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China Grows More Corn
(BEIJING, China) A lot of folks in North America may be wondering what will happen in terms of agricultural production in Argentina, Brazil, Paraguay or Ukraine. But an unexpected source of grain output growth might be on the way: the top grain importer in the world, China.
The Chinese government has planned one of the biggest rural exodus in recent history. As the country controls internal migration, it would know almost precisely the number of people going to big cities. The estimation is that nearly 200 million people would leave farm fields to large urban municipalities in the next ten years.
The idea of that government is to increase farm scale while its boosts on the field technology with broad-band internet investments. Broad-band internet access in rural areas of China grew from 125 million users to 186 million in a matter of five years with state support.
One of the initiatives that exemplifies best this support, it is the Internet Plus action, which integrates cloud computing big data, mobile internet and Internet of Things with modern manufacturing and e-commerce.
Right in the middle of this is Brazilian American Manuela Zoninsein, the founder of the online database platform SmartAg Analytics. Born in Rio de Janeiro and raised in Evanston, Illinois, Manuela designed the platform to help international ag tech companies to connect with Chinese farmers using news, credit background, government data, and info on the local culture.
The customer acquisition support platform, which is both in English and Chinese Mandarin, helps farmers to acquire irrigation equipments, tractors, crop protection products, greenhouse nurseries, precision agriculture or even drones, among other things. "China will modernize faster its agriculture as it is still backwards. It is a process that will happen pretty fast," forecasts Manuela Zoninsein.
Another interesting trend pointed out by the entrepreneur si the growth of e-commerce and the big demand for organic food. The government estimates that online transaction of farm produce valued US$ 16,1 billion in 2014. The number of vendors selling agricultural at Alibaba nearly doubled from 394,000 to 750,000 in the same period and yet the company may invest millions of Yuans to increase the rural e-commerce platform.
"The Chinese consumer may be willing to pay up to four times to buy organic in order to avoid food poisoning and things related. This is very common in China [...] The retail network wants to find this farmers, but yet it is hard to make it happen. A lot of pesticides are used and the government make money with it," she explains.
For Loren Puette, ChinaAg Director and former employee of Fintrac, a USAID contractor, thinks that the big potential of China is on labor intensive commodities such as garlic and reveals that rice farmers will be subsidized to stay on land. Some corn farmers may also be paid.
"China has the people to do the intensive labor and you do not need a lot of land to do that. In the strategy of the Chinese government, corn production has to go up and soybeans may go down," stresses Puette.
In agricultural machinery, investments raised from US$ 12.54 billion to nearly US$ 64 billion in less than ten years. A plan called "Made in China 2025" aims to boost purchases the machinery from local companies. Analysts say that multinational such as John Deere and AGCO may lose ground.
A few years ago, a Chinese national was accused by U.S. authorities of stealing corn seeds at a Pioneer Hi-Bred field in Iowa to smuggle it to seed company Beijing Dabeinong Technology Group Company. The allegede goal was to steal trade secrets to that company - owned by the husband of that Chinese citizen.
According to American authorities, this offense has been each time more common in Illinois and Iowa and becomes a challenge to protect intellectual property. That can be also a challenge for China to modernize its agriculture. Basf is one of the international companies that grown in the country and has manifested worries about counterfeit crop protection products in China. Over the last three years, the German-based company launched seven products and opened a seed laboratory. Basf introduced a technology which proves the authenticity of a product and points out with clarity products that are counterfeited.
"We have taken large investments in recent years to bring our latest innovations to Chinese farmers. Farmers demand more innovative products and high quality inputs. They are confronted with a large amount of counterfeit products with fake ingredients which can threaten farmers’ yields when diseases and pests are not controlled," tells Agriculture.com Tracy Wu, Director for Basf Crop Protection China.