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GREAT insights Magazine

Chinese agricultural investments in Zambia

April 2014

Guo Chatelard, S. 2014. Chinese agricultural investments in Zambia. GREAT Insights, Volume 3, Issue 4. April 2014.

Most analyses of Chinese agricultural engagement in Africa focus either on what China expects to get out of these partnerships or the impacts that Chinese agricultural aid and investment have on host societies and local communities. Few reports examine what Chinese actors are actually doing – or not doing – differently on the ground.

Cultivating contradictions

Recent alarm over foreign ‘land grabs’ and Chinese land deals in particular,[1] combined with the lack of systematic, in-depth and empirical research on Chinese engagement in African agriculture, has resulted in a striking discrepancy between what is frequently reported and what is in fact occurring in Africa.

Contrary to prevailing views, China is not a major ‘land grabber’ in Africa nor are its companies producing food for export to the Chinese market.[2] Although there has been a rapid increase of private investors accompanying bilateral agricultural cooperation in recent years, Chinese actors remain relatively small players in Africa’s changing agrarian landscape.

In order to understand the nature of Chinese investments in African agriculture we need to situate them in the broader context of global rising commodity prices and rising foreign investment as a national development strategy promoted by African governments in general.

The alignment of national development programmes in China and many African states, including Zambia, along a shared commitment to market reform and deeper global economic integration since the 1990s has created the conditions which are enabling and encouraging profit-driven agricultural transactions to proliferate.

Sowing seeds of cooperation: from political allies to economic partners

This is the case in Zambia, a country that has played a strategic role in the history of Sino-African relations and is home to one of the largest Chinese state-owned farms in southern Africa. Over the years China’s agricultural engagement in Zambia has evolved from an ideologically driven agro-socialist mode of cooperation in the 1970s-80s in the context of the Cold War to a profit-driven agro-capitalist mode since the 1990s.[3]

Before the 1990s there was no ownership of Chinese farming entities in Zambia. Experts were sent on a voluntary basis, they were subject to a strict code of conduct and expected to go back to China upon completion of their services. The focus was on facilitating subsistence agriculture and local capacity building, with no economic incentives to spur high returns on yields.[4]

By contrast in the 1990s, following market reform in China and economic liberalisation in Zambia, the basis of agricultural engagement changed and shifted to commercial cooperation geared towards production for the market. Stimulated by expanding domestic demand for food fuelled by a rising middle class, Chinese investors, like other foreign investors, sought to establish farms in Zambia first and foremost for commercial purposes.

In effect, China’s rise as a foreign investor following its metamorphosis into the world’s second largest economy occurred in tandem with Zambia’s efforts to develop commercial agriculture as part of a wider strategy to promote private sector led economic growth. Mutual commitment to market reform since the 1990s, in other words, enabled Chinese and Zambian economic interests to converge.

Chinese farms in Zambia: food as business

Nowadays, there are around half a dozen Chinese state-owned farms and about thirty private Chinese farms operating in Zambia, all of which target growing domestic demand.[5] They range from large state-sponsored investment projects (3000ha+) and agricultural cooperation programmes on the one hand, and individual entrepreneurs (starting from 2ha upwards) and private companies (40ha-1000ha+) on the other.

While many foreign investors in Zambia produce agricultural goods on a large-scale for export,[6] the majority of Chinese farms including state-owned farms produce staple foods for local markets. Their production includes cereals, fruits, vegetables, meat and eggs. They generally rely on various sales outlets from personal networks and local food markets to larger private clients such as restaurants, agri-businesses and commercial chains throughout the country.

Today, Chinese farms in Zambia vary in size, profitability and corporate strategy. Each company or commercial enterprise is organised and governed by a fluid and rapidly changing set of intra-corporate relations. No two farms, in other words, operate under the same production or corporate regime.

What is more, they cater to different segments of the market. What distinguishes Chinese farmers from other commercial farmers in Zambia is their commitment to meeting evolving trends in local demands from grass-roots consumers to large-scale agribusinesses.

In recent years, for example, the steady rise of Chinese migrants coming to Zambia has created a growing demand for different produce which was previously unavailable in Zambia such as Chinese cabbage and soya beans to produce bean curd (tofu). A number of Chinese farms have reacted to this new trend and adapted their production to this lucrative emerging market.

Up for sale

While some investors have acquired title deeds to land, many individual or household farmers are subleasing small parcels of land from private landlords. So far Chinese farms have predominantly used statutory land, also known as state land, and have therefore not prevented access of smallholders to traditional land.[7]

In most cases investors will search for land through local brokers and personal networks. There are, however, government agencies such as the Zambian Development Agency (ZDA), which facilitate land acquisition, particularly for large commercial purposes.

In other words, access to land is generally determined by supply and demand rules of the market. ZDA’s mandate is to facilitate and assist foreign investors in setting up their business in Zambia and to accompany them through every stage of the process. “ZDA is a one stop shop for all investors and this is evidence that Zambia is open for all to do business”.[8]

Steep learning curve: small but undeterred investors  

Although they vary in size, origin, resources, experience and ambition, Chinese farms on the whole remain relatively small players in Zambia’s evolving agricultural sector. In fact most are sandwiched between a handful of large-scale foreign commercial farms at the top,[9] and struggling local smallholders at the bottom.[10]

For example, China’s largest state owned commercial farm in Zambia, Jonken Farm,[11] comprises around 3500ha of land, while international conglomerate Chayton Africa’s Zambian subsidiary, Chobe Agrivision, is 4200ha and in the process of acquiring an additional 12000ha of land in the mining province of the Copperbelt.[12] China is therefore a relative newcomer (or latecomer) in the industry and is far from being able to compete with larger, more experienced companies.

At the grassroots, since the 1990s only a fraction of small private Chinese farmers have succeeded in transitioning to larger high-productivity commercial agriculture. Failure rates are high due to volatile costs of production and the capital intensive nature of commercial farming which few private investors have access to. In 2013 for instance, half a dozen small-scale Chinese farms, most specialising in poultry, shut down because of a sudden hike in the cost of labour and chicken feed.[13]

Most small-scale farmers in fact come from non-agricultural backgrounds. Unlike other foreign agricultural investors in Zambia, particularly from South Africa and Zimbabwe, Chinese farmers are often self-taught ‘accidental farmers’ who converted to farming from other non-agriculture related industries. With the exception of a handful of agricultural experts involved in government projects, the majority of Chinese actors involved in commercial agriculture are economic actors in search of new opportunities. They learnt about farming, livestock, agricultural management and marketing in Zambia, generally under remarkably challenging social, linguistic and physical environments, and are ready to convert to a new line of business if it proves to be more economically viable.

In other words, so far large-scale land investments carry multiple risks which Chinese corporations, both private and public, are either not yet capable or willing to take. Nevertheless, although Chinese investments in Zambian agriculture are currently more exploratory than predatory and they remain comparably smaller compared to other types of foreign investment, they will undoubtedly continue to grow if agriculture remains a sector which promises to deliver yields on investment. A discernible trait most Chinese investors share, either small or large, is a hunger for profit and an insatiable appetite to learn and adapt to market fluctuations and shifting local demand.

While both state-owned and private investors will likely continue to struggle to establish viable commercial farms in Zambia, if agricultural investments prove to be economically sustainable and profitable in the long term, it is probable that future generations of experienced investors with access to more resources will seek to learn from and improve on existing models of agro-businesses. The responsibility of managing these new partnerships will, ultimately, remain in the hands of the host government.

Solange Guo Chatelard is a Ph.D candidate at the Institut d’Etudes Politiques de Paris and an associate at the Max Planck Institute for Social Anthropology in Halle/Saale, Germany. 

This article was published in GREAT Insights Volume 3, Issue 4 (April 2014).

Footnotes

1. Since 2008 there has been a surge of Western media reports about Chinese land grabs in Africa. In 2012 the international non-profit organisation GRAIN released a data set listing 400 identified land grabs across the world. The report “confirms that Africa is the primary target of the land grabs but also underlines the importance of Latin America, Asia and Eastern Europe, demonstrating that this is a global phenomenon”. Accessed in March 2014: http://www.grain.org/article/entries/4479-grain-releases-data-set-with-over-400-global-land-grabs

2. Brautigam, D. 2013. “Chinese Engagement in African Agriculture. Fact and Fiction”, in Allen et al. (eds), Handbook of Land and Water Grabs in Africa: Foreign direct investment and food and water security, London: Routledge, pp. 91-103; Irna Hofman and Peter Ho, 2012. “China’s ‘Development Outsourcing’: A Critical Examination of Chinese Global ‘Land Grabs’ Discourse”, The Journal of Peasant Studies, Vol. 39, No. 1, January 2012, pp. 1-48; Lila Buckely, 2013. “Narratives of China-Africa Cooperation for Agricultural Development: New Paradigms?”, Futures Agriculture, China and Brazil in African Agriculture (CBAA) project Working Paper Series, no 53.

3. Hairong Yan and Barry Sautman, 2010. “Chinese Farms in Zambia: From Socialist to “Agro-Imperialist” Engagement?”, African and Asian Studies, 9, pp. 307-333.

4. Ibid.

5. Numbers are based on combined data from the Zambian Development Agency (ZDA) and the Patents and Companies Registration Agency (PACRA).

6. Zambia’s most important non-traditional exports include sugar, tobacco and coffee. Sutton, J. and G. Langmead. 2013. An Enterprise Map of Zambia, London: International Growth Centre. p.35.

7. Land in Zambia is divided into statutory land which is governed by the state, and traditional land which is administered by traditional chiefs. The majority of Zambia’s rural households live on traditional land.

8. Zambian Development Agency website, accessed March 2014: http://www.zda.org.zm/

9. Sutton, J. and G. Langmead, 2013. An Enterprise Map of Zambia, London: International Growth Centre. p.27-56.

10. Siegel, P. B. and J. Alwang. 2005. “Poverty Reducing Potential of Smallholder Agriculture in Zambia: Opportunities and Constraints”, World Bank, Africa Region Working Paper Series, no 85.

11. Jonken Farm operates under China National Agricultural Development Group Corporation (CNADC).

12. Chu. J. 2013. “Creating a Zambian Breadbasket: ‘Land grabs’ and Foreign Investment in Agriculture in Mkushi District, Zambia”, Land Deal Politics Initiative Working Paper 33, Institute of Development Studies.

13. Authors interviews with Chinese farmers in Lusaka. May 2013.

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Economic Transformation and TradeFood SecurityEmerging Players in AfricaAgricultureAfricaChinaZambia

External authors

Solange Guo Chatelard