China to Lease 3 Million Hectares From Ukraine for Farming

China will plough billions of yuan into farmland in Ukraine that will eventually become its biggest overseas agricultural project.

The move is a significant step in China's recent efforts to encourage domestic companies to farm overseas as China's food demand grows in pace with urbanisation.

Under the 50-year plan, Ukraine will initially provide China with at least 100,000 hectares - an area almost the size of Hong Kong - of high-quality farmland in the eastern Dnipropetrovsk region, mainly for growing crops and raising pigs.

The produce will be sold to two Chinese state-owned grain conglomerates at preferential prices. The project will eventually expand to three million hectares.

Ding Li, a senior researcher in agriculture at Anbound Consulting in Beijing, said the deal was a big move for China compared with earlier overseas agriculture.

In April 2009, China had slightly over two million hectares of farmland abroad, he said. "So three million hectares would mean a very big project."

The agreement was signed in June between the Xinjiang Production and Construction Corps and KSG Agro, Ukraine's leading agricultural company, XPCC said in a statement.

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Too bad the Europeans didn't work out this sort of deal.