Foreign Capital Restricted in Agriculture

Agriculture is the base for a country’s existence and development. No country wants its agriculture to be controlled by the foreign capital. Neither does China, the largest developing country in the world.

Presently, the Chinese Ministry of Agriculture is working on the relevant policies and systems to exert stricter management over the foreign investment into the Chinese agricultural fields.

On the morning of September 22, the News Office of the State Council (Cabinet) held a press release in which the Minister of Agriculture Sun Zhengcai gave out the above information. Sun Zhengcai said clearly that the government will support the agriculture in introducing the foreign capital. But the foreign investment into agriculture must serve and subject to the basic principle of guaranteeing the supply of main agricultural products and maintaining the national agricultural safety and farmers’ benefits.

In recent years, a lot of foreign capital came into the Chinese agriculture, covering planting, breeding and the other industries, as well as the agricultural products’ circulation and processing. How to consider the issues about the foreign capital into the Chinese agricultural field is a disputable topic.

Li Guoxiang, a researcher from the Rural Development Institute, Chinese Academy of Social Sciences, thought that the foreign capital is neither a wolf nor “the more, the better”. Even a foreign-funded enterprise can bring different influence in different areas or fields. They must be treated differently.

For example, Yihai Kerry Investment Co., Ltd, which has taken a half of the Chinese edible oil market, introduced the Jinlongyu brand small-package rice, causing different reactions in the market. Li Guoxiang, based on his visit and investigation in Heilongjiang in August and the survey into the market, concluded that it played an important role in promoting the upgrade of China’s rice industry and the increase of the farmers’ income.

According to him, this kind of product uses the high-quality rice from Heilongjiang. The purchasing price is 0.1 or 0.14 yuan (USD 1.4 cents to 2 cents) per kilometer higher than purchasing the ordinary rice. Against this background, developing the high-end rice market satisfies the industrial development requirement, as well as the basic interests of the farmers.

According to the data, compared with the annual output of 120 million tons of rice in China, the 4-million-ton market capacity of the small-package rice is less than 4%, but its annual growth rate is over 50%.

“But for the beans industry, we opened it too wide. In addition, the raw materials mainly come from the international market. The influence of the international economic situation change and the price fluctuation is enlarged and then transmitted into China. It is not good for the market stability and the farmers’ interests. At this point, the government should take some administrative and legal measures to regulate this industry while supporting the legal operations of the foreign investors,” said Li Guoxiang.

Li Guoxiang thought that the government should give different kinds of restrictions over the amount of foreign capital in different agricultural fields based on their characteristics. When the prices of agricultural products see large fluctuation, the relevant departments have the rights to conduct the adjustment.

Furthermore, Li Guoxiang said that it is necessary to consummate and specify the regulations of the foreign investments into China. For example, the made-to-order farming, which was developed by the cooperation between the foreign companies and the Chinese domestic farmers, has already been generally adopted and is undergoing continuous development. But there are no corresponding regulations in the cooperation pattern and contract specification. When the disputes come out, there is no special department to tackle with them. In whole, the policy-led system needs to be reinforced.