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Sino-Russian agricultural links take root

By Chen Yingqun in Beijing, Ren Qi in Birobidzhan, Russia and Zhou Huiying in Harbin | China Daily Global | Updated: 2019-09-19 10:21

Farmers from Heilongjiang province plant soybeans in the Jewish Autonomous Oblast in the Russian Far East. [ZHANG RUOXUAN/XINHUA]

Exports to rise

Valery Dubrovskiy, director of investment for the Far East Investment and Export Agency, a nonprofit organization, said Russia will open 1 million hectares of arable land to foreign investors, and it expects most of the funds to come from China. The South China Morning Post reported last month that the land is suitable for dairy farming or for cultivating crops, including soybeans.

Maxim Oreshkin, Russia's Minister of Economic Development, said his country and China have listed several key sectors that need to be developed and improved.

"The two countries should not only implement large projects, but also provide diversified end-use goods and investment, whose volumes will grow very quickly," he said.

In particular, he said that Russia plans to increase soybean exports to China, the world's largest importer of the crop.

There is high demand in China for soybeans, as they are the source of tofu, soy milk, soybean oil and even animal feed, but 90 percent of the country's requirements are met through imports, mainly from countries such as the United States, Brazil and Argentina. According to the Ministry of Agriculture and Rural Affairs, soybean demand in China is about 110 million tons per year, while the nation's output is about 16 million tons.

However, since last year, the US has imposed several rounds of additional tariffs on Chinese imports. In retaliation, China has levied tariffs on a range of US imports, including soybeans.

Before the trade dispute erupted, the Chinese market accounted for about 60 percent of US soybean exports, but last year the proportion fell to 17.9 percent due to US trade protectionist policies.

Sergey Lukanin, researcher at the Institute of World Economy and International Relations at the Russian Academy of Sciences, said that when trade tensions between China and the US began, he thought that Russia could theoretically fill the gap in soybean supplies resulting from the dispute, and as a result, agricultural cooperation between Russia and China could flourish.

Chen Yangfen, a researcher with the Institute of Agricultural Economics and Development at the Chinese Academy of Agricultural Sciences, said China needs to diversify its soybean import sources to ensure a stable supply of agricultural produce amid the trade tensions with the US. At the same time, Russia also needs to seek new growth drivers while facing economic sanctions from the West.

"China and Russia have strong complementarities in agricultural markets, capital, land and technology resources," he said. "Both countries have good relations, so deepening agricultural cooperation, especially in the soybean industry, is a natural move."

Some Chinese companies have already started to grow agricultural produce, including soybeans, in Russia to sell to the Chinese market.

Chen said the Russian Far East, which has a large area of reclaimable land that can be cultivated and is ready to attract investment, has been the main target for Chinese companies. An estimated 95 percent of the soybeans in the Russian Far East border region with Heilongjiang province are grown by Chinese, he added.

"In Russia, about 250 million hectares of land are suitable for growing soybeans, but to date, only about 3 percent has been used," Chen said.

The good relations between China and Russia, which mean low political risks, are an advantage in growing soybeans in Russia, he said. Moreover, the nations' geographical proximity means that the cost of sending the produce to China is much lower than that for shipping it from the US or Brazil.

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