Case Study B: Africa

Summary

Wanbao Xaixai farm is one of the largest Chinese agricultural investments in Africa. It has an ambitious plan to grow rice in an area of 20000 hectares in Xai-Xai province of Mozambique and comprehensively improve Mozambique’s food supply system. The Mozambican government views the project as having strategic importance and has provided much support for it. However, there are NGOs accusing this project of land grabbing.  A report of National Geographic 2014 seemed to confirm this accusation. Mainly based on first-hand findings from field research, this case study will demonstrate the multiple facets of the Wanbao farm project. By examining perspectives and arguments of Chinese investors, Mozambican government and local communities, we will show the diverging understandings on agricultural development, environmental protection and social responsibility among the stakeholders. We will also compare the gap between plans and implementation to illustrate the challenges facing Chinese investors in Africa. 

Structure:

 
  1. 30-minute presentation: 1) introduction of case study; 2) defining the issue; 3) identifying stakeholders
  2. 30-minute group work: 1) How do you realize your own interest?; 2) How do you accommodate others’ interests?
  3. 30-minute group presentation: 1) group representing Chinese stakeholder 2) other groups respond to their presentation

Details for Case Study 

Case Study: Wanbao Xai-Xai Farm in Mozambique

Key Issues: Food Security, Environmental Protection, Land Grab, Integration with Local Community

Background:

June 2006, Mozambique allocated 1000 hectares land in Xaixai region of Gaza province for Hubei province to farm. April 2007 Hubei Lianfeng officially started operation in Gaza. The land in Xaixai region used to be part of a large irrigation scheme which was created 1951 by the colonial authority and was abandoned later for long years. After rehabilitating the irrigation system, Hubei Lianfeng Co. experimented to grow rice. The yields were pretty high for local standard. Local farmers can get 1-2 tons/ha on average yearly, whereas Lianfeng harvested 7-9 tons/ha on average. However, Lianfeng was not able to expand production because of capital limit.

2011 Wanbao Grain and Oil Investment Ltd. from Hubei province saw big chance in Lianfeng farm and decided to invest. Initially Wanbao planned to develop 20000 hectares rice farm within 3-5 years and use this farm as a model to drive local farmers to grow rice in another 100000 hectares land. 2013 CADF signed agreement to join the project and take 49% of the total shares.

Wanbao rapidly implemented the project. It developed 1800 ha land in 2012, and 8800 ha land in 2013. Wanbao was to expand another 6000 ha in Chokwe 2014.  According to the company’s manager, Wanbao has invested over 800 million RMB in the project. Because of the sufficient funding, Wanbao is able to shorten the development period of 20,000 ha land from 5 years to 3 years. Besides farming, Wanbao is also building facilities to process and store grain. Three processing areas in Xaixai region are under construction. Total warehousing capacity is 135,000 ton.

Perceptions of Stakeholders:

Wanbao Investment Co.

Wanbao has three modes of cooperation with local farmers. 1. Training program to teach local farmers how to grow rice. The trained farmers are expected to become out-growers to cultivate the planned 100,000 ha rice field. 2. After 2-year training, some farmers will become “demonstration farmers” and manage their land independently. They need to invest in seed, tools, herbicide and labor themselves. 3. Partnership. Wanbao welcomes local individual farmers and enterprises to become out-growers to supply rice. Wanbao is willing to provide seeds, technology and machinery services. Currently out-growers are very few.

Wanbao promised Mozambique government that the rice produced won’t be exported during the first five years. It will supply local market first. It is not profitable to export ordinary rice to China. Wanbao is constructing warehouses in Xaixai region which can store 135,000 tons of grain. The investment aims for long term gain and comprehensive development of rural area. However, a Mozambican researcher criticized that the project was more in line with the interests of local politicians and elites rather than with the interests of ordinary farmers.

Mozambican Government:

Mozambique government showed enthusiasm and high-level support for the Wanbao-Xaixai project. First, the government is generous in providing large area of land at a low price. Mozambique authority stressed that they are not interested in getting rent from the land, but asked Wanbao to transfer technology to local farmers. Second, Mozambique president, Gaza governor and agricultural department provided concrete support to the project. Wanbao feels that the high-level support gives them convenience in handling administrative processes. Third, politicians praised Chinese’s working morals and called local farmers to learn from them. President Guebuza emphasized that Mozambique can learn from China to be self-sufficient in grains.

Local Community:

May 23 2014, FONGA (a local NGO platform) tried to organize a protest, which was dispelled by the police. The protest accused Chinese of taking land from local people and not respecting local law (low wage) etc. According to a Mozambican researcher, these accusations could not find proofs. The land belonged to RBL, a state-owned company. Local people had used the land without legal permission. However, another ambiguous law says that people who have been working the land for more than ten years have a legal right to use the land. National Geographic wrote a story on this topic July 2014.

Besides, the neighbors who had land there did not want to become a part of the trainee program, for they did not believe Wanbao’s plan. The failed harvest of the first year due to flooding further discouraged people. Lack of communication and information also caused trainees to become indebted. For example, after farmer trainees sold their grains to Wanbao, they did not get money, but owed money to Wanbao instead, because training and service provided were added to charges, something that had not been known to the farmers.

Other Social-environment issues:

Wanbao does not use hybrid rice seeds, but uses good-quality conventional seeds. Hybrid rice has the advantage of efficiently absorbing water and high resistance against disease and pest. Yet, water resources in Mozambique are abundant and the ecological system is good so that there are hardly pests or diseases.  Therefore Wanbao does not see the need of using hybrid rice.

Unlike local peasants, Wanbao does not dispel birds. In Wanbao’s opinion, local farmers dispel birds because the birds can eat a large proportion of their grains. However, Wanbao is able to achieve a much higher production. What birds eat is just an insignificant part. For 70% time of a year birds eat worms and insects and benefit plantation. To use ultrasound equipment to dispel bird will interrupt ecological system too. Wanbao thus believes that it’s better to keep the birds. Similarly, Wanbao refuses to use pesticide. Learning from environmental lessons in China, Wanbao attaches great importance to maintaining existing ecological system.

World Bank once suggested Wanbao to use center pivot irrigation system to save water. Wanbao’s manager did not think that it’s a suitable technology. Rice plantation requires much water and Mozambique has abundant water. Therefore there is no need to save water.