Chinese Gov’t Policies to Help Large-scale Agribusiness

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July 2 – The Sichuan earthquake is likely to hurt small livestock farms in rural China, with medium-sized to large livestock farms emerging as a new trend says an executive of Thailand’s largest agricultural conglomerate.China’s modernization of the farm sector will affect the key agricultural provinces of Hunan, Hubei, Shanxi, Jiangxi and Anhui says Damrongdej Chalongphuntarat of the CP Group.

Damrongdej, a vice-chairman of Chia Tai Group of Companies, CP’s China arm, says that Beijing implementation of tougher building codes will cover farms, effectively stamping out small-scale farms in the future.

CP Group plans to invest heavily in Sichuan, Hunan and Hubei by adding a chicken slaughterhouse and two animal-feed plants in the next two to three years the Bangkok Post reported.

Beijing views large-scale agribusiness as a possible solution to helping the interior of the county catch up to the run-away economies of China’s eastern coast.

In other agricultural news, the largest U.S. pork processor is selling a five percent stake to a Chinese company, further highlighting China’s growing importance in the world meat market.

Smithfield Foods Inc. will sell a five percent stake to COFCO Limited, a state-owned agricultural-trading company. The Wall Street Journal reports that the move is the latest example of foreign governments buying up struggling American meat companies. The Brazilian beef company JBS SA bought on of the largest U.S. beef companies, Swift & Co, last year.

Smithfield has been courting the Chinese government for some time the paper reports, and recently sent a high-level executive delegation to China for a several-months-long tour of hog facilities. China consumes about half of the world’s pork.

Pork imports into China have soared with an anticipated surge in pork consumption during the coming Olympic Games in Beijing. China also lost some 3.7 million pigs to the earthquake in Sichuan.