China subsidises crop rotations

Intensive farming and over-use of inputs has polluted much of China's agricultural land, which has depressed yields and farmer income.

China has opened an experimental zone to subsidise farmers and agribusinesses operating crop rotations over three years in the central-eastern province of Hebei.

Grain-growing fields irrigated with groundwater pipes in Hebei, rain-fed fields and fields with heavy metal pollution will each use different crop rotational systems integrating beans and fallow periods. Areas prone to flooding, drought and heavy pollution will be prioritised, according to financial magazine Caixin.

Intensive farming and overuse of inputs has polluted much of China’s agricultural land, which has depressed yields and farmer incomes, according to United States Department of Agriculture (USDA) senior economist and China researcher, Fred Gale.

The pilot scheme will also identify land to be turned to forest or grasslands as part of an effort to make environmental improvements and hold back desertification.

The experiment is expected to be repeated, as finding a system to widen rotation practices and reduce pollution from industrialisation and the overuse of inputs is official government policy.

Caixin also reported that the government is preparing to return 40 million acres of farmland to forest or grassland, citing unnamed sources. That is an area about 8 million acres larger than the US state of Alabama.

Pollution is one of the highest risks in farming in China, according to Gale. He told Agri Investor earlier this year: “there is a lot of work to do in terms of pollution and crop-land. That, and state control over commodity pricing should make investors wary.”

Warburg Pincus Asia-Pacific’s former chairman Chang Sun has set up an agriculture and investment operating company, Black Soil, in the northern Heilongjiang province, which he chose because of low pollution and high soil quality, he told Agri Investor.

Efforts to reform Chinese agricultural systems often involve working with state-owned enterprises. Beidaihuang Group, the state company with which Black Soil is working to build up its crop and potato farming operation in Heilongjiang, has 5.439 million hectares of land. Sun says working with the company will soon allow Black Soil to aggregate about 700 square kilometres, an area of land slightly larger than Singapore.

China is investing heavily in reforming its own agricultural industries and linking China to supply chains on a global scale. A consortium of Chinese state-owned grain trader Cofco Corporation (China National Cereals, Oils and Foodstuffs Corporation) and private equity firm Hopu Investment completed a full purchase of Noble Agri earlier this month. A listed Chinese agricultural retail company with more than 13.6 billion renminbi ($2 billion; €2 billion) in assets is also in plans to launch a new 2.5 billion renminbi fund focused on agri infrastructure and supply chains in China, using public and private funding.

At the end of last year an agriculture micro-financing plan for the northern province of Jilin was ready to be implemented, according to state-owned news agency Xinhua. Meanwhile, companies like Cofco are working to implement government orders to scale up and move livestock farming operations inland from China’s east coast.