China Investment Corp., (CIC), which is China’s $650 billion sovereign wealth fund is shifting its investment focus into global agriculture by partnering with governments, multilateral organizations and institutional investors around the world. It appears the Chinese are realizing that self-sufficiency in food will never be a total reality. China is, therefore, shifting its strategy to securing food sources through global mergers and acquisitions as it once did for fuel and mines.
The CIC plans to invest in sectors such as irrigation, animal feed production, and land transformation and other sectors that it leadership sees as being overlooked by institutional investors, according to Financial Times reporters.
Over the years since CIC was formed in 2007, CIC’s focus changed a couple times—first investing in U.S. financial institutions but then shifting to investments into energy, mining and metals to support China’s industrial growth and now agricultural sectors investing.
China has 21 percent of the world’s population and only 9 percent of the world’s arable land, and in order to feed its growing population by 2050 the country will need approximately half of the total global beef and wheat production, claims Bloomberg business news.
Last year Chinese and Hong Kong-listed companies spent $12.3 billion on overseas takeovers and investments in agriculture, food and beverages, Bloomberg further noted. There have been takeovers by Chinese companies of U.S.-based Smithfield Foods Inc.; a Dutch trader company—Nidera Holdings BV; and the agribusiness unit of Noble Group Ltd. All are big players or can be in the international market although China will have to compete against mega-companies world ag trade such as Cargill.