China plants bitter seeds in South American farmland

BUENOS AIRES — Few were surprised when Venezuela announced a deal with China last week to restore 1.4 million acres of unproductive farmland across the oil-rich but impoverished South American nation.

China increasingly is buying farmland and agricultural companies in South America to feed its ever-growing population, currently estimated to be 1.34 billion.

The most important aspect of China’s agricultural investment in Latin America is that “it is a part of the increasing physical footprint of the People’s Republic of China that is just beginning to occur,” said Evan Ellis, an assistant professor at National Defense University in Washington.

Mr. Ellis said that “with the Chinese becoming mine owners, petroleum-field operators, factory managers and dam builders in Latin America,” China’s farming operations there “will immerse the Chinese, with their very different culture, in one of the most politically charged phenomena in the region - the relationship between the Latin American people and their land.”

Central to China’s rising agricultural-industrial complex are soybeans from Brazil and Argentina, millions of tons of which the Chinese are importing to feed cows and pigs to meet a growing demand for meat.

From 2005 to 2011, China’s soybean demand nearly doubled to more than 70 million tons per year, while domestic production declined 10 percent to 14 million tons, according to SinoLatin Capital, a Shanghai-based investment firm focused on transactions between Latin America and China.

China is working to close that deficit by infusing cash into Latin American economies in exchange for allowing Chinese government-owned companies to set up shop and extract basic food goods:

• The Chongqing Grain Group has agreed to build an industrial complex for soybean processing in Brazil’s Bahia state, where it reportedly plans to invest up to $2.4 billion.

• The Hong Kong-based company Noble Group is steering $237 million to a similar project in Brazil’s Mato Grosso region.

• China’s Sanhe Hopeful Grain & Oil announced plans in April to put $7.5 billion into soybean processing facilities in the state of Goias in exchange for an annual supply of 6 million tons of the legumes from Brazil, a deal that reportedly includes building a railroad to move products out of the facility.

Mr. Ellis notes that the Chinese agricultural giant Helionjiang Beidahuang, the China National Agricultural Development Group Corp. and Chongqing Grain Group have made clear their intention to buy Brazilian land in coming years.

In Argentina last year, Beidahuang inked a deal with the provincial government of Rio Negro to help develop more than 800,000 acres of farmland and upgrade a port in exchange for soybean exports over the next 20 years.