Diminishing water resources might force China to import large amounts of grain in the future, tells economic analyst Arthur Kroeber in Business Week. Although it might first groom domestic players like Cofco, before facing competitors like Cargill on a global market place.
China may have to increase imports because its dependence on the use of ground water for grain production “isn’t going to be sustainable indefinitely,” said Arthur Kroeber, managing director of Beijing-based GaveKal Dragonomics Research, a financial advisory firm…
China may be putting off “inevitable” large grain imports for 10 to 20 years to enable the opportunity to “develop companies like Cofco as domestic alternatives to Cargill and give them some sense of security of supply,” Kroeber said.
While the government has limited expansion of corn-based industry to ensure priority for livestock, “it’s difficult to control demand for starch” or other corn-derived products because there’s a strong demand for them, he said. So “either we produce here, or buy from outside,” he said…
Most countries will find it a rather “sensitive matter” to either sell or give long-term leases for food production areas to other foreign entities, Kroeber said. Still, cash-rich Cofco can offer “very attractive terms,” he said.
Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conferencen? Do get in touch. You can also fill in our ‘speakers’ request’ form.
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