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China Grain Producers Move Overseas

In March 2004, southwest China's Chongqing Municipal government and the government of Laos signed an agreement to build in Laos a comprehensive agricultural park for Chinese enterprises to produce grain.

China has the world's largest population but comparatively little arable land. Its food supply issues are a focus of the world, and in recent years those supplies have been shrinking. Leasing land overseas to grow staple grain crops may have become the wave of the future.

With an investment of just under US$5.0 million, the agricultural park will cover 5,000 hectares. Seven agricultural programs will be conducted there, including raising plant crops, a fishery and farm produce processing.

"Preferential tax and loan policies will be offered by the governments of both sides to attract enterprises to participate in the agricultural park project," said Dr. Wang Jiguang, deputy director of the Foreign Trade and Economic Committee of Chongqing. "By 2006, when construction of all the projects is complete, the annual sales of the park are expected to reach US$7.7 million, with an annual profit of US$655,000 and an annual tax of US$182,000."

Chongqing also plans to send 10,000 laborers to work on the project.

The project is not the first of its kind for China, Wang said. As early as 1996, the Suntime International Techno-Economic Cooperation Group, a listed company in northwest China's Xinjiang Uygur Autonomous Region, invested US$50,000 in Cuba to develop 150 hectares to grow rice. The use of improved rice varieties and advanced agricultural technology raised the per-hectare yield of the experimental land as high as 4.8 tons, setting a record in Cuba.

The success of the experiment encouraged the company to expand. In 1998, the Suntime Group bought 1,050 hectares of farmland from the Mexican government for US$3.2 million. After four harvests, the average per hectare rice yield reached five tons, compared with 3.5 tons the local farmers in Mexico normally reap.

"The two projects are successful examples of overseas farmland leasing. They have not only brought handsome profits for the Chinese and overseas enterprises but also opened broader prospects for the development of agriculture overseas," said Liu Zhiyong, chairman of the Suntime Group's foreign operations subsidiary.

The dilemma for China's agriculture is its abundance of labor and farming technology and its shortages of water and arable land, said Lin Yifu, director of the China Center for Economic Research at Peking University.

"In China, the average per capita arable land is only 0.095 hectares. Laos has a potential arable land area of 8 million hectares, with only 800,000 hectares reclaimed," said Wang Jiguang.

Laos produces high-quality rice thanks to its tropical climate, but its undeveloped agriculture industry results in the country's dependence on imports, said Wang. "There remains a large potential market for farm produce in Laos."

Wang predicts that the average high-quality rice yield in the Chongqing-Laos agricultural park will be 3 tons per hectare.

Both sides should win in such cooperative ventures with countries that have abundant water and land resources and with China exporting labor and advanced agricultural technology, said Hong Guowei, a top official with the Chongqing municipal agricultural bureau.

Since 1998, China's grain output has been on a continuous downtrend. In 2003, the shortage of three main cereals--wheat, corn and rice--reached more than 20 billion kilograms. Total output had plummeted more than 70 billion kilograms compared with the 1998 record high.

To solve the problem, the government has taken a series of steps, such as reducing or rescinding agricultural taxes, providing grain subsidies directly to farmers, building grain bases and encouraging enterprises to produce grain overseas by leasing foreign farmland.

(Xinhua News Agency May 25, 2004)

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