June 27, 2019 | By Margaret Myers

Featured Commentary - China's Agroindustrial Interests in Latin America

Editor's Note: Agri-Pulse and The Chicago Council on Global Affairs are teaming up to host a monthly column to explore how the US agriculture and food sector can maintain its competitive edge and advance food security in an increasingly integrated and dynamic world.

 

Much attention has been focused of late on the implications for Latin America of the US-China trade war, including in the agricultural sector, where Brazil has seemingly benefitted from growing demand for its abundant soy. Recent tariffs have pushed China to intensify trading with Latin America, contributing to the expectation that Brazil will become the leading soybean exporter for 2019-20, a distinction previously held by the US. But the China-Latin America agro-industrial relationship has been growing in its own right, and at a notable pace, prompted in large part by China’s evolving food security strategy. When considering whether recent trade patterns will cause the US to lose its global agriculture market share, it is important to examine the long-term development of China-Latin American relations.

The relative boom in Chinese investment in Latin American agroindustry dates back more or less to the 2008 global food crisis. For China’s leadership, the food price crisis highlighted their country’s considerable dependence on foreign markets and companies for supply of key agricultural goods. As they grappled with soaring food prices, Chinese policymakers formulated new guidelines for both overseas investment and domestic production, with a focus on heightened self-sufficiency. A Ministry of Agricultural research team noted the major success of the ABCDs (Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus Company) in the Latin American region recommending that Chinese companies establish a footprint in the region’s agricultural logistics and processing.

Over the next decade, a range of Chinese companies grew their presence in Latin American agroindustry, whether in processing and transport or logistics and marketing. This effort was largely spearheaded by COFCO, China’s main grains trader, through targeted acquisitions to become majority stakeholders and investment in processing, storage, and trading. Chinese companies such as Chongqing Grain Group, Sanhe, and China National Heavy Machinery Corporation have also invested in factories, pressing plants, mills, and other agricultural infrastructure in Latin America in recent years. 

 

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The Global Food and Agriculture Program aims to inform the development of US policy on global agricultural development and food security by raising awareness and providing resources, information, and policy analysis to the US Administration, Congress, and interested experts and organizations.

The Global Food and Agriculture Program is housed within the Chicago Council on Global Affairs, an independent, nonpartisan organization that provides insight – and influences the public discourse – on critical global issues. The Council on Global Affairs convenes leading global voices and conducts independent research to bring clarity and offer solutions to challenges and opportunities across the globe. The Council is committed to engaging the public and raising global awareness of issues that transcend borders and transform how people, business, and governments engage the world.

Support for the Global Food and Agriculture Program is generously provided by the Bill & Melinda Gates Foundation.

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