Current and Future Trends of China-Africa Agricultural Trade and Cooperation Presentation prepared...

Current and Future Trends of China-Africa Agricultural Trade and CooperationPresentation prepared for the

AMT Agric Outlook Conference

CSIR International Convention Centre

Pretoria, 21st - 22nd September 2010

By Hannah Edinger

Head of Research, Frontier Advisory

22nd September 2010

1. Introduction

2. Background to Research Study

3. The Agricultural Sector: SSA vs China

4. Sino-African Commercial Relations

5. Sino-African Agricultural Cooperation

6. Where to from here?

Overview

Introduction

Increasing Sino-African relationship

• Commercial relations between China & Africa have gained significant momentum in the last decade

• Since turn of the century there has been a shift in China’s policy towards Africa• As “China Inc.” started to internationalise, Africa became a strategic focus for

Chinese outward-bound companies, especially in the extractive industries• Beijing accorded Africa renewed political importance, based on geo-strategic

and commercial interests, rather than ideological ones• Resulted in FOCAC vehicle to coordinate China’s foreign policy objectives in

Africa• China still small but growing partner in Africa• Core sector of future cooperation: agriculture

Introduction

Introduction

China in Africa

• As Africans, how do we perceive Chinese inroads into the African continent?

Introduction

Asia in Africa

• What do we see the role of Asia to be in Africa?

Background to Study

Study on the Relevance of Chinese Agricultural Technologies to African Smallholder Farmers

• Rockefeller China-Africa Project around FOCAC (AATF, ACET, AERC, CCS)• This project AATF; CCS; Consulting teams

Study Objectives:1)To assess the constraints of smallholder agriculture in SSA. 2) To assess the level of Chinese involvement under FOCAC, in supporting

smallholder farmers in SSA. 3) To assess agricultural technologies that are available to Chinese smallholder

farmers that can be used within the African smallholder farming community to address productivity constraints.

4) To come up with selection criteria for selecting Chinese agricultural technologies that are suitable for smallholder farmers in SSA.

5) To come up with strategies for access and transfer of Chinese technologies to smallholder farmers in SSA.

Production of Cereals, yields per ha (2003)

Background to Study

Source: AATF, 2009

Point of departure…

• Comparison of average regional cereal yields

• Comparison of fertilizer use (2002)

Background to Study

SSA 1t/ha

MENA 2.3t/ha

China 4.5t/ha

East Asia & Pacific 4.5t/ha

SSA 13kg/ha

MENA 73kg/ha

East Asia & Pacific 190kg/ha

Source: AATF, 2009

Source: AATF, 2009

The Agricultural Sector: SSA vs China

SSA agriculture vs Chinese agriculture

SSA vs China

• Only region on the globe where poverty & malnutrition continue to increase in percentage & absolute number

• Over half of the malnourished people are subsistence farmers whose productivity is too low to feed their families and escape poverty

• While productivity in other developing regions has improved, agricultural productivity in SSA has stagnated or declined (eg. cereal yields)

• Implementation of agricultural technology in SSA has been slow

• Agric in China is characterised by smallholder producers

• These producers have been able to record great improvements in productivity & become food self-sufficient

• Through CAAS, etc. China has been able to develop technologies to increase smallholder productivity

• Smallholder agric productivity in China driven by productivity enhancing agric technologies & supporting policy package by government

Is there a role to play for China in Africa’s agric sector?

Characteristics of agriculture in SSA

SSA Agric

Constraints to agricultural productivity in SSA

• Poor soil & soil mngt: - poor soil mngt; low fertiliser application; high acidity of soil; key constraint to crop productivity

• Climatic variability: - rainfall variability; droughts & flooding; arid/semi-arid; outdated weather forecasting systems

• Water dev & mngt: - about 5% irrigated in SSA; vs 55% in China; 65% in Japan; 60% of irrigated land in SSA in Sudan &

Madagascar; better irrigation could up productivity

• Biotic constraints: - pests, weeds & diseases decrease crop yields by up to 70%; inadequate knowledge & control; shortage of

extension services• Post-harvest handling: - lack of skills, technologies & facilities for harvesting,

processing & storage• Lack of crop varieties: - lack of access to improved varieties; lack of public funding

for breeding programmes; improved hybrid varieties not available to smallholder farmers

• L shortage & inefft draught power: -SSA least mechanised region; human L high; lack of

mechanised technology

Constraints to agricultural productivity in SSA

• Inadequate energy sources: - lack of power infrastructure; impacts irrigation & cold storage

• Land availability & tenure: - lack of individual ownership; limits access to credit; no incentives to invest in land quality

• Inappropriate infrastructure: - lack of transport, ICT, HR, research stations, etc.

• Inefficient markets: - lack of access to markets & market info; lack of & processing facilities; lack of K; lack of

knowledge; all results in no cash crops

• Poor government policies: - lack of direction re policy; inadequate subsidies; no creation of enabling environment

• Poor rural finance: - struggle to raise working K; unmet demand for credit & finance; no financing for inputs

• Inefficient research • & extension services: - lack of R&D; fragmented research systems;

weak research centre linkages; waste of resources & duplication; no extension systems

• Lack of capacity

Characteristics of agriculture in China

China Agric

Major progress in agriculture since 1978

• Greater agricultural productivity -> greater yields• From subsistence farming to relatively well-off communities -> by all measures,

farmers have become much better off since 1978• Limited arable land, but large labour force

• Comparative advantage in L intensive crops (fruit & veg)• Agric as share of GDP has declined (10%), but still employs about 65% of

labour force• Crop production (56%), animal husbandry (27%), fisheries (10%) & forestry• China has become the largest

• Producer and consumer of cereals, potatoes, garlic, onions, apples, pears, duck & goose meat, eggs, honey, pig, sheep and goat meat

• Producer of fish• Key exporter: Prepared fruit & veg (apple juice); chicken meat; tea• Key importer: Soybeans; cotton lint; palm oil; wheat…


How was this progress made?

• Major economic reforms in China since 1978 which also had impact on agric sector

• Gradual privatisation and opening up; eg. SEZs• Greater reliance on market forces; eg. Prices• Huge infrastructure spend to unlock economic potential

• Creation of conducive policy environment• Great focus on investment into agric sector• Greater application of science and technology• Greater focus on international trade in agricultural products and technology• Surplus agric L used for urban development of industry but some light

manufacturing and secondary industry was also moved to the countryside -> increased number of people engaged in off-farm activities

• Greater production due to higher yields (rice, wheat, apples)


Greater production due to higher yields (Chinese rice)


Source: AATF, 2009

Land reforms & property rights

• Since 1970s -> household responsibility system replaced the system where land was owned by collectives (where production was sold through govt monopolies)

• New system meant that surplus could be sold on open markets; that HHs could use, sub-lease and transfer land; and gave them land use rights and decision making freedom

• But not fully privatised• Land use rights granted for 30 years• Urban land is state-owned and traded for longer leases• Stronger rights to land and production

• stimulated growth in agric and rural incomes• insured a minimum of food security at the HH level

• Still greater need for further clarification on property rights


Role & success of agric technology in China (I):

• Application of technologies drove the increases in greater yields and thus greater production despite decreasing harvest areas

• Largely due to:• Increasing fertilizer use• Increasing pesticide use• Increasing use of agricultural machinery (8x more tractors; 12x more trucks)• Expanding irrigation (45m ha to 51m ha from 1978 to 1997)• Increasing rural electricity use (more than 6x that in 1978)• Reduction in post-harvest losses given application of food industry

technologies including• Storage; Processing; Preservation; Distribution

• Advanced research was also prioritised by the Chinese Govt in• Molecular biology; Plant genetics; Biotechnology, etc.


Cumulative Changes in Agric Inputs (% change, 1980-2005)


Input Change Period (if different)

Agric employment (primary industry) 17% to 2006

Cultivated land area 23% to 2006

Irrigated area 23%

Irrigated area by mech/elec pump 42%

Fertilizers:

Compound fertilizer 4691%

Nitrogenous fertilizer 139%

Phosphate fertilizer 172%

Potash fertilizer 1315%

Total fertilizer consumption 275%

Pesticide use 91% 1994 to 2005

Rural electricity consumption 1264%

Total power of ag machinery 364%

Source: Sandrey & Edinger, 2009

Role & success of agric technology in China (II):

• Achievements in technology part of greater package deal and integrated approach:

• Setting the correct policy and enabling environment (prices; markets; incentives)

• Investing in supporting infrastructure• Agricultural technology development• Distribution of this through extension systems (leave no farmer behind)

• Huge regional differences though still exist (crop yields, post harvesting processing and logistics)

• And now greater move towards greater quality of produce and more responsible approaches rather than just yields

• Limited increase in agric production due to limited land; water scarcity; growing environmental issues


Summary of key technologies applied in driving Chinese agriculture over last 3 decades

1) new seed varieties;2) fertilization technology;3) irrigation technology;4) insect control through plant breeding, new insecticides and integrated

pest management (IPM);5) planting technologies in the field;6) soil improvements such as mulching and desalination;7) mechanisation;8) tissue culture technologies;9) animal grazing and management technologies;10) feed and nutrition changes for animals;11) animal disease controls; and12) aquaculture technologies.

Agriculture & technology in China

Other technologies available in China

• Computer based agriculture and precision agriculture • Edible fungi research selection and efficient cultivation technology • Greenhouse technology • Animal breeding technology• Animal feed and nutrition technologies• Animal health technologies• Fish farming technologies

Agriculture & technology in China

Sino-African Commercial Relations

Source: IMF, EIU, Frontier Advisory analysis

Almost an absolute correlation after 1999 – Coincided with China’s New Africa Policy

1996 1999 2007Beginnings of a growth correlation

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

f

-2

0

2

4

6

8

10

12

14

16

18

Africa real GDP growth China real GDP growth

%

Africa’s growth is tracking the V-shaped recovery of China since mid-2008

1999-2008: Growth correlation of 0.919972!

China & Africa – the new growth coupling

Key trade trends

• Africa’s exports to China much more concentrated than imports• Exports in 2008: oil (70%), iron ore (4%), manganese (3%), as well as

chromium, cobalt, platinum, wood, copper and diamonds• Export relationship reflects Africa’s relative comparative advantage in natural

resource base but lack of value-add• Last decade, declining share in agric exports• Resource-rich African countries serve as NB trade partners for China to meet

fast-growing resource requirements of Asian powerhouse• On import side, top imports are machinery and electrical equipment (31.8%),

textiles and articles (17.5%), base metals (13.9%), transport machinery (11%) and chemicals (4.6%)

• Issue of trade imbalance: value of goods exported vs imported• No FTAs but preferential tariffs on resource imports into China and preferential

trade access of 440 products (zero-tariff) for LDCs• Issue of non-tariff barriers to trade

China-Africa Cooperation: Commercial Trends

Lower commodity prices informed lower trade values in ‘09


1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20090

10,000

20,000

30,000

40,000

50,000

60,000

China's imports from Africa China's exports to Africa

US

$ m

illi

on

Source: World Trade Atlas

• Total trade declined by 15.7% to $90.01bn in 2009

• China’s trade deficit in 2008 changed to a trade surplus of $5.4bn in 2009

• Chinese imports from Africa down 24.34% mainly due to lower commodity prices

• Chinese exports to Africa down only 6.18%

• Main imports into China continue to be oil (about 66%)

Trading profile

• Africa’s trading profile dominated by resource exports

• In 2007, about 70% of exports made up of crude oil

• In 2007, about 80% of all exports constituted crude oil, iron ore, wood, diamonds

• On imports side, key imports include: machinery and capital goods, consumer goods including clothing & textiles, electronics, etc.


Source: World Trade Atlas

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

0

10

20

30

40

50

60

70

80

90

Exports of repaired imports Diamonds Wood Iron oreCrude Oil

Pe

rce

nta

ge

(%

)

Investment: Chinese companies’ inroads into the continent

• Sino-African trade spurred by inroads of Chinese companies• 2006: 800 companies (est)• 2009: 2,000 companies, mainly smaller private business (est)

• Investments of these companies in extractive industry, agriculture and agri-business, manufacturing (including CTF), services (ICT), etc.

• Chinese investments on the continent up significantly but data understates Chinese companies’ footprints on the continent financing agreements

• By 2002: $982.7m cumulative Chinese FDI in Africa (2.6% of Chinese global cumulative outward FDI)

• By 2007: $13.5bn cumulative Chinese FDI in Africa (14%) [Sources: Gu (2009), UNCTAD (2009)]

• Disaggregated data not readily available & Chinese stats on FDI questionable• Investment however concentrated in resource-rich countries and around oil• Financing/development assistance/loans in infrastructure & construction


Key sector activity: Infrastructure & construction

• Most visible and significant involvement of Chinese companies in construction & infrastructure sector

• Increasing bidding and tendering for projects across continent• Chinese infrastructure focus has prompted resurgence of Western interest in

the sector, eg. North-South Corridor (Cook & Lam, 2009)• Vital infrastructure packages and rollouts linked to mining rights and access to

key resources (Angola Model) largely supported by Chinese government and financial institutions

• China EXIM Bank: By June 2007, more than 300 projects in AfricaLending policies closely linked to China’s FPSupports Chinese SOEs in “going global” Supports resource- and market-seeking initiatives

• CDB: By March 2007, more than 30 projects across AfricaCapitalisation of $5bn CADFund; JVs in key

sectors


Chinese financing activity in Africa

• Between 1955-2006: $44bn in aid from China to Africa in more than 900 projects • In early 2000s: less than 10 infrastructure projects per annum financed by the Chinese

(World Bank, 2008)• Spike in projects and value in 2006 “Year of Africa”• More than 35 African countries benefitting from Chinese financing with key source of

financing being China EXIM Bank (92%)• Majority of deals in Angola, Nigeria, Sudan and Ethiopia • Chinese financing cumulative commitments concentrated in power & transport

Period Financing # of projects

2000-2003 $500m per annum >24

2004-2005 $1.3-1.7bn per annum 43

2006 $7bn 29

2007 $4.5bn 28

Source: World Bank, 2008

Power33%

Transport33%

ICT17%

Water and sanitation

2%General

14%

Source: World Bank, 2008


• Chinese overseas investment especially encouraged since 1985

• SOEs designated and supported by state to ‘go global’

• More than 5,000 domestic Chinese investment entities had by end 2006 established over 10,000 overseas enterprises in 170 countries

• More than 8,500 domestic Chinese investment entities had by end 2008 established over 12,000 overseas invested enterprises in 174 countries

Chinese Outward FDI

2003 2004 2005 2006 2007 20080

10,000

20,000

30,000

40,000

50,000

60,000

2,8555,498

12,261

17,634

26,506

55,907

US

$ m

Chinese Outward FDI (2003-2008)

Source: Ministry of Commerce of PRC, National Bureau of Statistics of PRC, State Administration of Foreign Exchange, 2009

• Asia continues to be destination of choice for Chinese outward FDI

• Used to be followed by Latin America but was displaced by Africa in 2008 (due to large inflows into South Africa that year)

• But offshore financial hubs skew distribution of Chinese FDI by region

Chinese Outward FDI

Chinese Outbound FDI flows by region (2008)


78%

10%7% 3% 2% 1%

Asia

Africa

Latin America

Oceania

Europe

North America

• Previous years, SANE economies used to be top recipients of Chinese FDI

• FDI flows are resource-biased looking at FDI recipients in last few years

• Top African recipients in 2008 were South Africa, Nigeria, Zambia, Algeria

• But FDI figures perhaps understate China’s activity on the African continent

Chinese Outward FDI

Chinese Outbound FDI flows to Africa (2003-2008)


2003 2004 2005 2006 2007 20080

2,000

4,000

6,000

74.81 317.43391.68

519.86

1,574.31

5,490.55

US

$ m

• FDI to Africa has been increasing rapidly but from a very low base

• By 2006, 800 Chinese companies in Africa, dominated by activity of SOEs

• By 2008, 2,000 Chinese companies in Africa including also more small private businesses

Chinese Outward FDI

Change in China’s Outbound FDI Flows (2003-2008)


Latin America

Europe

North America

World

Asia

Oceania

Africa

0 2,000 4,000 6,000 8,000

254%

504%

531%

1,858%

2,793%

5,661%

7,239%

%

Africa’s role in China’s economic expansion

• If urbanisation drive in China is irreversible, then Chinese commodity demand is a long-term trend

• Given Africa’s comparative advantage, its growth is largely underpinned by Chinese demand for resources

• Thus, China’s growth prospects and changing consumption patterns increasingly dependent on Africa’s ability to supply these resources

• “New Coupling” China and Africa’s growth trajectories become intertwined• Africa a source of both hard and soft commodities given developments in China• Africa also plays role in China’s “going global” policy practising ground• Chinese initiated SEZs in Africa as potential safe-haven investment zones


Sino-African Agricultural Cooperation

Africa-China Agric Trade

• China’s agric imports:• In 2008, 1.7% of China’s agric imports were from Africa = US$906m• From 1999-2006 3-5% of China’s agric imports were from Africa• In 1995, 14.4% of China’s agric imports from Africa• Cotton is more than 33% of these imports, followed by tobacco, sesame seeds,

cocoa beans, wool• African agric exports highly concentrated – top 5 HS6 lines represent 82.8%• SA main source; top products: wool and hides• China’s agric exports:• In 2008, 4.8% of China’s agric exports were from Africa = US$1.446bn• This is about 2.8% of Chinese exports to Africa• Agric exports to Africa grown 13.5% pa, below exports to Africa overall (22.5%)• Green tea (18.6%), tomato paste, rice, kidney and animal guts• Top destination is SA, Nigeria, Morocco, Algeria & Egypt

China-Africa Cooperation: Agriculture

Chinese cooperation in SSA agriculture

• Chinese cooperation in SSA agric spans over 5 decades• Highly uncoordinated in the past• More than 200 agric cooperation programmes since 1960 in 40 states, including

agri-technology programmes• More than 10,000 Chinese agric experts dispatched in Africa during this period• About 300 Africans study agric courses in China every year• Since 2000 also shorter agric training programmes for Africans in China • Increasing dispatching of Chinese agric experts & technicians in Africa • Increasing FOCAC commitments re agricultural sector development in Africa

(both directly and indirectly)


FOCAC II – Addis Ababa

• Infrastructure development and logistics support• Mainly transportation; telecoms; energy; water; electricity

• Prevention and treatment of infectious diseases• Human resources development

• Development Fund training up to 10,000 African personnel• Agricultural cooperation

• Agro-infrastructure development• Farming & breeding & aquaculture• Food security• Exchange and transfer of applied agric technology• Skills transfer & technical assistance• Manufacturing of farm machinery• Processing of farm produce


FOCAC III – Beijing

• Double annual development assistance by 2009• Send 100 senior Chinese agricultural experts to Africa• Set up 10 agricultural demonstration sites in Africa• Set up 100 rural schools & double scholarships• Build 10 hospitals; build 30 anti-malaria clinics• Send 300 young volunteers to support education, agriculture, sports & health-

related projects• Cancel interest-free loans maturing in 2005 of LDCs• $3bn in preferential loans & $2bn in export buyer’s credits• Establish 3-5 SEZs in Africa• Set up the China-Africa Development Fund


FOCAC IV – Sharm el-Sheikh

• Building 10 clean energy projects in Africa to address climate change• Building 100 joint demonstration projects as part of the establishment of the China-Africa

science and technology partnership • Provision of $10bn in concessional loans to build up financing capacity

• Including $1bn for SME businesses• Further opening of Chinese market to African products - 95% of products duty free• Greater agric cooperation by building another 10 agricultural technology demonstration

centres & sending agricultural teams• Deepening medical care and health cooperation through building 30 hospitals, 30 malaria

prevention centres, training of 3,000 doctors & nurses• Increasing people-to-people and cultural exchanges

• Proposal to launch China-Africa joint research and exchange programme• Cooperation in human resources development and education by building further 50

schools, training 1,500 principals and teachers, more Chinese scholarships


Recent activities (I)

• Angola: Sinohydro contracted in 2007 to set up irrigation systems in four regions, and to construct a dam. Dam and related irrigation infrastructure have been common areas where Chinese companies have been active in, in Africa. In 2009, China also extended a $1bn loan towards ag sector development in Angola; and more than 60 ag technicians were to be trained by 2010 in Angola.

• DRC and Congo B: Two farming projects have received years of support from an agricultural institute in Hebei province in China. Chinese ag cooperation with the DRC dates back to 1973, in terms of planting of rice and vegetables; more recently, given the $6bn resource for infrastructure deal in the DRC, positive spillovers for the ag sector are expected, given the massive infrastructure rehabilitation plan.

• Ethiopia: China as cooperated in ag sector over the last three decades.

China-Africa Agric & Rural Dev Cooperation

Recent activities (II)

• Ghana: the Bui dam that is financed and constructed by China EXIM Bank and Sinohydro respectively looks to have irrigation potential of about 30,000 ha. Nigeria: There has been assistance with development of commercial livestock production; as well as construction of more than 600 boreholes to boost water supply across various states.

• Mozambique: A $18m loan was extended in 2008 from China to fund a number of smaller agric projects in the Zambezi valley. It is also reported that multiple Chinese companies are focusing on agro-industry and aquaculture in the country.

• Sierra Leone: Chinese agric teams have assisted to cultivate rice technologies. • Tanzania: Signed agreement with China in 2009 worth $17.5m for agricultural

cooperation activities.


Recent activities (III)

• Uganda: The Industrial and Commercial Bank of China (ICBC) in mid-2009 expressed interest to invest in Uganda’s ag sector. Also, in 2007/2008 more than 200 Ugandans (mainly officials and professionals) received training in ag, fishing, bamboo cultivation, urban health, education, etc in China. Further 100 or so were said to be trained in 2009 particularly in fisheries as part of a quota extended by the Chinese Govt to Uganda.

• Zambia: Chinese investment in Zambia dam projects will also have downstream irrigation benefits. There are also smaller private investments in farms including vegetable farming, maize and pork in Zambia (“friendship farms”).


Recent activities (IV)

• Construction of hospitals, rural schools, malaria clinics, etc.• Poverty reduction experience shared at workshops such as the The Experience

Sharing Programme on Development between China and Africa in Beijing; draws on success and progress of Chinese economy and poverty reduction, reforms and development in rural areas, infrastructure construction

• Nanjing Agricultural University offers classes to African agric officials on rural and development reform of agriculture; trained many agricultural experts in Africa

• Visits to provinces, Gansu province, for African officials to draw on experiences of poverty reduction programmes coordinated by China International Poverty Alleviation Center


Agricultural demonstration centres & EXIM Bank

• Previous assistance in agric sector has been uncoordinated and effectiveness thereof questioned

• More recent FOCAC commitments – boost agri programmes and cooperation further in Africa

• At FOCAC III and IV• Multibillion dollar packages for development initiated• Key focus on sectors of agric and infrastructure• Total of more than two dozen agric demo centres announced at summits

• Projects/agric demo centres being erected in more than a dozen African states to date

• Currently largely focusing on seed technologies• With numerous failed aid projects in Africa, coordinated efforts need to be made

that these research centres do not make the list of failed projects


Agric demo centres

• Benin: contract signed in March 2008• Cameroon: contract signed in November 2008; working committee set up early

2009;• Congo: contract signed in March 2008;• Ethiopia: contract signed in April 2008;• Liberia: construction not yet commenced;• Mozambique: contract signed in November 2008• Rwanda: construction commenced on 4 April 2009• South Africa: contract signed in 2008;• Sudan: field visit by Chinese company in October 2007;• Tanzania: field visit by Chinese experts in 2007;• Togo: construction commenced on 22 October 2008;• Uganda: contract signed in June 2008; and• Zambia: visit by Chinese experts in December 2008;• Zimbabwe: contract signed in 2008.


Role of agric demo centres

• Experimental research• Production demonstration • Showcasing modern irrigation and farming implements• Breeding improved strains to boost agric production• To help improve food security, alleviate poverty, fight unemployment• Introduction of modern farming technologies• Aquaculture development (SA and Uganda)• Rice research, including irrigation schemes and integrated production

(Tanzania)• Bridge gap between researcher and end user• Technical training of farmers, extension workers and agric students• Outgrower schemes – eg. DRC & Malawi



Role of CADFund

• 1 of 8 measures at FOCAC III• Independent commercial equity fund to facilitate Chinese companies investing in

Africa• Capitalised by CDB; initial $1bn; total $5bn• $540m dispatched across about 20 projects• Key focus sectors of agriculture, manufacturing, infrastructure (especially power

infrastructure), extractive industries and special economic zones• By March 2009, more than $20m committed across 10 agric projects• Includes projects in forestry, animal husbandry, fishery, planting, processing,

agricultural machinery, and agricultural trade promotion, among other things, to improve the livelihood of African people and to “bring in practical Chinese technology and skills” to African farmers

• Examples of these projects include cotton planting and processing projects in Malawi, Mozambique and Zambia and Ethiopian leather processing project.

• Greater proposed inv in agric machinery in Africa

Chinese agricultural technologies

Could address constraints of:

• Lack of high quality seed and plant breeding resources• Drought and poor water management• Problems of low labour productivity or mechanisation • Low soil fertility and lack of fertilisers • Biotic stresses pest and disease control and forecasting technologies• Agro-meteorology and climate change • Lack of affordable energy to support agriculture • Post-harvest losses of agricultural produce

Key Lessons

Where to from here?

Renewed emphasis on agric in Africa

• Traditional donor support in African agric has waned over the last 3 decades• But renewed focus on the primary sector from govt’s, donors & private sector• Recognition that agric can play important contribution to growth and

development of African economies• Mounting interest in the continent’s agric sector has emerging also from China &

other “non-traditional partners”, due to:• Higher global food prices• High rates of urbanisation in emerging markets (greater purchasing power)• Changing dietary patterns (greater meat intake)• Decreasing arable land in major agric producing economies• Water shortages in others• Cleaner energy targets, etc.

Where to from here?

China as a partner in Africa’s agric development

• China acknowledges developmental constraints in Africa & lack of progress in agric sector

• But China also sees commercial opportunity in agric (and other sectors)• And need to feed population that will peak at 1.6bn with declining resources• Cooperation & relations in agric sector will be on various levels / various actors• Policy focus as part of FOCAC commitments• Increasing focus by Chinese financial institutions (EXIM Bank, CADFund, etc) on

agric sector opportunities• Supporting investments and focus into complementary sectors such as infrastructure

(transport, storage & handling), ICT, power sector• Establishment of commercially run agric demo centres & outgrower schemes• Opportunities for smaller farming operations• Greater X of agric products, greater M of agric machinery & capital goods

Where to from here?

China as a partner in Africa’s agric development

• The transfer and accessibility of technologies, research & development• Cooperation programmes and agricultural research & expert exchanges• The best agricultural technologies for transfer from China to Africa are water

and soil related technologies• Investment into the agricultural and related sectors, rather than perhaps

“traditional aid” and handouts, are essential to further progress in the sector

• Africa has developmental challenges that only Africa can solve• Looking to success stories such as China’s agricultural development could be a

part of that solution• China has indicated a willingness to assist with the continent’s developmental

challenges, which perhaps is more closely aligned to Africa’s needs than previous assistance from traditional donors

Where to from here?

Overview of DiscussionThank You

Hannah Edinger

Senior Manager & Head of Research

Frontier Advisory

T +27 11 447 8038

F +27 11 447 8439

E [email protected]

W www.frontieradvisory.com

Overview of Discussion

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