China buys 5 percent of Ukraine's land

China buys 5 percent of Ukraine's total land -- about 9 percent of its farmland -- to feed its growing population.
By KRISTEN BUTLER,  |  Sept. 23, 2013 at 2:11 PM
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China has just struck a deal to farm 3 million hectares (about 11,580 square miles) of Ukranian land over the next 50 years to feed its ballooning population.

For comparison, that's an area roughly the size of Massachusetts or Belgium.

The eastern European country will give up 5 percent of its total land, or 9 percent of its arable farmland, under the deal between China’s Xinjiang Production and Construction Corps (XPCC) and KSG Agro, a Ukrainian agricultural company.

Last year, Ukraine repealed a law barring foreigners from purchasing land. As part of the deal, China's Export-Import bank has given Ukraine a $3 billion loan for agricultural development.

Ukraine will receive seeds and equipment in exchange for crops and pigs raised in the eastern region of Dnipropetrovsk, to be sold at preferential rates to two Chinese state-owned grain firms.

XPCC also plans to give Ukraine a fertilizer plant, as the country currently imports about $1 billion in fertilizer annually. XPCC says it will help build a highway in Ukraine’s Autonomous Republic of Crimea and a bridge across the Strait of Kerch, a transport and industrial center.

The deal will initially turn over 100,000 hectares of farmland, increasing to 3 million over 50 years.

China eats about one-fifth of the world’s food supplies, but holds just 9 percent of the world’s farmland after rapid industrialization. The country has already purchased farmland in Africa, South America and Southeast Asia, but the deal with Ukraine represents its biggest investment in foreign farmland to date.

It is estimated that between 0.7 and 1.75 percent of the world's farmland is being transferred from poor nations to foreign buyers with growing populations including Egypt, China, South Korea and UAE.

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