World Grain - October 2022 - 6

FROM THE EDITOR
Tensions high over
proposed China mill in US
F
or all the saber rattling between the
United States and China in recent
years, the superpowers desperately
need each other when it comes to grain and
other agricultural products.
Despite its boldly stated goal of becoming
self-sufficient in grain, China
will never be able to feed its 1.4 billion
people (20% of the global population)
with only 7% to 9% of the world's arable
land, a percentage that continues to
shrink due to urbanization. It will continue
to depend on grains and oilseeds
imports from the United States and
other countries as well as expanding its
overseas investments in farmland and
other agricultural assets.
The United States is in a much better
position from a grain self-sufficiency
standpoint, but its ag economy is
highly dependent on exports to China,
particularly soybeans. A USDA study
found that during the US-China trade
war (mid-2018 through 2019), Chinese
tariffs reduced US ag exports by $25.7
billion, with soybean exports accounting
for 71% of the decline.
The complex, intertwined nature of
politics and agriculture involving China
and the United States is perhaps best
exemplified in the controversial 2021
purchase of North Dakota farmland by
Fufeng Group of Shandong, China, for
the building of a new wet corn mill. The
proposed deal, which would infuse millions
of dollars into the Grand Forks,
North Dakota economy, has met with
resistance from some state and national
politicians who say the project is a major
security concern given its proximity
(12 miles) to a US Air Force base. As a
result, some US lawmakers are calling
for policies that range from increased
scrutiny of agriculture deals to outright
bans of purchases by some countries.
With the project in limbo pending a
review by the Committee of Foreign
6
Investment in the United States, the
debate about whether to allow its bitter
adversary to buy US cropland, build
grain and food processing facilities and
purchase controlling interests in US
agribusiness companies has increased in
intensity. While talk of outright bans of
land purchases (China accounts for only
1% of foreign purchases of US farmland)
or asset investment are alarmist
and an overreaction, any country would
have legitimate concerns about allowing
a foreign entity, particularly one as
adversarial to US interests as China, to
build a mill essentially in the backyard
of a military installation. If China is determined
to build a plant in the United
States, it should be able to find land in a
less sensitive location.
Since the turn of the century, China
has made foreign agricultural investment
a top priority, having made major
acquisitions in Africa, Asia, Australia,
South America and the United States.
Signs point to more investment
as
Chinese leaders encourage it as a core
component of the One Belt, One Road
initiative that seeks to build connectivity
across six main economic corridors.
Going forward, the United States will
have to weigh the financial benefits of
Chinese agricultural investment against
its own national security interests. China,
meanwhile, must carefully guard
against taking actions
that could lead
to a
grain embargo by the
United States, putting
its food security at
risk. As different as the
countries are culturally
and politically, they will remain bound
together to a certain extent by grain and
other agricultural products.
Arvin Donley
Editor
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World Grain - October 2022

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