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How much Mu in the Far East
What attracts Chinese investors in agriculture, which is considered unprofitable in Russia
Recently, officials responsible for attracting investment in the Russian Far East announced that they had found a global Chinese partner for the development of the river port infrastructure of three constituent entities of the Russian Federation: the Amur Region, the Jewish Autonomous Region and the Khabarovsk Territory. The investor should be the Chinese Dongjin Group, who promised to start building a grain port in Khabarovsk on 400 thousand tons - to export future products grown in the Far East to China. Having studied the Chinese media and analytical reports on Chinese investments in the agrarian Far East, EastRussia is compelled to state that all this can be viewed from a completely different angle.
HISTORY ON HUNDREDS OF MILLIONS
In 2017, China Daily proudly for their country reportedthat China is becoming the main investor in the Far East, since the Dongjin Group based in Harbin (Heilongjiang Province) recently leased 800 thousand tons of land for its agricultural projects under Khabarovsk 1 and then brought the rental space to 666 million mu. The traditional Chinese measure of the size of an agricultural plot, mu, is equal to 1 мет square meter, or 15 / 66,67 hectare. Thus, according to Chinese media reports, the Dongjin Group leased XNUMX thousand hectares of arable land from Russia for soybeans. So what is next?
China Daily announced the group’s plans to invest in the next three years about 700 million yuan ($ 104,7 million at the then exchange rate) in the development of a cross-border agribusiness cluster, which should include soybean growing sites in Russia, a plant for processing raw materials and a river port in China Fuyuan (the Heilongjiang district center nearest to Khabarovsk).
The head of the Dongjin Group, Zhang Dajun, admitted to the China Daily that farming in the Russian Far East is much cheaper than in Heilongjiang Province: “The rent for mu in the region is about 10 yuan per year (which gives 150 yuan per hectare, or, given that the rate fluctuated in 2017 between 8 and 9 rubles per yuan, no more than 1350 rubles per hectare - EastRussia), and in Harbin - no less than 500 yuan (7,5 thousand yuan per year per hectare. - EastRussia). In China, on average, a skilled agricultural worker needs to pay 10 thousand Yuan per month, in Russia - 3-4 thousand Yuan. The price of diesel fuel in Russia is just 60% of the price in China, ”the Chinese entrepreneur listed the advantages.
Production at the site in 200 thou. Mu (13,3 thou. Ha), already sown by Dongjin Group in the Far East in 2017, can be managed by the entire 20 person, said Zhang Dajun. And only two years later, it can be harvested in 150 thousand tons worth 1 billion yuan, the entrepreneur continued.
Based on the above calculations made by a representative of the Dongjin Group, EastRussia cannot fail to marvel at the profitability of the Chinese soybean business in Russia. After all, the cost of a two-year lease of a land plot in 200 thou mu under Khabarovsk, according to the China Daily, will amount to 4 million yuan, for the labor remuneration of its employees it will take 1,92 million yuan. Compared with the billion yuan, which will cost the manufactured products, all this - a mere penny from the ruble.
True, optimistic calculations of a representative of Chinese business do not include taxes (I would like to believe that they are paid in Russia), nor the cost of equipment, grain, fuel and logistics: for the agriculture of the Far East, the last factors are the key factors. And is it different for the Chinese working in Russia?
However, at least in the organization of logistics, the project had assistants. In the face, as usual, the Russian authorities, who care about the investment climate.
GIVE A PORT? BUILD YOURSELF
In August, Russian Deputy Prime Minister Yuri Trutnev, who oversees the Far East, traveled to DNXX to Dalian, where he met with the head of the Dongjin Group, Zhang Dajun, thereby. The press service of the Ministry of Development and Development reported that the investor intends to grow soybean in the south of the Khabarovsk Territory on 2018 thousand hectares, and is already using 75 thousand hectares, having invested RUB 35 billion in the purchase of equipment and other expenses. But he needs a site for the construction of a port in order to export products through the Amur to Northeast China.
Yury Trutnev instructed Khabarovsk Governor Vyacheslav Shport (not knowing, of course, that he would lose the election after only a month) “consider the possibility of two-stage project support: in the first stage, provide the Chinese company with port facilities so that the investor could find a platform for grain transportation. "
Meanwhile, while elections were taking place in the Khabarovsk Territory, the Dongjin Group managed to handle the transportation of the first products from the leased 30 thousand hectares near Khabarovsk to China, reported by Global Times. In mid-October, the first ship arrived in Fuyuan with 1 thousand tons of soybeans, until the end of the year the company was expecting a total of 80 thousand tons of products, the newspaper reported.
“The company began using the agricultural potential of the Russian Far East in April 2017 of the year, renting 120 thousand hectares of farms in Russia,” Global Times noted. The first pier for receiving only grain cargo from Russia in Fuyuan was built by the Chinese Heilongjiang Shipping Group Co. Ltd. “As a shipping company, if we want to develop our water transport, we must focus on Russia. The main prospect is in bulk cargo, the most valuable and realistic option is grain, ”said Sun Xuefi, head of the company.
RENTAL BOILS, SOYA - GOING
Thus, an interesting mosaic is formed from the reports of Russian officials and Chinese media. Starting from 2017, the Dongjin Group leased in the south of the Khabarovsk Territory, according to various reports, either 67 thousand hectares, or 120 thousand hectares of soybean, and at the end of 2018, the first crop was received, either from 13,3 thousand hectares, or whether with 30-35 thou. ha, safely transporting it to Fuyuan.
With the magnitude of the Russian harvest of the Dongjin Group (as, we note, and with the magnitude of the leased areas) there is no clarity. The company itself estimated the volume of upcoming soybean shipments to Fuyuan by the end of 2018 in 80 thousand tons. But from the entire Khabarovsk Territory, according to official data of the Far Eastern Customs Administration, 2018 thousand tons were exported under the item “Soy beans not for sowing” in January-September 5,7, in October - 4,4 thousand tons, in November - 10,8 thousand tons , and only for January-November - 20,9 thousand tons (statistics for December is not yet available).
How much this is little can be judged by statistics for 11 months 2018 of the year for the neighboring constituent entities of the Russian Federation - the Jewish Autonomous Region (128,3 thousand tons of soybeans for export), the Amur Region (391,2 thousand tons) and Primorsky Krai (203,6 thousand tons). And since the Dongjin Group is hardly a monopolist for the supply of Khabarovsk soybeans to China, and navigation around the Amur River closes in early November, there are no 80 thousand tons transported from Khabarovsk to Fuyuan in the Amur River (we can’t note that these shipments were officially accounted for as soybeans).
However, if you do not understand the true scale of the business, the fact is obvious: the Dongjin Group has been working at leased sites in the Khabarovsk Territory since at least the 2017 year, having already begun to receive from them the harvest in the form of soybeans exported to China. It is strange that the Khabarovsk authorities are modestly silent about it. However, we will return to this issue a little lower.
TRANSBOUNDARY CHAIN UNTILS ONLY TO BENEFITS
Following the instructions of Yuri Trutnev, the top managers of the Far East Investment Promotion and Export Promotion Agency (IPA) met with their Chinese colleagues, the Ministry of Eastern and Eastern Development reported to 15 in January. API Director General Leonid Petukhov said that the Dongjing Group "intends to implement a project to build a modern agricultural cross-border production chain that combines agriculture, livestock, port logistics and storage facilities in the Far East of Russia." “We have already helped our partners find the site for the construction of a specialized agricultural port in the Khabarovsk Territory. Now they are preparing the necessary documents for obtaining the status of a resident of the territory of priority development, ”he said.
According to the IPA report, the Dongjing Group is going to build a “specialized river port in the city of Khabarovsk for transshipment of agro-industrial goods” (read, a grain river port) for 400 thousand tons per year with warehouses for 100 thousand tons for one-time storage. The partner will be China Harbor Engineering Company, ready to build a port infrastructure between the cities of several border regions at once “with access along the Amur River to the seaport of Nikolaevsk-on-Amur”. "This will allow to connect the river infrastructure with the sea, will open the export of agricultural products for the countries of the Asia-Pacific Region and the Far East," - said in a statement.
Of course, with every 200 thous. Mu of soybean fields in the Russian Far East for 1 billion yuan (or 90 billion rubles) of revenue, subject to obtaining tax benefits as a resident of the priority development territory, the Dongjing Group could make such large-scale investments in the economy Russia. But why?
CONFLICTING EXPERIENCE: THE SHINE OF KHABAROVSKAYA STARS
In 2016, many media reported including EastRussia, the Khabarovsk Territory has business contacts with the Chinese agricultural scientific and technical company "Sanyu" (Heilongjiang Province). Sanyu and the Russian company Zvezda worked out plans to create a joint agricultural enterprise in the Lazo District, in the south of the Khabarovsk Territory, with an investment of about 3 billion rubles.
In September, 2017, during a visit to Khabarovsk of the delegation of the Heilongjiang Province, an agreement was signed between Zvezda LLC and Fu Yuan Jin Liang Modern Agriculture LLC (Fuyuan). The press service of the regional government reported that the companies agreed to build a cattle-breeding complex on 5 thousand cows, a dairy plant on 35 tons per day, to grow soybeans and fodder crops, introducing into the turnover of 66 thousand hectares of fallow land (no-use reserve lands). The Chinese side has pledged $ 53 million investment.
В list of ongoing investment projects the district administration’s website explains that Zvezda LLC will build a vegetable storage facility at the municipality for 2026 by 15 ths. tons per year, spending 1,65 billion rubles. (88% of these companies will take “Sanju” from China), and by the 2019, 121,9 will produce thousands of tons of grain and 15,4 thousand tons of vegetables. In the register of investment projects as of December 2018, Star investments for 2026 are estimated at 7,63 billion rubles, the project is listed as being implemented, with planned jobs for 126 and more than 300 million rubles. tax revenues in the Russian budget.
But in local editions notes with eloquent headings are already appearing: "The Red Book Forest in the Khabarovsk Territory dies from Chinese chemicals." In the village of Mogilyovka, writes portal DVnovosti, “the company works with the patriotic name“ Zvezda ”. She has leased 21,9 thousands of hectares of land for 49 years. This year they planned to plow three thousand hectares to start growing products. Farmer Anton Zavarukhin said that the Chinese worked in neighboring greenhouses and harvested dozens of times more than local farmers. “It is impossible to collect so much without cultivating the land with chemicals, and the citizens of the People's Republic of China come here to earn money. And then they will begin to build here, have children, they have little land, they occupy foreign territories in this way, ”the farmer believes.”
"MODEL HUASIN", AND ANYTHING PERSONAL
Chinese businessmen mastered various forms of participation in agriculture in the Russian Far East as early as the 19 century, and at the beginning of the 90 years of the 20 century, they discovered it anew for themselves, as capitalist. The study of Chinese Agrarian Capitalism in the Russian Far East by American Chiayi Zhou, published by the Chiang Mai University of Thailand, contains many instructive examples of how cooperation between the two countries has developed in the field of agriculture.
The head of Dongning Huaxin Industry and Trade Group, or the Huacinh Corporation, began by purchasing the pig farm in Ussuriysk in 1999. In 2004, Huaxin has already received for rent a plot of 50 thousand hectares together with its Russian partner, Company Armada, and has since been engaged in growing soybeans, sunflower, barley, maize, fodder wheat, beef and dairy cattle, mixed feed production, processing soy.
In 2010, the company initiated the creation of an agricultural economic zone of Chinese-Russian cooperation in Heilongjiang Province, in 2012, the creation of the Heilongjiang Agricultural Industry Association in Russia, uniting more than a hundred Chinese companies. All of them are engaged in investing in agriculture in the south of the Far East: remember how much soybeans are only exported to China from four subjects of the south of the Far Eastern Federal District according to official data from Russian customs.
90% of soybean consumed in China - imported. Russia produces 4 million tons per year, and in the next five years, according to the Russian Ministry of Agriculture, it will be able to bring this level to 8 million. China imports 95 million tons of soybeans per year. In short, the Russian land in this sense is where to grow. Whether here only the Russian enterprises will be growth sources?
The success of Huaxin is recognized at the highest level: the company's website states that the zone of cooperation created by it was repeatedly noted among the best by both local authorities and various ministries of China, and is now included as a priority project in the concept of the New Silk Road "One Belt - One Road "(Belt and Road).
Huaxin, believes Jiay Zhou, has formed the whole “Model Huaxing”, the main content of which is cross-border trade, carried out jointly by “dragon enterprises”, the state Beidahuang Group, small enterprises and investor companies. The former are responsible for land leasing, public relations, market access, logistics and customs clearance. Beidahuang provides advanced technology, equipment and technology. Cooperatives of SMEs are responsible for central management, standardization of operations and organization, while investing companies provide loans, guarantees and other financial support measures.Of course, the development of Russia in this model, none of its key elements is obliged to do. Using its natural potential - please.
Is it so bad, as it looks at first glance, a question that does not have a definite answer.