Official report sets the tone of overseas investment in agriculture

Economic Observer reporter Jian Yunzhang

A "investigation report on Chinese Enterprises' outward Agricultural Investment" (hereinafter referred to as "the report"), jointly completed by more than a dozen ministries and commissions, including the National Development and Reform Commission, the Ministry of Finance, the Ministry of Agriculture, and the Ministry of Commerce, is about to be released. Relevant departments will launch a series of policies and measures to encourage and support agriculture to "go global".

It is reported that from the establishment of the research group at the beginning of 2012 to the initial formation of the above report at the end of last year, a total of 29 provinces (autonomous regions and municipalities directly under the Central Government) provided full and accurate information data on foreign agricultural investment. Not long ago, the National Development and Reform Commission and the Ministry of Agriculture invited some experts, scholars and enterprise representatives to gather together to further discuss the revision and improvement of the report, with a view to launching it as soon as possible.

After the launch of the report, at the national policy level, a series of policies and measures are expected to encourage and support Chinese enterprises to invest in agriculture abroad, including simplifying the import examination and approval procedures for overseas agricultural enterprises in rice, corn, and wheat, and increasing financial assistance to overseas agricultural enterprises. Among them, for large agricultural enterprises, especially large state-owned grain enterprises, is still the focus of national financial support.

International layout

The Economic Observer has learned from relevant departments that since 2001, China's overseas agricultural investment and cooperation has spread to more than 100 countries and regions, and there have been more than 600 overseas invested agricultural enterprises. Among them, Asia is the region with the highest concentration of overseas agricultural investment by Chinese enterprises, followed by Africa, Europe, Oceania, North America and South America.

In recent years, the central enterprises headed by Cofco and China Agricultural Development Group, and the local state-owned enterprises dominated by heavy Cereals Group and Heilongjiang Agricultural Reclamation have made great efforts to invest in agriculture abroad. In terms of central enterprises, after successfully acquiring 99% of Australia's Tarly Sugar Company in 2011, Cofco spent US $2.8 billion this year to acquire Dutch Nidera Group and Hong Kong Noble Group's Bao Agriculture Co., Ltd., both of which have a 51% controlling stake. Among the local state-owned agricultural enterprises, since 2010, the heavy Grain Group has invested billions of yuan to build soybean bases in Brazil, Argentina and other places, involving planting, warehousing, port logistics and other links. During the 12th five-year Plan period, state-owned agricultural enterprises such as Cofco, China Agricultural Development Group, heavy Farm Group and Heilongjiang Agricultural Reclamation all have overseas investment target plans. Cofco expands its business of soybeans, cassava, wine and sugar mainly through mergers and acquisitions. China Agricultural Development focuses on developing agriculture, fisheries and other resources in Africa, South America, Australia and Southeast Asia, and the heavy Farm Group plans to invest more than 17 billion yuan to expand its soybean base in Brazil. Heilongjiang land reclamation plan in Russia, Brazil and other countries, to expand the "extraterritorial reclamation area" more than 40 million mu.

In addition to state-owned enterprises, private enterprises such as Tianjin Julong Group, Zhejiang Carson Group, Qingdao Ruichang Cotton Company, New Hope Group and other private enterprises are also beginning to take shape in overseas agricultural investment. Tianjin Julong has planted more than 100,000 hectares of palm oil trees in Indonesia, accounting for 20% of the local market each year; Zhejiang Carson has 270000 mu of soybean farms in Brazil; Qingdao Ruichang cotton industry can produce more than 100000 tons of seed cotton in Africa every year; New Hope hopes to expand at least eight agricultural and animal husbandry enterprises abroad every year.

Although Cofco and other leading agricultural enterprises have increased overseas investment, on the whole, small and medium-sized enterprises still account for the vast majority of more than 600 overseas agricultural enterprises, and from state-owned enterprises to private enterprises, the proportion of agricultural leading enterprises is still obviously on the low side. Compared with the grain giant enterprises in the United States, Japan and other developed countries, the influence of state-owned enterprises such as Cofco Group and heavy Cereal Group on the international grain market is still very limited.

Statistics show that the average investment in foreign agricultural projects in the United States, Japan and other developed countries is 6 million US dollars, while that in developing countries is about 2.6 million US dollars, while that in China is only 1 million US dollars at present. According to Hu Hengyang, an inspector of the Rural economy Department of the National Development and Reform Commission, the main reason behind Cofco's successive mergers and acquisitions of two major international grain merchants in just one month this year is related to the central government's high emphasis on food security strategy.

With regard to the national food security strategy, the specific goal set out in the Central Committee's No. 1 document this year is "basic self-sufficiency in grain and absolute safety in food rations." as to how to promote agriculture to "go out," the central government has also made it clear that it is necessary to cultivate internationally competitive grain, cotton, oil and other large enterprises, and support mutually beneficial and win-win cooperation in agricultural production and import and export abroad, especially with neighboring countries.

Financial support

In the investigation of overseas agricultural enterprises by the National Development and Reform Commission and the Ministry of Finance, including state-owned enterprises, most enterprises reflect the problem of too many financial constraints and examination and approval links.

In terms of funds, overseas agricultural projects generally have the problems of high development costs, large investment funds and long recovery cycle. in addition, they have to face risks in the international market, international politics and other aspects. a variety of comprehensive factors have hindered the rapid development of China's overseas agricultural enterprises.

Shi Kerong, chairman of Hebei Huifu Grain and Oil Group, said that the scale of state policy loans to overseas agricultural enterprises is very small and is mainly concentrated in a small number of state-owned enterprises, so it is difficult to solve the problem of loans for most foreign agricultural projects. It is hoped that the policy of overseas agricultural loans can also be tilted to private enterprises.

At present, the overseas investment of Chinese enterprises is mainly managed by the National Development and Reform Commission, the Ministry of Commerce and the foreign exchange management department. The specific division of labor is that the NDRC is responsible for examining and approving overseas investment projects, the commercial department is responsible for approving the establishment of foreign investment enterprises, and the foreign exchange management department is responsible for foreign exchange management of foreign investment. The foreign-related investment of state-owned enterprises still needs to be approved by SASAC.

A number of companies investing in agriculture abroad have said that in recent years, although the National Development and Reform Commission and other aspects have promoted the facilitation of foreign agricultural investment by simplifying procedures and relaxing restrictions, the relevant departments have not yet formed a coordination and management mechanism, and various institutions still proceed from their respective jurisdiction, causing a lot of inconvenience to enterprise investment and restricting the pace of enterprises "going out."

With regard to the issue of financial constraints, an official from the National Development and Reform Commission said that in late April 2011, the National Development and Reform Commission and the Ministry of Finance jointly issued the Circular on doing a good job in the declaration of special funds for foreign economic and technological cooperation in 2011. it is clear that the state focuses on encouraging enterprises to develop cooperation in agriculture, forestry and fisheries abroad, and the financial support is up to 30 million yuan by means of direct subsidies and discounted loans. In May 2013, the National Development and Reform Commission and the Ministry of Commerce jointly issued the Circular on issuing guidance on encouraging overseas Agricultural Investment Cooperation, which will clearly cultivate several central enterprises with overseas agricultural investment cooperation as their important business.

The Economic Observer also learned that the complex inspection and quarantine procedures for wheat, rice, and corn crops previously leased and purchased by Chinese enterprises abroad when they were shipped back to China will be simplified in the next step to reduce transportation costs for enterprises.