China, Latin America advised to deepen agricultural co-op

10.11.2016

Although agricultural cooperation between China and Latin America has entered the track of institutionalization and routinization, investment scope and size in the agriculture remain small. The two sides should deepen industrial innovation and further enhance efficiency and sustainability of their agricultural development, said experts. China and Latin America are strongly complementary to each other in agriculture and Latin America enjoys obvious resource superiority. Latin America sees its cultivated lands take a share of 10 percent in the world and China also 10 percent.

However, Latin America's population accounts for 8 percent of the world and China 20 percent. Such resources allocation and population distribution imply huge space for their cooperation, according to the International Cooperation Department of China's Ministry of Agriculture (MOA). China and Latin America have built increasingly improved mechanisms for agricultural cooperation. At present, China has signed bilateral memorandums of cooperation with 16 Latin American countries. To be specific, it has established the joint committees under the cooperation agreements with 13 Latin American countries.

It is worth noting that trade between China and Latin America has maintained a rapid growth. In 2015, total trade of agricultural products between the two sides reached 33.4 billion U.S. dollars. To be specific, 93.4 percent of the total trade refers to Latin America's exports to China, accounting for 27 percent of China's total agricultural imports. Last year, nearly half of China's imported soybean came from Brazil.

According to statistics, China has constantly expanded investments in agricultural industry in Latin America, especially South America. Its investments in the region have amounted to over 30 billion U.S. dollars accumulatively and the investments focus mainly on fields including soybean, corn, oil palm and rice. Despite the delightful achievements, China and Latin America also face many adverse factors in agricultural cooperation, said experts.

First, the two sides are far away from each other geographically, leading to relatively high costs in agricultural cooperation and economic risks. Second, the two sides have poor information communication and lack comprehensive and systematic understanding of each other's social system, laws and regulations, financial system, tax policies, etc., leading to high policy and institutional risks. Third, the two sides are quietly different in investment policies, labor system and agricultural support and protection, which exclude and restrict their cooperation.

Fourth, some countries or media continued to hype up so-called "China threat" theory, making China-Latin America agricultural cooperation more complicated and sensitive, said experts. Jiangsu Muyang Co., Ltd officially entered the Latin American market in 2005. It now has eight offices in countries including Brazil, Bolivia, Ecuador, Peru and Mexico and is engaged in cultivation, feed-processing equipment and port grainstorage facility. After more then ten years of development, it finds out two problems, namely, language and transportation. Besides, it still lacks enough understanding of the local tax and laws.

To overcome these problems, the Chinese enterprises have to implement the localization strategy, said Liu Guangdao, vice president of the Muyang Co., Ltd. Meanwhile, many experts and entrepreneurs believed that in the future agricultural cooperation between China and Latin America, innovation will play an increasingly important role. A few years ago, China and Brazil started to cooperate in the science and technology in the agricultural field. The two sides jointly developed some brand new cooperation projects and achieved some results, which bring common interest to them.

Brazil has many advanced technologies in agricultural production and can share them with China to enhance agricultural production efficiency and realize win-win results, said Andrea Bertolini, agricultural counselor at the Brazilian embassy in China.

Yili Group, a large dairy enterprise in China, has seen nearly 10,000 dairy cows in self-built pastures come from Uruguay. It also cooperates with Latin American countries on raw material imports. In recent years, Yili has carried out strategic layout in Europe, North America and Oceania. Meadow and pasture conditions in Latin America are very superior. Stock farming in Argentina, Brazil and Uruguay are developed.

Yili is willing to have deeper exchanges and cooperation with the Latin American countries and focus on innovation to promote the global agricultural innovation and development, said Wang Baoquan, vice president of Yili Group.

In China-Latin America agricultural cooperation, they cannot be confined only to agricultural technology biotechnology. Furthermore, they shall extend cooperation to logistics and port service, policies and agricultural industrial organization. They shall make full use of their complementarities to enhance their agricultural production efficiency and sustainability, said Tian Zhihong, head of Department of International Trade, China Agricultural University.


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