can only envision a cycle of endless debt.
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Re: Farmland

Postby winston » Thu Aug 07, 2008 8:54 am

U.S. farmland values are at a record high even as the rest of the country suffers the worst housing crisis since the Great Depression, with the highest crop prices ever pushing up agricultural real estate.

The value of all land and buildings on farms averaged $2,350 an acre at the start of this year, up 8.8 percent from a year earlier, the U.S. Department of Agriculture said today in an annual report.

Surging corn, wheat and soybean prices boosted values in the Northern Plains, which includes Kansas, Nebraska, North Dakota and South Dakota, by 15.5 percent, the biggest increase in the country, according to the report.

The report also tracks rates for land that's rented for farming. Rents for farmland rose 13 percent last year to $96 an acre while pasture fees rose 8.3 percent to $13 an acre. Because of high demand for additional farmland and the high cost of buying, farm-rental prices may rise 20 percent to 30 percent in 2009, said Murray Wise, chief executive officer of Westchester Group Inc., a farm-asset management company based in Champaign, Illinois.

Source: Bloomberg
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Re: Farmland

Postby LenaHuat » Thu Aug 07, 2008 10:40 am

Read this BBC report on English farmers :
Turning Russia's rich soil into riches

http://news.bbc.co.uk/2/hi/europe/7528850.stm

That 67,000 hectare farm is 100 times the size of Singapore and so the tractors are satellite-guided. Wow :!:
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Re: Farmland

Postby millionairemind » Sat Aug 23, 2008 5:18 pm

Read this interesting article in this week's Economist.

Saudi Arabia
Buying the farm

Aug 21st 2008
From The Economist print edition

Feeding its own people more cheaply


WHILE Saudi Arabia sets up its first sovereign wealth fund, ordinary Saudis are more preoccupied with the rising price of food. This is prompting the Saudi government to consider a new direction for foreign investment: buying farms in the poorer parts of the world.

Inflation in Saudi Arabia is running in double digits, its highest rate for three decades. Last December, 19 prominent Saudi clerics gave warning that inflation constituted a crisis that would lead to social unrest and crime. Since then, the poorest Saudis have got poorer, with prices going up across the board because of rapid monetary growth. Food and housing costs are rising fastest.

The Saudis’ need to import food is sure to increase. For decades, their government has poured money into farm subsidies, producing some of the world’s costliest wheat. As a result, the largely desert country is self-sufficient in wheat, though it has to import rice. But the authorities have decided that, with a fast-growing population and mounting industrial needs, they cannot waste costly desalinated water in the wheat fields, so will phase out production by 2016.

Instead, the desert-agriculture dream may be fading in the face of an alternative: outsourcing abroad. The cabinet recently decided to study other ways of improving food security, perhaps creating a new holding company to buy farms and fisheries overseas. Saudis are thinking of buying rice farms in Thailand, the world’s biggest rice exporter. Rice prices are climbing especially fast, as several rice-producing countries have restricted exports, fearing domestic shortages. Thailand has even flirted with the idea of an OPEC-style rice cartel.

Investors from elsewhere in the Gulf, including Qatar and Abu Dhabi, are scouring the world for undeveloped farmland to buy, especially in Pakistan and Sudan. Libyans and other Arabs have been checking out Ukraine. Kuwaitis have been looking in Myanmar, Cambodia and Laos. But the Arabs should note that grandiose farm schemes in Sudan have had a long history of failure; the UN’s World Food Programme currently feeds 5.6m people there, since the Sudanese cannot feed themselves.

If Saudis owned farms abroad, they might be more confident about the security of their food supplies. As well as injecting capital, the kingdom could also offer cheap fertiliser, which it can produce by using subsidised gas. But Saudi investors may be resented for buying up primary commodities from poor countries, while monopolising and limiting the output of their own special one: oil.
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Re: Farmland

Postby LenaHuat » Sat Aug 23, 2008 5:32 pm

Hi MM
Wow, what a great read :!: I've been thinking hard abt Wilmar and Dairy Farm :lol:
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Re: Farmland

Postby blid2def » Sat Aug 23, 2008 6:06 pm

The risk, I suppose, is that if the farmland isn't on your own soil, they could be seized when relations between countries sour (e.g. a hostile regime takes over, or when nationalism kicks up a head of steam).
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Re: Farmland

Postby LenaHuat » Tue Aug 26, 2008 8:42 pm

The Japanese has joined the scramble to control food supplies.
Australian dairy company National Foods announced yesterday that it will take over Dairy Farmers for a firm value of A$910 million ($790 million).

National Foods, which is a subsidiary of Kirin Holdings in Japan, will acquire all the equity shares of Dairy Farmers at a price of A$5.65 per share in cash, including a special dividend of 59 cents per share, totalling A$675 million. The sale is subject to the approval of at least 75% of Dairy Farmers’ shareholders, which is expected to take about three months.
.......
Dairy Farmers is a co-operative comprising around 2,000 farmers and is the second-largest manufacturer in Australia of fresh dairy products for retail customers, after National Foods. Dairy Farmers produces and distributes milk, cheese, yogurt and other fresh dairy products.
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Re: Farmland

Postby winston » Fri Sep 19, 2008 1:39 pm

An Alarming Twist on the Ag Boom By Chris Mayer, Capital & Crisis

Over the summer, Iran bought more than 1 million tons of wheat from the U.S.

That's something we've not seen in 27 summers. In Iran's case, a tough drought cut the wheat harvest by a third, forcing the country to look abroad. But still, the fact that Iran had to come to the U.S. is telling. It's like Lee asking Grant for rations in the summer of 1863. As one analyst put it: "Do you think Iran would come to the U.S. if they had any place else they could buy it?... They're searching the world for wheat. They're buying the U.S. because it's the only thing they can buy."

Markets, like great unscripted dramas, develop their own plotlines as time rolls on. Now unfolding is a new plotline in the agriculture boom. It begins with the fact that there are fewer and fewer options these days for importers looking for large quantities of high-quality grains. But it speaks more to a deeper issue: an emerging shortage in fertile soil. Yes, we're running out of good dirt. (And that insight leads to some compelling investment ideas, as you'll see below.)

Fertile soil – good dirt – may become more important to land values than oil or minerals in the ground. Some say it is already a strategic asset on par with oil. As Lennart Bage, president of a U.N. fund for ag development says, "Now fertile land with access to water has become a strategic asset."

Doubtful? Consider rising export restrictions around the globe, which act as a sort of fence keeping the goods within borders. India curbs exports on rice. The Ukraine halts wheat shipments altogether. The number of grain-exporting regions has dwindled, like the vanishing buffalo herds. Before World War II, only Europe imported grain. South America, as recently as the 1930s, produced twice as much grain as North America. The old Soviet Union, for all its faults, exported grain. Africa was self-sufficient. Today, only three major grain exporters remain: North America, Australia, and New Zealand.

No surprise, then, to find faith in the global food supply at generational lows. So begins the scramble to secure farmland. Saudi Arabia, for example, is particularly at the mercy of the winds of global agriculture. It has little ability to produce its own food. The kingdom, reports the Financial Times, "is scouring the globe for fertile lands in a search that has taken Saudi officials to Sudan, Ukraine, Pakistan and Thailand." Saudi Arabia's quest is not one it pursues alone. There are many hunters.

The UAE has also been looking to lock down acreage in Sudan and Kazakhstan. Libya is looking to lease farms in the Ukraine. South Korea has been poking around in Mongolia. Even China is exploring investing in farmland in Southeast Asia. While China has plenty of cultivable land, it does not have a lot of water.

"This is a new trend within the global food crisis," says Joachim von Braun, the director of the International Food Policy Research Institute. "The dominant force today is security of food supplies." Food prices reflect this crimp in supply.

The mainstream press focuses on issues such as population, dietary shifts, and the impact of biofuels. One thing that doesn't get talked about much may be the most important thing of all: a growing shortage of quality topsoil. Call it the topsoil crisis...

Quality soil is loose, clumpy, filled with air pockets, and teeming with life. It's a complex microecosystem all its own. On average, the planet has little more than three feet of topsoil spread over its surface. The Seattle Post-Intelligencer calls it "the shallow skin of nutrient-rich matter that sustains most of our food."

The problem is that we're losing it faster than we can replace it. And replacing it isn't easy. It grows back an inch or two over hundreds of years.

This is not lost on certain far-seeing investors. Jeremy Grantham, the curmudgeonly head of the money manager GMO, wrote about soil depletion in his last quarterly letter. "Our farmers are in the mining business! Yes, the soil is incredibly deep, but it is still finite." For every bushel of wheat produced, we lose two bushels of topsoil.

Until the final decades of the 20th century, the amount of new farm acreage added to the mix by clearing land offset the losses on a global basis. In the 1980s, the amount of land under cultivation began to fall for the first time since humble early humanity began to farm the rich land around the Tigris and Euphrates. It continues to fall today.

We lose topsoil to development, erosion, and desertification. "Globally, it's clear we are eroding soils at a rate much faster than they can form," notes John Reganold, a soils scientist at Washington State University. Estimates vary. In the U.S., the National Academy of Sciences says we're losing it 10 times faster than it's being replaced. The U.N. says that on a global basis, the rate of loss is 10-100 times faster than that of replacement.

In any case, it seems safe to say that good dirt is in short supply. The obvious investment conclusion: Buy farmland. That's hard to do as an individual investor, although there are at least a few options. One is Cresud, which owns 1 million acres of farmland in Argentina. It trades on the Nasdaq. Another way into the idea is to own farming assets in grain-exporting countries, like Canada.

More investment ideas will surely surface as time goes by. The topsoil crisis has a long way to go. It's not going to resolve itself anytime soon. In the meantime, though, investors may want to rethink the phrase "cheap as dirt" and keep an eye on this new trend.

Source: Daily Wealth
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Re: Farmland

Postby winston » Fri Oct 03, 2008 6:24 am

Land break for farmers

Farmers will be allowed to transfer their land-use rights, President Hu Jintao said, signaling a potentially important shift in the nation's land management system.

The country's more than 730 million rural dwellers own what they can produce but not the land itself, and are barred from trading their land-use rights under current laws.

"Farmers will be allowed to transfer land contract and management rights by various means, in accordance with their will," Hu said.

He added that policy changes would not overturn the existing "household contract responsibility system," under which land-use rights are granted to farmers for a period of 30 years.

Source: REUTERS
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