Despite all their efforts, agricultural expert Shi Jingui could not figure out why his organization's projects in Africa were not producing expected results.

Shi, who has been working in Africa as a Chinese agricultural expert for more than 10 years, had been searching for answers for some time.

"We have agricultural cooperation projects in some African countries, but these have not generated satisfying economic benefits and grow slowly even though they are welcomed by locals and we've worked really hard," Shi told ChinAfrica recently.

The answers have emerged from the Central Rural Work Conference, held on December 22 and 23. Held annually to discuss China's agricultural policies, this meeting decided agricultural modernization will be pushed forward through reforms and innovation. Reforms in China's state-owned agribusinesses were also discussed.

"Modernization is the key to further boosting agricultural development, especially the growth of big state-owned agribusiness groups," said Shi, noting that these groups are now the major force in China's agricultural production.

"With advanced technologies and machineries as well as a permanent team, state-owned groups, which usually have long histories, will have a new development impetus during the process of modernization in future," said Shi, adding that there lies the key to making their African projects more viable. 

Technology driver

Shi is now more optimistic about the development of his company's African operations. "Though smaller in scale, the agricultural cooperation projects in African countries also need modernization for further development," he said. "We hope to grasp the opportunity."

Established on March 5, 1980, China State Farms Agribusiness (Group) Corp. (CSFAC) is one of the biggest state-owned agribusiness groups in China. What makes it different from its peers is that it has the biggest investment in agricultural cooperation in Africa.

According to Shi, the CSFAC has been exploring ways to enhance the operation capacity of projects in Africa and has gained some experience. Currently, it has agricultural projects in six African countries. They include government-to-government aid programs as well as market-oriented ones.

"For the government projects, we mainly highlight their social functions by demonstrating China's advanced agricultural technologies so as to help local farmers improve their farming technologies," said Shi. "We have courses training locals in agricultural production in a more scientific way. China's agricultural technologies and machineries work very well in Africa."

For market-oriented projects without government subsidies, Shi said the economic profits should also be stressed. "We have several successful projects after years of hard work and have gained a lot of experience," he added.

A chicken farm in Boffa, about 130 km away from Conakry, the capital of Guinea, is a successful project launched in January 1996. Originally a government-to-government scheme, it now runs as a business.

"Though its economic return is not very high, it has developed for nearly 20 years on its profits alone," said Shi. The social benefit of the project, warmly welcomed by the locals, is extremely good. "This project has greatly boosted the local poultry industry," he remarked.

The farm uses high-quality flocks and advanced technologies to breed chickens and sell them to local farmers. Farmers profit by selling eggs. The profits enable the project to keep growing. In addition, local farmers are trained to raise chickens scientifically and prevent epidemics.

"This is a good mode of development. On one hand, our farm can gain enough profit to maintain its development; on the other, it can increase local employment and stimulate the poultry industry," Shi said. The farm now has more than 200 local employees.

It is the first project of the CSFAC operated as an enterprise in Africa. Evidence proves that the experiment has been successful, Shi said.

The CSFAC will soon have a second chicken farm up and running in Africa. The group is now operating a government-aid agricultural demonstration center in Benin. Started in 2011, the aid period has ended and the center is expected to develop on its own. "We will turn part of the center into a chicken farm with the same operation system as the one in Guinea," said Shi.

Adding value

Shi admitted that agriculture projects, especially grain growing, involve high investment and risks but low profits. "It is impossible to get quick economic returns from agricultural projects. That requires long-term vision," said Shi.

According to him, the key to solving the problem is to introduce an industrial chain operation mode. "It is true that earnings from the grain industry are low, but we can develop grain processing, which has much higher added value," he explained.

The CSFAC is trying out an all-industrial-chain project in Cambodia in Southeast Asia, where they grow grain, process, trade, store and transport it. "This way, we can balance low-profit sections with high-profit ones to ensure sustainable development of the whole project," said Shi. This operation mode also helps locals process their grains at low costs.

Once the experiment in Cambodia takes off, Shi plans to introduce it in African projects.

Africa has welcomed the cooperation mode. "Africa-China cooperation in agriculture is very important. [It] should be conducted on an equal and win-win basis," Abdulrahman Shimbo, Tanzanian Ambassador to China, has said earlier.

Agribusiness Background

After the founding of the People's Republic of China in 1949, a series of state-owned agribusiness groups were established, focusing on agricultural production and processing. Usually equipped with advanced agricultural machinery, these groups hold large plots of farmland and have a high capacity to process agricultural products.

Large state-owned agribusiness groups are widely regarded as the "national teams" of agricultural production with the main task of safeguarding China's food security. Statistics from the Ministry of Agriculture show that China's agribusiness system has 1,785 state-owned farms covering 6.12 million hectares of farmland – 5 percent of China's total farmland. There are more than 3,200 state-owned enterprises, mainly in agriculture, forestry, animal husbandry and fishery.

In 2014, state-owned agribusinesses nationwide produced 36 billion kg of grains, and their GDP exceeded 650 billion yuan ($104.84 billion).

However, these groups are also burdened with heavy social responsibilities. They run schools and hospitals as well. According to Wang Shoucong, Director of Bureau of State Farms and Land Reclamation under the Ministry of Agriculture, the key to reforming state-owned agribusiness groups is to encourage them to transform into modern enterprises and ease the burden of the additional functions.

"Through the reforms, we hope to enhance state-owned farms' operational capacity and strengthen their economic functions," Wang said, adding that the reform goal is to develop state-owned agribusinesses into modern agricultural enterprises.