June 23, 2016

Minera Catania Verde, a Chinese mining company operating in Chile, has recently repurposed 35 hectares of land for the production of permanent crops, with another 650 hectares in the pipeline. Having previously acquired the land and water rights to the 700 hectare plot for the mining business, the company’s leadership sees the switch to a permanent crop strategy as a way to increase profits and “keep the company going.” In Chile, the world’s largest copper exporter, the mining sector has been struggling due to decreasing global commodity prices, of which copper is no exception.

While the low end of the commodity lifecycle has negatively affected agricultural “soft” commodities, hard commodities have been in an even more dire position. In the last five years the Ag and Livestock Commodities Index, defined by the S&P GSCI, has decreased 7.07% annually. In the same period, the metals index has decreased by 10.48% annually, with copper decreasing by 12.11% annually. While the intricacies between a row crop and permanent crop strategy have been discussed at length by the Global AgInvesting community, such as in this article, it would seem that by choosing to switch part of their land out of metals and into ag, Catania Verde is taking a safe bet.

The current planted acreage is focused on the production of table grapes, due to their higher profitability. The company employed a consultant to identify a variety that was adapted to the climate and design the irrigation system. The company plans to add an additional 40 hectares of table grapes in the near future. The rest of the land will be devoted to cactus pears, as they are far less water intensive.

Minera Catania Verde plans to export its crops to markets in the Chinese mainland, Hong Kong, and South Korea. The manager of the project, Hu Yunhua, stated that, “In China the cactus pear was not previously known, but today its nutritional benefits are known and our boss wants to grow in large quantities.”

The importance of health food in China has been growing rapidly. A recent survey by BCG revealed that the Chinese consumer has the highest preference for healthy foods in the world, and that the Chinese health and wellness market is expected to reach nearly $70 billion by 2020.

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Eric Francucci