China in 'land-grab' deal with Ukraine

By Alex Spillius

Ukraine has reportedly agreed a deal with a Chinese company to lease 5 per cent of its land to feed China's burgeoning population.

It would be the biggest so-called "land-grab" agreement, where one country leases or sells land to another, in a trend that has been compared with the 19th century "scramble for Africa", but which is now spreading to eastern Europe.

Under the 50-year plan, China would eventually control 3 million hectares, an area equivalent to the size of Belgium or Massachusetts, which represents 9 per cent of Ukraine's arable land.

Initially. 100,000ha would be leased. The farmland in the eastern Dnipropetrovsk region would be cultivated principally for growing crops and raising pigs. The produce would be sold at preferential prices to Chinese state-owned conglomerates, said the Xinjiang Production and Construction Corp (XPCC), a quasi-military organisation.

XPCC said it signed the $3.3 billion deal in June with KSG Agro, Ukraine's leading agricultural company.

But KSG Agro denied reports that it had sold land to the Chinese, saying it had reached agreement for the Chinese only to modernise 3000ha and "may in the future gradually expand to cover more areas".

Any sort of "land-grab" deal can be sensitive politically. Madagascar was forced to scrap a plan to lease 1 million ha to South Korea in 2009 after protests against "neo-colonialism". The Philippines has also blocked a China deal.

"This reminds us of a colonial process even when there is no colonial link between the two countries involved," said Christina Plank, the co-author of a report by the Transnational Institute on "land-grabbing".

With its population of 1.36 billion predicted by the United Nations to rise to 1.4 billion by 2050, China is among the leading renters of overseas farmland in Africa, South America and Southeast Asia, although the XPCC deal would make Ukraine China's largest overseas farming centre. China consumes about 20 per cent of the world's food supplies, but is home to just 9 per cent of the world's farmland, thanks in part to rapid industrialisation.

"As urbanisation speeds up, consumption has led to greater food demand and domestic grain prices have stayed above global prices," Ding Li, a senior researcher in agriculture at Anbound Consulting in Beijing, told the South China Morning Post. "Therefore, China has been importing more and more grain."

The Dnipropetrovsk transaction comes with considerable side benefits for the region. The Chinese company said it would help build a motorway in the Crimea and a bridge across the Strait of Kerch to connect the Crimea with the Taman Peninsula in Russia.

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