The Chinese invasion – they’re gobbling up Africa. Is Canada next?

The Chinese invasion – they’re gobbling up Africa. Is Canada next?

By Ian Cumming

The Chinese are coming to invest in Canadian farms. Actually, they are already here, buying farms, while, sometimes, technically adhering to provincial rules of non-foreign ownership.

They are very open that their long-term goal is producing food "for export to China," Youming Zhaou, President of the Canada-China Agricultural Food Development Exchange Center in Hamilton, a big Chinese government investor in Canadian farmland, told me last week. "The Chinese have the money, so we invest in farms," he said. "We’re forming lots of numbered companies," real estate agent Pierre Bergeron from Brossard, Quebec, told me last week. His company, Monaxxion, had bought, with Chinese money, 40,000 acres in 2011 and 18,000 acres in the first two months of 2012, mainly in Ontario and Quebec, he said last February in an interview.

While not revealing exact acreages at this point, "the price went up $500,000 a farm after I told you that," Bergeron said, conceding they have dwarfed those earlier numbers of acres sold. He noted that the Chinese are investing under a five-year and a 10-year plan.

These numbered companies, formed in Canada, are financed through Chinese government investment, with them taking over heavily-leveraged, modern farm mortgages, while retaining the same farm operator, and in the case of dairy operations, the same licence number for shipping milk, said Bergeron.

"If you own the mortgage, you own the farm," he said. He noted that it was perfectly legal for the Chinese to hold a mortgage and be shareholders in a Canadian corporation.

He used the example of taking over a $5 million mortgage on a heavily-leveraged dairy farm and then sweetening the pot by giving the farmer another $2 million. We’re buying the farm by keeping the mortgage and then giving the money to the farmer. We’re doing that across Canada."

When asked whether they were buying dairy farms this way in Ontario and Quebec — something dairy industry officials deny is happening because the names on the milk licences haven’t changed — "yes, for sure. We’re buying lots of them," said Bergeron.

Some buyers of high-priced Holstein genetics this year, not wishing to be identified, have anecdotally stated that Chinese investment money financed their purchases.

Zhaou, the Chinese government investor whose organization has given research money to the University of Guelph plus aligned on several projects with Agriculture Canada, noted that the majority of Chinese investors are after cash crop farms. Finding dairy farms, with quota, are "too high of an investment."

However, some taking the longer-term view are investing in dairy, he noted.

"We will get a Chinese community of farmers started," Zhaou predicted.

Out in Saskatchewan, provincial regulations stopping foreign ownership of farmland are just being blatantly disregarded, according to a recent Globe and Mail article. It featured Max Crop, which recently purchased 70,000 acres with money from 40 Chinese investors. It’s CEO, Jason Dearbon, was quoted saying, "We have Mandarin speakers and we have a vision that is going to link us with the marketplace. China is the largest commodity buyer in the world."

A September 2012 report titled "Dancing With The Dragon," by Josephine Smart, professor of anthropology at the University of Calgary, detailed that "Chinese investment is the biggest player in farmland acquisition in the world."

Canada "serves very nicely as both a source of safe food for Chinese consumers — now 1.3 billion — and as a destination for Chinese investment in farming projects and land acquisition," she wrote. "Food security is a strong concern of the Chinese government."

She also noted that both the government and private Chinese investors "have active investments in farmland and land crop production" around the world.

Based on examples from Africa and New Zealand, where unrestricted access to agriculture by Chinese investors caused bitter debates within their societies, Smart voiced concern that that will happen in Canada.

"Should farmland and agriculture production capacity be regarded as something of national strategic interest?" she asked, noting that Canada "needed to convey its position regarding foreign ownership of farmland and agriculture production before investors arrive in large numbers."

With the mixture of both Chinese government and individual investors from that country, "the total number of Chinese private investments may be much higher than what available data reveals," cautioned Smart.

However, Smart conceded in her report that those investors will come and both provincial and federal governments need to invest in training centres, focusing on language and customs.

"The competition for food supply and the ownership of agriculture production capacity is the future," she predicted.

Dairy farmer Ian Cumming lives in Glengarry County. The dairy farm is in northern New York state.