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Jim Rogers’ assessment on Chinese commodities boom is proving to be true. China is the epicenter of a global commodity boom these days. At the same time, China is also investing in commodities assets across seve..

15 Oct 2013

By David Lew
China has been the world’s most exciting investment destination as far as commodities are concerned in the last few years. Global commodities investment guru Jim Rogers was lured by the Chinese boom in agriculture and especially in farm assets. This prompted him to shift his residential base from the United States to Singapore, so that Rogers could be close to the commodities boom in China.

Jim Rogers’ assessment on Chinese commodities boom is proving to be true. China is the epicenter of a global commodity boom these days. At the same time, China is also investing in commodities assets across several countries in the world.

From South America to South Africa, Chinese executives and businessmen are touring the world to scout for farm assets and food technologies.

The aim: China, the world’s most populous nation needs enormous food assets if the consumption pattern in the country is any indication.

Data on China compiled by Bloomberg reads interesting: China is expected to spend a mind-blowing amount of money on food assets and farms. In the last five years, the country doled out a spectacular $32.7 billion on farm assets.

No wonder, then, that early this year Shuanghui International Holdings Ltd decided to buy the US-based Smithfield Foods Inc. (SFD), the biggest hog producer in America, for $4.7 billion.

“Chinese investors are looking for farm assets and food companies around the world because the domestic market for consumption is huge,” says Howard Kelley, a farm analyst based out of Beijing.

Kelly says food products and agricultural produce are the core of the Chinese boom in the global commodities market.

“The fact is that no country can consume food as much as China. It drives insatiable demand for farm lands, agricultural produce and new farm technologies,” Kelly points out.

According to the Bloomberg data, China’s purchases in agriculture including pastoral land, farm chemicals, processors and food companies, have already touched around $7.8 billion this year, compared with the record $8.1 billion in 2010.

China’s acquisitions are for agricultural land, food companies and farm assets including technology. This is in fact driving the global commodity prices these days.

Among the foreign countries, Australia is top on the Chinese investment agenda. The agricultural and mining sectors in Australia continue to get bountiful of investment from Chinese companies. Australia has lots of under-utilized and un-utilized farm lands.

“China is buying large tracts of land in Australia to grow a variety of farm produces that can be consumed by the growing Chinese population,” says Kelly.

There are several reasons that are prompting China to scout for farm lands and agricultural produce abroad. They include limited supply of arable land, farms, water supply and rapid urbanization in China.

Economists have pointed out that food security, in other words, supplying enough food products to the burgeoning population is the most critical and important agenda for the Chinese government.


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