September 24, 2013 11:45 am
Yesterday, China announced that Ukraine will soon become its largest overseas farm—but the agricultural group that’s supposed to be selling off the land says that’s not exactly the case.
The South China Morning Post reported that China plans to buy 3 million hectares of Ukrainian land—an area equivalent to Massachusetts or the country of Belgium—and is dropping a minimum of $2.6 billion on the venture. The project would begin with about 100,000 acres for growing crops and raising pigs, but eventually expand to its full scope over a period of 50 years. Quartz reported on additional perks of the deal:
The deal comes after Ukraine lifted a law barring foreigners from buying Ukrainian land last year. As part of the deal, China’s Export-Import bank has given Ukraine a $3 billion loan for agricultural development. In exchange for its produce, Ukraine will receive seeds, equipment, a fertilizer plant (Ukraine imports about $1 billion worth of fertilizer every year), and a plant to produce a crop protection agent. XPCC also says it will help build a highway in Ukraine’s Autonomous Republic of Crimea as well as bridge across the Strait of Kerch, a transport and industrial center for the country.
However, the deal may not be quite as solid as the SCMP reported. After the news broke, Ukraine’s KSG Agro released a statement denying that things have been settled with their investors to the east.
The news published in the media about a Xinjiang corporation and KSG Agro does not reflect the reality.
At the moment, KSG Agro and its Chinese partners are working on a contract for cooperation in the execution of a project aimed at the installation of drip irrigation systems over an area of 3,000 hectares in 2014.
KSG Agro does not intend or have any right to sell land to foreigners, including the Chinese.
If Ukraine does decide to hand over the land deeds, it won’t be the first time China has bought up land abroad for farming purposes. As Quartz reports, China bought 400,000 hectares in Sudan in 2010 and 110,000 hectares in Tajikistan in 2011, both for growing cotton, rice and other crops. According to the Morning Post, China also owns more than 200,000 hectares in Argentina for growing soya beans and corn, and has significant investments in Brazil.
Because domestic grain prices have remained static, the Post explains, China’s demand for cheaper imported grain have increased, which puts pressure on the country’s goal of remaining 90 percent self-sufficient when it comes to food production. If China can secure the deeds to land abroad, then technically the country won’t be importing food from Argentina, Sudan and Tajikistan, but growing it on Chinese soil.
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