November 18, 2010

 

China seeks food security with Argentine deals

During a five-day trip to Argentina that ended Tuesday (Nov 15), China had engaged in phytosanitary protocol talks that would pave the way for China to import corn from Argentina, while announcing deals to resume beef purchases after a four-year hiatus.

 

"(China wants to) become more self-sufficient in terms of food ... but to guarantee secure supplies, we will be making more efforts on international trade," said China's Agriculture Minister Han Changfu at the grains exchange in Rosario, Argentina's main grains port.

 

The opening of a big, new corn market might encourage Argentine farmers to dedicate more land to the cereal, which has lost ground to soy in recent years as prices lagged.

 

China restricts imports of genetically modified (GMO) corn and GMO strains account for about 80% of Argentine production, which is seen reaching a record 26 million tonnes this season.

 

"There's a noticeable interest among Chinese traders, but no deals are being done and none will be done until we have a bilateral agreement," one Argentine grains trader said.

 

China lifted its de facto ban on Argentine soyoil in October, ending a trade spat that drove down prices for the edible oil and forced Argentina to sell one of its leading export earners more cheaply to India.

 

The restrictions were apparently put in place in retaliation against anti-dumping measures imposed by Argentina on Chinese manufactured goods.

 

"With the soy conflict behind us, we've started a new chapter," said Dominguez, who will travel to China later this month to sign the accords announced in Argentina.

 

Despite the soyoil spat, Chinese companies have recently announced new investments in Argentina's booming agricultural sector, including the construction of a US$800-million fertiliser plant and a cargo railway upgrade to link fast-growing northern soy areas to port.

 

Last month, the Chinese province of Heilongjiang signed a deal with Argentina's Patagonian Rio Negro province to work on a project to expand Argentina's usual agriculture borders by supplying irrigation systems.

 

Investments related to the agricultural industry, and especially soy production, look set to keep growing.

 

"The Chinese know where there are supplies of grains and where there is still room to expand the farming frontier," an analyst said.

 

In 2009, Chinese investment in Argentina totalled US$136.7 million, down slightly from the US$142.5 million invested in the previous year but way up from just US$12.9 million in 2004, Argentine government data shows.

 

"We receive two or three trade missions from China every week," said Ernesto Fernandez Taboada, head of an Argentine-Chinese trade chamber based in Buenos Aires.