China, Africa and Food Security

07.09.15
UNDP
Longform /09 Jul 2015
07.09.15

China, Africa and Food Security

China and Africa together constitute more than a third of the world’s population. China is Africa’s largest trading partner and an important source of investment and aid. As a result, the China-Africa relationship has significant implications for global food security. Neither China, with 1.4 billion people, nor the 54 countries of Africa collectively, with 1.1 billion people, are food self-sufficient. Although they both export food, they have become net food importers.

The 2015 Global Food Security Index ranked 109 countries on the basis of food affordability, availability, and quality and safety. China ranked 42 on this index. Of the 32 African countries ranked, only South Africa scored higher (number 41) than China and 31 countries scored lower, most of them near the bottom of the ranking. This index suggests there is considerable room for both China and Africa to improve food security. Climate change will make even more difficult the ability of China and Africa to contribute positively to global food security.

I need to underscore one note of caution in this analysis. Some of the statistics used refer to agriculture generally and do not distinguish between food crops and cash crops such as cotton, sisal, and tobacco.

Challenges for China

China has done a good job of maximizing food production in view of its large population, about 20 percent of the world’s total, and limited farmland, about 9 percent of the world’s total. The number of undernourished people in China decreased from 254 million in 1990-1992 to 158 million in 2010-2012.

Agriculture accounts for 43 percent of the workforce in China. But China is approaching, if it has not already exceeded, the maximum production of food that it can obtain from its land. Total arable land and permanent cropland actually fell between 1991 and 2009.

A growing population, continuing urbanization, and the effects of negative environmental practices on farmland are making it increasingly difficult for China to meet its need for food. As incomes rise in China, per capita consumption of food products also increases.

Challenges for Africa

Africa has the potential to increase significantly its food production. Agriculture (including non-food items) constitutes 40 percent of Africa’s exports and 70-80 percent of employment. Yet African agriculture is in decline; its food production per capita decreased by 15 percent from 1960 to 2005. Africa went from being a net exporter of food in the early 1960s to a net importer in the 2000s. The number of undernourished people in Sub-Saharan Africa increased from 170 million in 1990-1992 to 234 million in 2010-2012.

Theoretically, Africa could improve its food production with better technology, infrastructure, training, and agricultural inputs.

Theoretically, Africa could improve its food production with better technology, infrastructure, training, and agricultural inputs. For example, only 4 percent of Africa’s cultivated land is currently irrigated. Most important, Africa is the location of an estimated 60 percent of the world’s uncultivated land. But Africa must overcome many challenges before it can become a net food exporter.

Sub-Saharan Africa has the fastest growing population in the world and the most rapid rate of urbanization. Each year these demographic facts complicate Africa’s ability to achieve food self-sufficiency, not to mention a food export capacity. Most African countries have serious land tenure issues that have stymied the development of agricultural projects. Many African countries must improve their agricultural policies, eliminate trade barriers among African countries, reduce corruption, and/or end conflict before they can reasonably expect to increase food production. Due to the absence of adequate water sources, irrigation is not an option in many areas; it is also expensive and comes with environmental downsides.

Even Africa’s large tracts of uncultivated land need to be considered with great care. By cultivating these lands, will forested carbon sinks be eliminated? Is the soil truly productive or largely worn out? Does it receive reliable rainfall? By farming these virgin lands will farmers face serious diseases? Will people have to be forcefully removed from the land before it can be farmed efficiently? Is the uncultivated land located in a conflict zone? Having 60 percent of the world’s uncultivated land is not as meaningful upon closer examination.

Climate Change

And then there is the wild card of climate change facing both China and Africa (and the rest of the agriculturally productive world). I will focus on climate change in Africa, which I know better. The experts say that the impact of climate change on Africa will be greater than on most other global regions and it will be more negative than positive.

In most of Africa, temperatures are already close to, and sometimes exceed, the optimum with regard to crop growth and yield. Global warming has occurred across Africa and it is certain that temperatures will continue to rise, posing increasing constraints on agricultural production and creating a variety of other challenges. Near-term increases in annual mean temperatures are expected to be higher in the tropics and sub-tropics of Africa than in the mid-latitudes. By the 2030’s, Africa will experience a temperature increase of 1.5 degrees Celsius above pre-industrial levels. This is expected to result in a higher risk of drought in Southern, Central, and West Africa but a decreased risk in East Africa. Between 2030 and 2050, crop yields in North Africa may decrease by up to 30 percent and there will be severe implications for farmers’ livelihoods and regional food security.

By the 2030’s, crop growing in mixed rain-fed, arid-semiarid regions will experience failure about one in four years as compared to about one in five years today.

By the 2030’s, crop growing in mixed rain-fed, arid-semiarid regions will experience failure about one in four years as compared to about one in five years today. Some crops will experience no yield decrease while others such as sorghum face significant negative impacts in the western Sahel and Southern Africa.

By 2050, a drying trend in Southern Africa will accompany increased frequency and severity of severe storms, drought, and flooding. Increasing temperatures will result in reduced yields of all major food crops and a loss of area that is currently suitable for growing these crops.

Greater variability in rainfall is expected, which will increase the risks for dry land farming. In fact, increased rainfall variability may be the biggest challenge farmers confront as they tend not to be risk takers and are reluctant to invest their meager capital in a crop that has little predictability. The intensity of storms and poor water infiltration will result in the inability of soils in many areas to absorb extreme rainfall. There will be poor groundwater recharge in areas where rainfall decreases or becomes more variable. Farming systems will move progressively towards the margins. Semiarid croplands may become rangelands and semiarid zones may turn into deserts. Fish stocks will seek colder water. Pastoralists will move livestock to greener pastures. By 2050, climate change will result in higher food prices for all staple crops such as maize, rice, and wheat. Higher prices may diminish the demand for food, hence resulting in lower caloric intake.

Some studies have already found a correlation in Africa between warmer temperatures and increase in conflict, although this factor is less important than many other social and economic conditions. The Intergovernmental Panel on Climate Change concluded with medium confidence in 2014 that “climate change can indirectly increase risks of violent conflicts in the form of civil war and inter-group violence by amplifying well-documented drivers of these conflicts such as poverty and economic shocks.” Early agricultural adaptation policies by governments and the private sector could, however, do much to mitigate the downsides of climate change.

China and Africa would not seem to have much in common in efforts to combat global warming and climate change. China is heavily industrialized and now accounts for about 30 percent of global CO2 emissions, the highest percentage for any country. Africa’s 54 countries are mostly agricultural and account for less than 4 percent of global CO2 emissions; it tends to function as a carbon sink. In spite of these differences, the United Nations Environment Programme, China, and Africa created in 2008 a cooperative effort to enhance the capacity of African countries to address environmental challenges in the context of climate change through technology transfer, demonstration projects, and capacity building programs. It is in China’s interest to align its climate change policy with developing countries; the question is whether China and Africa share the same climate change policies.

China-Africa Agricultural Relationship

The China-Africa agricultural relationship includes both food and non-food products; China’s interests seem to be about equally divided between the two categories. The engagement takes place in the form of China’s agricultural aid projects in Africa, Chinese investment in agricultural enterprises that are intended to make a profit, and China-Africa trade in agricultural products. China’s policy message to Africa is that Chinese agriculture has been successful through a combination of market reforms, trade, and foreign direct investment. China believes it has useful lessons for Africa and if these lessons can be applied in African countries, there will be an increase in food production that will benefit the global community, including China.

Most of the experts who have looked at this relationship have concluded that so far China is not making a special effort to obtain long-term leases on large tracts of land in Africa, the so-called “land grab” accusation.

Most of the experts who have looked at this relationship have concluded that so far China is not making a special effort to obtain long-term leases on large tracts of land in Africa, the so-called “land grab” accusation. The signals from China on this controversial issue have not, however, always been consistent.

In 2007, the head of China’s Export Import Bank declared that his institution would be prepared to provide financial assistance to Chinese farmers to settle in Africa. Although the government of China quickly distanced itself from this assertion, other Chinese officials subsequently alluded to this possibility. Because of objections from Africans to the concept of huge foreign controlled agricultural projects, especially those with large numbers of non-African farmers, China’s official policy continues to steer away from this idea.

China’s Agricultural Aid to Africa

Agriculture has been a mainstay of the China-Africa aid relationship. Between 1960 and 2010, China completed 220 agricultural aid projects in Africa. In the 1950s, China relied heavily on the development of agricultural cooperatives that emphasized new techniques and better agricultural inputs. Large state farms were also a common feature of China’s program. China’s projects were not always successful and often lacked an adequate understanding of African agricultural conditions and traditions.

At the end of the 1970s, China began to rely on a contract system that used Chinese companies to manage its agricultural projects.

At the end of the 1970s, China began to rely on a contract system that used Chinese companies to manage its agricultural projects. This market-oriented aid system subsequently led to agricultural investment projects in Africa by Chinese companies.

In the 21st century, China launched a multi-faceted program that included agricultural demonstration centers, sending of agricultural technicians and experts, holding of training courses, and participation in the Food and Agriculture Organization’s action programs on food security. The technology demonstration center has become the dominant feature of China’s agricultural aid program to Africa, combined with the sending of experts. Since 2006, China has set up 15 centers and plans to establish another 7. While it is too soon to assess the contribution of the centers, the initial reports are mixed. A study of the centers in Mozambique and Benin found that the research and training offered did not respond to the demand in the host country but more to the strategy of the Chinese companies in charge of the center. In addition, the centers did not work in an integrated way with the national agricultural research efforts of the two countries.

Current Chinese agricultural aid includes infrastructure construction, food production, livestock breeding, technology exchange, scholarships, and the storage and transport of agricultural products. Chinese banks also finance agricultural development projects. From 2010 to 2012, 52 percent of China’s global foreign assistance went to Africa, but only 2 percent was devoted to agricultural projects. It is impossible to measure the overall success of these aid projects, but China has improved its agricultural aid programs as it learns from its successes and failures.

Chinese Agricultural Investment in Africa

Direct investment in agriculture has not yet become an important part of China’s strategy in Africa. Many of the media reports on Chinese land leases in Africa are exaggerated or inaccurate; on the other hand, China has been more active in agricultural investment in Asia and Latin America. As of 2013, China approved almost 2,400 large and medium-sized investments in Africa for Chinese companies. Only 86 of these investments in 27 African countries were specifically related to farming. They included food crops, cash crops, and animal husbandry but not all of these proposals materialized.

While China’s direct investment in African agriculture grew from $30 million in 2009 to $84 million in 2012, it constituted only about 3 percent of China’s total direct investment in Africa. On those occasions when Chinese companies obtained leases for food production in Africa, there is little evidence that the goal is to grow food for export to China. Most of the food production meets local and regional demand. Some of the smaller land leases, especially vegetable gardens, are designed to supply a component of the Chinese community in Africa.

Solid field work on Chinese land leases in Ethiopia, the Democratic Republic of the Congo, and Mozambique offers useful insights on this controversial subject.

Solid field work on Chinese land leases in Ethiopia, the Democratic Republic of the Congo, and Mozambique offers useful insights on this controversial subject. Since 2008, the Ethiopian government has licensed 32 Chinese agricultural investments, of which 18 are small vegetable farms.

Four are edible oil and processing operations, three sugar cane production and processing, three pig farms, two poultry farms, one mushroom farm, and one rubber plantation. Most of the vegetable, pig, and poultry farms are designed to supply local Chinese and international restaurants/hotels. The only large proposal among the 32 licensed by Ethiopia is a 33,000 hectare palm oil plantation and a 30,000 hectare rubber plantation. There is no indication that either of these large projects has moved forward. There are more licensed agricultural investments in Ethiopia by companies from the United States, Ethiopian diaspora, Europe, Israel, or Saudi Arabia than from China.

The Democratic Republic of Congo offers some of the most discussed Chinese “land grabs” in Africa. In 2007, ZTE Agribusiness signed an agreement with the government of the DRC to develop 100,000 hectares for a palm oil plantation. This announcement led to numerous press reports of a much exaggerated project. Poor road infrastructure forced ZTE to scale back the 100,000 hectare project to several smaller ones. As a result, it now has a 200 hectare oil palm plant nursery and two additional farms of 246 hectares and 600 hectares. The China Overseas Engineering Group Company applied for 100,000 hectares of farmland in the DRC. In 2009, after failing to get approval from the DRC’s Ministry of Agriculture, it abandoned the proposal. The Hubei Dadi International Corporation also encountered land problems as it tried to implement a project. It eventually abandoned a 300 hectare farm and a much smaller vegetable and pig farm due to land disputes. The Hubei Dadi International Corporation changed its business model from farming to agro-processing and trading of agricultural machinery.

Finally, reports of Chinese land leases in Mozambique have resulted in confusion, misinformation, and legitimate concerns. China Grain and Oil Group agreed to invest $12 million in a soybean farm. The company brought seedlings and machinery from China that were not suitable for local conditions and had to abandon the project. ACE Agriculture and Aquaculture has a 600 hectare rice farm that has been plagued by an inadequate irrigation system. China-Africa Cotton Mozambique adopted a business model that provides inputs and training to local farmers in return for the purchase of raw cotton. In this manner, it avoids the problems of leasing land.

The largest and most controversial project is being implemented by Wanbao Africa Agriculture Development Limited, a private Chinese company, which received a concession for 20,000 hectares of farmland. As of 2014, the company was growing rice on about 6,000 hectares and maize on 1,000 hectares. Wanbao provides the agricultural inputs and trains Mozambican farmers in Chinese techniques. It also subcontracts its land to four Chinese state-owned agribusiness companies. In 2013, the managers of the project faced a protest by about 400 Mozambican farmers who claimed they had been deprived of their land. Wanbao has plans for significant additional agricultural investments. Chinese investments in Mozambique’s agricultural sector are increasing and diversifying.

China-Africa Trade in Agricultural Products

While China has been Africa’s largest trading partner since 2009, agricultural products have not been a significant part of the trade in either direction. From 2009 to 2012, China’s agricultural exports to Africa grew from $1.6 billion to $2.5 billion. During the same time, China’s agricultural imports from Africa grew from $1.2 billion to $2.9 billion. China’s agricultural imports from Africa constitute about 2.5 percent of China’s total agricultural imports and only about 1.5 percent of its total food imports, the single most important item being sesame from Ethiopia. Africa’s agricultural exports to China constitute about 3 percent of Africa’s total agricultural exports and have the lowest compound annual growth rate of any trade category with China.

China’s average most-favored-nation tariffs on agricultural goods are a relatively high 22.5 percent, which discourages imports, although China allows some agricultural products from Africa’s poorest countries to enter duty free. China is increasing its food imports from Africa, but most of the agricultural imports remain cash crops such as cotton and tobacco. Most of China’s agricultural exports to Africa are food products. In fact, China exports more food to Africa than it imports from Africa.

China imports most of its agricultural products from the United States, Brazil, Australia, Canada, New Zealand, and Argentina. China’s agricultural exports go primarily to Japan, Hong Kong, the United States, South Korea, Vietnam, and Malaysia. Africa is not currently a significant source of food for China or recipient of food from China.

The Future of China-Africa Agricultural Relations

The fact that China does not now depend on Africa in any meaningful way for food does not mean this will continue to be the case. China increasingly will require more food imports as land is lost to development, water shortages become more severe, arable land quality deteriorates for environmental reasons and due to climate change, and more Chinese move into the middle class. Chinese leaders are not optimistic the country will be able to achieve additional growth in the agricultural sector.

China’s $650 billion sovereign wealth fund, the China Investment Corporation (CIC), is already shifting its focus to invest in agriculture and global food supplies in a strategic move that reflects the priorities of the country’s new leadership. The head of CIC announced in 2014 that the fund will pay particular attention to agricultural sectors such as irrigation, land transformation, and animal feed production that have been neglected by large institutional investors.

If Africa becomes a more efficient producer of food and China’s food demands continue to outstrip domestic supply, China can be expected to turn increasingly to Africa to meet its demand just as any other food deficit nation would do. If Africa becomes food self-sufficient and develops an export capacity, Africans control the farmland, and African farmers raise the crops, food exports to China should not raise any concerns. Chinese capital investment in such circumstances could make a positive contribution to global food supply and, at the same time, directly benefit Chinese consumers.

If, however, Africa remains a food deficit region, exporting significant quantities of food to China grown on Chinese-financed investment projects will raise serious questions. This will be the case even if Africa earns foreign exchange from the projects that it could use to purchase food. Likewise, if China sends significant numbers of Chinese farmers to Africa to operate its investments for growing food or cash crops, the African reaction will likely be highly negative. Both China and Africa face important agricultural policy choices.

This article is adapted from a lecture originally delivered at Yale University.

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