May 30, 2014

Realizing that self-sufficiency in food will not be a reality, China is shifting its strategy to securing food sources through global mergers and acquisitions as it once did for fuel and mines.  China has 21% of the world’s population and only 9% of the world’s arable land, and in order to feed its growing population the country will need approximately half of the total global beef and wheat production. Last year Chinese and Hong Kong-listed companies spent $12.3 billion on overseas takeovers and investments in agriculture, food and beverages – the highest yearly level of investment in a decade.  After 2013 saw the $7 billion takeover of U.S.-based Smithfield Foods Inc. by Shuanghai International Holdings Ltd. (Now WH Group) and 2014 saw China’s Cofco Corp. buy controlling stakes in Dutch trader Nidera Holdings BV and the agribusiness unit of Noble Group Ltd. within two months for a combined $2.8 billion, China is expected to expand even further into global beef, sheep meat, oilseed and grain operations.  This expansion will face competition however as Bunge, Cargill, Archer Daniels Midland, Louis Dreyfus, and Mitsui & Co. among other international companies, are expected to be looking to create supply chains from Australian and the Americas to China.

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