By population, China is triple the size of the United States. Food, which generally costs more in China than in the U.S., makes up one-quarter of Chinese household expenditures. Meeting China’s demand for food will be a boon for domestic agriculture businesses, and a test for sustainable food production worldwide.
One issue to watch closely: the ongoing land-grab in Africa, which has much of the world’s unused arable land.
In China, tech adoption and environmental sustainability are progressing quickly, says Alex Zhang, cofounder of Hosen Capital, based in Beijing. New government policies tax food producers that negatively impact the environment, creating opportunities for products that reduce or eliminate synthetic pesticides and fertilizers, for example.
There are additional opportunities in tech that improves the traceability of food and ways to connect farmers, suppliers, and distributors is another opportunity. “There should be a data infrastructure to support mechanization and to make sure we have the right information flowing from the farm to the plate,” Zhang told AgFunderNews, adding China requires basic infrastructure upgrades.
Zhang says four of 10 of the world’s food companies, like four of 10 of the world’s internet companies, will be Chinese by 2027.
Hosen has invested more than $300 million in China-based or China-serving food and agribusiness-related companies and recently closed its third fund at $440 million with investments from institutions in the U.S., Europe, the Middle East and Asia.
“The whole industry is modernizing at a speed we haven’t seen in Chinese food industry history,” Zhang said. “We will see more trade sales and large Chinese food companies will continue to go global.”