Eaten in China, Grown in Ukraine

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China leases 3 million hectares of prime Ukrainian farmland for domestic consumption needs

Sept. 23 – The large agricultural Chinese SOE Xinjiang Production & Construction Corps (XPCC) has signed an agreement with the Ukrainian government-controlled KSG Agro to lease 3 million hectares of land to China for the next 50 years.

Beginning with 100,000 hectares – an area the size of Hong Kong – the prime farmland in Ukraine’s eastern Dniproppetrovsk region will be used for growing crops and farming pigs. The produce will then be sold to two Chinese SOEs for distribution at preferential prices. The deal – said to be worth US$2.6 billion per year – is said to be Ukraine’s single largest foreign investment.

China has increasing strains on its domestic food production – the country consumes one-fifth of all global food supplies yet possesses only 9 percent of the world’s viable farmland. The Chinese government has set a target for China to be 95 percent capable of producing its own produce for consumption. The 3 million hectares in the Ukraine agreement is 50 percent larger than China’s own agricultural land. In 2009 (the latest available data), China possessed just 2 million hectares of farmland.

This is not the only land lease deal Chinese agricultural SOEs have committed to. Through various entities, China has acquired rights to 234,000 hectares of land in Argentina for production of corn and soya, and similar deals have also been concluded in Brazil. China also purchased Australia’s largest cotton producer last year.

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