Who is the meat superpower? China (at 71 million tons consumed), not the U.S.
Asia
"Asia’s future food bowl
By Karl Wilson
July 13, 2012 - 9:54am
Often referred to as China’s sand pit, Australia could soon become China’s food basket as well.
Although agricultural exports to China are miniscule when compared to resources, Australia is being viewed as a future source for food, especially beef, sheep, sugar and dairy.
More than a quarter of all meat produced worldwide is now eaten in China.
In 1978, China’s annual consumption of meat was eight million tons. It is now 71 million tons — more than twice that of the US.
A merino sheep farm near Parkes in rural New South Wales. Australia is being viewed by China as a future source for food especially, beef, sheep, sugar and dairy. (Photo by Agencies)
This year alone China will import 100,000 heads of dairy cows to help supplement its own growing herds. More than a third of the imports will be supplied by Australia’s Elders International Trading, which is struggling to meet China’s growing demand.
A report to be released later this year is expected to recommend the federal government lease vast tracts of unused land in northern Australia to Chinese agricultural companies for growing and processing food.
Michael Harvey, dairy analyst at financial services provider Rabobank, says: “There is no doubt Chinese companies are interested in Australian dairy farms and processing facilities. The investment, however, is small when compared to China’s demand for milk.”
Despite concerns expressed by Australian and New Zealand dairy farmers, Harvey says he doesn’t see the Chinese investment as a “real threat”.
“The Chinese market needs 9 percent more milk each year over the next five years. Added to the shortfall of local production, it means that Chinese dairy farmers would have to produce a significantly larger volume of milk to stop the import of milk products, a task that appears well out of reach,” he says.
For the past 12 months, a joint Australian-Chinese group has been studying the feasibility of leasing unused land for beef, sheep, sugar, dairy, wheat and rice production for the Chinese market.
The foreign ownership of agricultural land is a politically sensitive subject in Australia despite the fact that 1 percent of Australia’s agricultural businesses and 44 million hectares, or 11.3 percent of agricultural land, is wholly or partly owned by foreigners.
Threats to Australia’s own food security are also misplaced.
According to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), “there is no ‘foreseeable risk’ to Australia’s food security”.
An ABARES report says Australia produces twice as much food as it consumes, produces almost all its fresh food, and can easily afford the food it imports. Australia is also a competitive supplier of bulk commodities, fresh foods and processed foods (such as meat and dairy products) to world markets.
ABARES, however, warns that Australia’s agricultural sector faces a number of challenges in the coming decades, as the rate of growth in agricultural productivity and investment in research and development decline.
Prime Minister Julia Gillard sees Australia becoming the food basket for Asia. But before that can materialize huge sums will need to be invested in infrastructure, such as roads, processing plants, power and water — money which the government does not have.
Australia’s Trade Minister, Craig Emerson, believes China holds the key to help fund the much-needed infrastructure.
Although he has not gone into details of what the report is likely to recommend, he has refuted growing speculation that the Australian government is “opening the doors” to a foreign takeover of Australia’s agricultural sector.
“Australia and China are undertaking a joint study on how we can cooperate in agricultural investment and technology,” he tells China Daily Asia Weekly.
He says the study was first raised during a visit he made to China in April last year coordinated by Australia’s Department of Foreign Affairs and Trade and China’s Ministry of Commerce.
“There is no proposal for ‘buying up the farm’, importing overseas labor and dedicating the production to Chinese consumption,” he says.
Emerson says the study will look to combine the expertise and resources of both countries — Australia’s large tracts of unused or under-utilized areas and China’s surplus of capital — to find solutions to global food security challenges.
“The study will focus on the use of technology to raise agricultural productivity; development of new productive capacity; agricultural investment opportunities and help to reinvigorate rural communities; and further integration and expansion of agribusiness interests in China,” he says.
A number of Chinese companies have already expressed interest in Australian agricultural investments.
The Shanghai Zhongfu Group has bid for rights to farm 15,000 hectares being developed by the West Australian government in the massive Ord River project in the far north of the mineral-rich state.
Shanghai Zhongfu, which trades in Australia as Kimberley Agricultural Investments, is represented in Australia by former prime minister Bob Hawke.
The group is also negotiating with the Northern Territory government for a further 15,000 hectares just across the border from the Ord development.
While the Ord River scheme, which began in the 1950s, has abundant water and good soil, it has struggled to attract investment due to poor transport links and a lack of scale, which has made agricultural investment economically marginal, according to the Australian Financial Review.
According to the Review, Chinese investors are showing interest in the scheme, reportedly bidding for 30,000 hectares of irrigation land which will be watered by Lake Argyle, Australia’s largest man-made lake, said to be 18 times the size of Sydney Harbor.
The West Australian and Northern Territory governments want investors to develop infrastructure in return for land and water rights.
Analysts say Chinese interest in Australian agriculture has intensified over the last 18 months with about A$500 million ($509 million) earmarked for investment in agriculture by 2015.
Earlier this year, Shandong Taifeng Textile and Shanghai Xiangfu Real Estate Investment were reported to be interested in a 20,000 hectare cotton property and farmland in Western Australia and Queensland.
Other major Chinese companies looking at agricultural investments in Australia this year have included the Bright Food Group, Shandong Ruyi Technology Group and Nanshan Group.
The Shaanxi Kingbull Livestock Company is reported to be considering buying a 5,000 hectare cattle station in northern Australia as a stepping stone to importing 10,000 high-quality beef cattle and calves from Australia each year.
So far investments in Australia’s agriculture sector by China have been mainly projects under A$40 million, with the majority under A$10 million, according to the government.
Some recent examples include the Beijing Sanyuan Dairy investment in dairy farm in Western Australia; Qiantang Group (Zhejiang) in orchard farms in Tasmania; Shan Shan Group (Zhejiang) in wine in New South Wales; and Shanghai Yanlong International Trade in Tasmanian spring water.
A report by the federal government earlier this year on foreign investment in Australia said that while Chinese stake in Australian agriculture is still very small, there is “anecdotal evidence (Chinese) investors were showing increased interest in investing in Australian agriculture since the rise in global food prices in late 2007”.
It pointed to specific examples of major Chinese investments, including Tully Sugar, the producer of 5 percent of Australia’s sugar which was bought in 2011 by Top Glory (Australia), a subsidiary of the Chinese State-owned COFCO Corporation.
The purchase was widely seen as securing long-term access to supply sources.
COFCO and two other foreign-owned sugar milling groups account for almost 60 percent of Australia’s raw sugar production.
Foreign Investment Review Board data show approvals for foreign investment totaled A$139.5 billion in 2009-10.
But the bulk of these (or 58 percent) was in mining. Only 1 percent was in agriculture, forestry and fisheries, with a further two per cent in food, beverage and tobacco manufacturing."
[Note: Thank you to Chung Yoon Ngan for the newslink.]
