Grow your food where the water is : Even if that's in another country !

In China the water table under the North China Plain, an area that produces more than half of the country's wheat and a third of its corn, is falling fast. Overpumping has used up most of the water in a shallow aquifer there, forcing well drillers to turn to the region's deep aquifer, which is not replenishable. As water tables have fallen and irrigation wells have gone dry, China's wheat crop, the world's largest, has declined by 8% since it peaked at 123 million tons in 1997. In that same period China's rice production dropped 4%. The world's most populous nation may soon be importing massive quantities of grain.

But water shortages are even more worrying in India. There the margin between food consumption and survival is more precarious. Millions of irrigation wells have dropped water tables in almost every state. Half of India's traditional hand-dug wells and millions of shallower tube wells have already dried up, bringing a spate of suicides among those who rely on them. Electricity blackouts are reaching epidemic proportions in states where half of the electricity is used to pump water from depths of up to a kilometer [3,300 feet].

A World Bank study reports that 15 % of India's food supply is produced by mining groundwater. Stated otherwise, 175 million Indians consume grain produced with water from irrigation wells that will soon be exhausted. The continued shrinking of water supplies could lead to unmanageable food shortages and social conflict.

Between the start of 2007 and the middle of 2008, The Economist index of food prices rose 78%; soybeans and rice both soared more than 130%. In the five largest grain exporters, the ratio of stocks to consumption-plus-exports fell to 11% in 2009, below its ten-year average of over 15% , this shrinking of food stocks is driving countries with large populations ( India, china ) to try out alternative investment models to food security.

Traditionally Governments used to invest in domestic agriculture, cereal and food production became a prime target for investments. ( Rice in Japan, Fruit in Saudi Arabia Etc..) However, in the recent past, Governments are inviting other governments to develop and invest in their Ag sector. Africa is a very prominent destination and China is a large investor..OPEC/Mid East oil exporting countries are another.

China secured the right to grow palm oil for biofuel on 2.8m hectares of Congo, which would be the world’s largest palm-oil plantation. It is negotiating to grow biofuels on 2m hectares in Zambia, a country where Chinese farms are said to produce a quarter of the eggs sold in the capital, Lusaka. According to one estimate, 1m Chinese farm labourers will be working in Africa this year.Peter Brabeck-Letmathe, the chairman of Nestlé, claims: “The purchases weren’t about land, but water. For with the land comes the right to withdraw the water linked to it, in most countries essentially a freebie that increasingly could be the most valuable part of the deal.” He calls it “the great water grab”.

The China Development Bank has granted loans worth millions of dollars to agricultural processing firms in East Africa. Chinese assistance has been provided to plan crops of cereals as well as cash crops like rubber and pine. Angola has received a $ 1 billion agricultural loan from Beijing to improve the sector after decades of war. Senegal recently signed a deal to sell 10,000 tons of groundnut oil to China during Chinese premier Hu Jintao’s visit.

This is a solution that balances the water-ag-food connection. Given 70% of the world water se is Agriculture, the "export" of crop production to "water-rich" countries in Africa is a trend that will accelerate is the coming years.