An agreement has been reached for Tanzania to start exporting Soybeans to the world’s biggest importer of Soybeans, China. This has placed Tanzania in an advantageous position to narrow its trade deficit with China. This was made known by Wu Peng, director of African affairs at China’s foreign ministry.
According to South China Morning Post, Wu Peng said the move was in line with Beijing’s pledge to support African nations by expanding imports – especially beyond natural resources – made during the Forum on China-Africa Cooperation in 2018. “Both China and Africa stand to benefit from stronger trade ties,” the director stated.
This is tremendous news for Tanzanian farmers because China’s soybean market is the largest in the world, and depending on Tanzania’s production capacity, its trade deficit with China can easily narrow. Tanzania’s embassy in Beijing said China’s demand for soybeans was estimated at 103 million tonnes per year – 15 million of which are produced locally with the rest imported, SCMP reported.
South China Morning Post noted that there is a sizeable trade gap between Tanzania and China. In 2018, China bought goods worth US$393.92 million from Tanzania – mainly sesame, sisal, tobacco, and cashew nuts, according to the China Africa Research Initiative at the Johns Hopkins University School of Advanced International Studies. Beijing, meanwhile, exported goods worth some US$3.59 billion to Tanzania that year. China ranks fifth on Tanzania’s export list and it accounted for 3.9 percent of the country’s total exports.
A statement by Tanzania’s embassy in Beijing said, “Tanzania joins the list of countries that are allowed to capitalize on the huge export soybean market…it opens up new opportunities for Tanzanian farmers to find a reliable market for the product.”
Soybeans imported into China are mostly sourced from Brazil, the U.S., Argentina, and Africa. The only other supplier is Ethiopia, which accounts for a tiny portion of the imports. Other producers in Africa include South Africa, Nigeria, and Zambia. China consumes an average of 110 million tonnes of soybean a year – it is a key source of protein for animal feed and edible oil for the country – but only produces about 16 million tonnes annually.
China bought 9.79 million tonnes of the oilseed in September, up 19 percent from a year earlier, Chinese customs data shows. As Tanzania’s top buyer of sesame seeds (80 percent of exports), the country in 2019 made $164.5 million from exports of sesame to China alone.
Mark Bohlund, a senior credit research analyst at REDD Intelligence, observed that there were signs that African agricultural imports to the Chinese market from countries like Kenya and Tanzania were increasing, albeit the small scale. Purporting the reason for this phenomenon, Mark said, “I think it is partly due to China wishing to cut its dependence on soybean imports from the U.S. or Brazil, although the African production levels are too low to make any real difference.” This is also one of the major reasons why Tanzania stands the chance to benefit substantively from the Soybean market in China.
African Countries Must Take Advantage
Agriculture deals between China and African countries have always been touted by scholars as one of Africa’s best channels to reduce the widening trade deficit with China. In recent years, Beijing has signed Agriculture trade agreements with African countries like Kenya, Ghana, and Ethiopia, among others. The ability of African countries to take advantage of these agreements will help the continent bridge its trade deficit gap with the world’s second-largest economy.
Charles Robertson, the global chief economist at Renaissance Capital, an emerging and frontier markets investment bank, said, “it helps Africa pay for the Chinese exports they buy…African agriculture could at least double (perhaps quadruple) if the output of yields is increased to levels seen in Brazil – and China will be a market for those products.”
This year, China proposed a “soybean industry alliance” with Russia as it seeks to deepen economic ties with its strategic partner – despite its commitment to buy more of the oilseed from the U.S. In 2019, Beijing and Moscow signed a cooperation agreement on soybeans, aiming to increase imports from Russia to 3.7 million tonnes by 2024. Russian soybeans at present account for less than 1 percent of China’s imports.
How can African countries ramp up their Agriculture production capacity to meet China’s high market demands, which can help tilt the China-Africa cooperation towards a more mutually beneficial situation?
What do you think? Let us know in the comments.
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Africans on China (AoC) is a media-tech platform and consultancy on a mission to create a self-sufficient Africa that relates with the world, especially China, on mutually beneficial terms. We are led by a team of passionate African professionals who are experts in their field. Together, we bring decades of strategic and business expertise in the African and Chinese business and educational markets.