China moves to secure food and fuel future
Published: 07 Jun 2011
Posted in:  Australia | COFCO | China
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Radio Australia | June 7, 2011

Chinese food manufacturing company COFCO is negotiating the take over of Australia's fourth-biggest sugar producer, Tully Sugar.

Speaking to the Australian Financial Review newspaper, president of state-owned COFCO, Patrick Yu, says food security is his company's number one issue.

With China's population continuing to rise, it also faces problems with the quality of its land for agricultural production.

Presenter: Liam Cochrane
Speaker: Julian Cribb, author and a specialist in science communication


CRIBB: Yes by all means, China is a resource scarce country, in spite of its huge size, and they are fanning out worldwide to secure for themselves whatever resources they possibly can against a future where the world is going to be poor on resources. They're after energy, they're after food, they're after mineral resources, it's happening in all areas.

COCHRANE: And sugar would strike me as something of a luxury item, is that a sense of China sort of upward movement, socioeconomically?

CRIBB: Well I'm not sure that it's sugar they're actually after, it could well be ethanol. China's foreign investment in Asia, in other Asian countries has tended to be around bio fuels rather than actual food, because I think the thing that it is most worried about is the possibility of peak oil. The Chinese are truly scared by the prospect of peak oil, and their economy is very vulnerable to it. So they're looking at alternative transport fuels primarily. Now I don't know that that is the motive behind this, but I suspect it would be a motive behind this. They have of course been sniffing around Australia's sugar industry for a couple of years, they had a lash at CSR some time back, and these are the sorts of investments that they're making in other Asian countries and in Africa.

COCHRANE: Now of course all of these kind of big foreign investment deals have to go through Australia's Foreign Investment Review Board, which will examine them on their merits. Will the board be looking at this, especially with that ethanol component as something that Australia needs to be a little bit wary of?

CRIBB: Look for some reason that escapes me, Australia doesn't regard fuel as a strategic resource. We tend to take our luck on the markets, and I think that's rather foolish actually because peak oil has already actually happened worldwide, it's happened in the 49 out of 65 oil producing regions, it's happened in Saudi Arabia and another major price hike is imminent. We don't know when, could be next week, could be next decade, but it's going to happen, and Australia is not really prepared for that, so we are a little bit sleepy on that one. China on the other hand I think is reading the writing on the wall quite clearly and it's making the appropriate investments in both bio fuels and other forms of energy.

COCHRANE: What about when it comes to the buying up of land. We had I think it was late last week there were some movements to protect agricultural land, I believe it was in Queensland. But is there a growing awareness of the need to just be aware of the limited resource of land in Australia and who owns it?

CRIBB: Well some people would say that Australia is not short of land, although we are definitely short of good soil. Worldwide the issue is that we're losing one per cent of our farm land every single year due to a combination of degradation, urban sprawl, mining, sea-level rise etc., etc. So the world is running out of farm land quite rapidly and farm land is going to be a very, very precious commodity in time to come. Yes Queensland has taken steps to protect their most valuable farm land, but that's only two per cent of Queensland, and we recently saw some attempts in South Australia to protect some of their better grape growing country. So people are starting to wake up to this one, but again awareness is pretty low, Australians are pretty dozy and comfortable on the issue of scarcity of land.