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Outsourcing Farming, a Chinese Initiative

Plagued by scarce water supplies, China is turning to a new trading partner 15,000 miles away - Brazil - to supply more protein-packed beans essential to a richer diet//. For more than 2,000 years, the Chinese have turned soybeans into tofu, a staple of the country’s diet.

In China, vanishing cropland and diminishing water supplies are hampering the country’s ability to feed itself. On the other hand the increasing use of farmland in the United States to produce biofuels is pushing China to seek more of its staples from South America, where land is still cheap and plentiful, reports say.

'All of a sudden you have a global market for land, a competition between several different products for the same amount of land,' said Sergio Barroso, president for the Brazil operations of Cargill, the biggest grain trader in the world. Brazil’s soybean industry is losing acres to sugar cane for ethanol production in some areas, he said, and is competing with corn, cotton and cattle.

For its part, China has continued its buying spree in Brazil. The soybean trade between the countries has exploded. Last year Brazil sent nearly 11 million tons of beans to China, a 50 percent increase from the previous year and nearly double the amount shipped in 2004. Early indications are that Brazil has produced yet another record crop, and analysts expect that China will devour most of it.

But there are complaints. Growers in the state of Mato Grosso amassed 14.5 billion US dollars in debt in the last two years. Farmers say they can no longer afford storage space, forcing them to sell their crops as soon as harvested, rather than wait for higher prices.

The growers’ desperation has allowed the major grain traders to tighten their grip.

Brazilian farmers say they are paying up to 25 percent more for supplies like fertilizers provided by the traders, who are paid back with the crop. 'We are becoming slaves of the big tradin g companies,' noted Ricardo Tomczyk, a farmer, bitterly.

In such a situation the Chinese want to connect directly with Brazilian farmers, bypassing the multinational grain merchants. While they have yet to make a major purchase of cropland in Brazil, they are looking to invest in improved facilities and upgrade the antiquated rail system.

China began looking overseas for more soybean supplies in the mid-1990s, when the scope of its land and water problems became clearer. Beijing has also chosen to use more of its arable farmland to grow fruits and vegetables, crops that make better use of China’s cheap labor and scarcer water supplies to generate higher returns on the export market.

In northern China, where soybeans traditionally have been grown, water tables are dropping at a rate of 3 to 10 feet a year, according to Wu Aimin, a researcher with the China Groundwater Information Center in Beijing.

'It takes a thousand tons of water to produce one ton of grain,' said Lester R. Brown, president of the Earth Policy Institute, an environmental research and advocacy group. 'So the most efficient way to import water is in the form of grain.'
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