Chinese companies are in talks to invest $1.9bn in 19 agricultural projects across Kazakhstan in an expansion of Beijing’s Silk Road initiative beyond roads and railways to beef and tomato purée.
Gulmira Isayeva, Kazakhstan’s deputy agriculture minister, said Beijing’s $40bn Silk Road Fund was planning investments in three projects, including one to move three tomato processing plants from China to the Central Asian country.
“We have great interest from Chinese companies to invest in our Kazakh agricultural production system,” she told the Financial Times in an interview. “We can export to China all products which we can grow in Kazakhstan.”
Kazakhstan is the world’s eighth-largest wheat exporter but its agriculture industry, established largely in Soviet times under Nikita Khrushchev’s virgin lands programme, is inefficient and under-developed. The Kazakh government hopes agriculture can help the oil-dependent economy diversify as it experiences its weakest growth in two decades.
Chinese investment in agriculture is a politically sensitive topic in Kazakhstan, where in 2010 a proposal for China to lease a large area of land was dropped after rare public protests.
In recent weeks, the country has witnessed a new series of protests over the mistaken belief that a new law would allow foreigners to buy Kazakh land, which led to the resignation of the agriculture minister and economy minister last week. Nursultan Nazarbayev, Kazakhstan’s president, last week bowed to the protesters by delaying the implementation of the new law.
Ms Isayeva, who was speaking before the most recent protests, stressed that Chinese companies would not be allowed to own Kazakh land.
Moreover, she said that Chinese investors were in general not seeking to rent large swaths of agricultural land. Instead, she said, they were looking to invest in processing facilities in partnership with Kazakh companies.
For example, chicken processing facilities can increase the efficiency of Kazakhstan’s poultry industry, she said. “In Kazakhstan we have no tradition to eat legs and heads of birds; in China it’s a delicacy.”
The former Soviet countries of Central Asia are looking increasingly to investments from China to spur growth as the fall in commodity prices and recession in Russia weigh on their economies.
“China is a growing giant; we welcome its development,” Erlan Idrissov, Kazakhstan’s foreign minister, said in a separate interview. “There is nothing bad in the growing presence of China in our part of the world. The prudent policy will be to find every opportunity to jump on board.”
Investments under consideration in Kazakhstan’s agriculture sector include $1.2bn by Zhongfu Investment Group into oilseed processing; $200m into beef, lamb and horsemeat production by Rifa Investment; and $80m into the production of tomatoes and tomato paste by Cofco, China’s state agriculture conglomerate, according to a list of prospective investments Ms Isayeva showed the FT and statements from the project partners.
Ms Isayeva said Silk Road, a sovereign fund dedicated to implementing Beijing’s “One Belt, One Road” policy, had allocated $2bn to agriculture and was considering investments in the Cofco and Rifa projects, as well as a $58m grain processing venture between China’s AIJIU and Kazakhstan’s Total Imepx in northern Kazakhstan.
“Before, the main attention [of the fund] was concentrated on industrial products,” she said, expressing confidence that further investments would be forthcoming. “It’s only starting. There is an expansion of interest from different provinces.”
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