Research On Benefit Allocation Of Overseas Cultivated Land Investments

During the past 10 years of this century, the international grain prices continued to rise. Especially since 2007, the food prices increasing trend is more apparent than ever. Meanwhile, with the international oil prices rising and the global food demand for biofuels and grain reserve battle increasing year by year, the raw food exporters have limited their food exports. As food safety issues directly relate to national survival and political stability, governments often put the food production in the first national security strategy.Under the background of economic globalization, developed countries dominate the legal form of international trade rules. Through the enforceable laws and public choice, profit allocation and arrangement mechanism, advantage interest groups configured and rearranged the interests of various interest groups, just depending on the balance of forces. The international evolution form of global three industries has evolved into the following forms:by using foreign direct investment, international technology exchange, international cooperation and other ways, developed countries transfer the lower labor-intensive or resource-intensive industries into the developping countries, only for taking advantage of cheap labor and raw material. If the distribution mechanism has inequality elements, fair trade would be hard pressed to reflect. Therefore, the distribution in foreign land investment needs to be of interest to achieve the justice and fairness.Based on the related research achievements at home and abroad, this paper draws the main conclusions by comprehensive utilization of literature, expert interviews and questionnaires. From the revealed comparative advantage index and market index depending on the main participants in such investment, the study summarizes the major overseas investment and trade in cultivated countries, analyzes their motivations, agricultural resource endowment and the international division of labor form. Starting from the strategy-style game theory, it is also derived interpretation of the foreign investment interests of all parties land allocation mechanism. Moreover, based on effective sample data and production elements theory, the total profit distribution, the elements, and the proportion between production factors and the participants are discussed. This paper also recalculates the final value distribution by using production factors, which would be more persuasive and convincing. The contents and conclusions consists as follows:Firstly, due to agricultural resource endowments and farming condition constraints, countries like Japan, South Korea and the Gulf State have established overseas farms, in order to protect domestic food and agricultural products supply. For the bio-energy industry development, U.S. and Western European countries have established production bases of raw materials, and the products are sold to global markets. Today the main host countries of overseas land investment concentrate in sub-Saharan region, Latin America, Southeast Asia, Eastern Europe and Central Asia. Developing countries interchange the cultivated land resource with overseas capital, as there are abundant land resources, low labor costs with backward agricultural infrastructure and the stronger aspiring foreign investment. Developed countries put efforts to develop capital and technology-intensive industries, while developing countries could only engage labor and resource intensive industries. With money, technical, diplomatic advantage developed countries cultivates farmland overseas, while developing countries, can use natural resources to attract foreign capital by foreign trade deficit and technology, capital restrictions. Developed countries depend more on developing countries, and make full use of cheap labor and land resources in development countries to expand foreign trade new fields. All mentions above are the international division of labor form of evolution mechanism.Secondly, overseas land investment is a multi-stakeholder involvement international trade, which needs to be comprehensive utilization of the normal elements. Therefore, it should follow the principle of benefits distribution fairness, the principle of survival protection, the principles of comprehensive utilization and the principles of openness and transparency. This paper also analyzes the negotiation for benefits distribution and allocation strategy in such process, among the perspective of investors, investment host countries, land owners and agricultural industry workers. The benefits of negotiating strategy and allocation issues-style game are also analyzed, launched from virtual enterprise investor, the host country, land owner and agricultural workers. By the principle of transparency and mutual benefit, investors should propose reasonable proportion of interest distribution and reach cultivated land trade agreement with the host investment country. Because of deviating from the equilibrium trade scheme cannot ascend the welfare level of any party. Land owners and investors should play their respective comparative advantages in agricultural co-operation joint venture. Agricultural workers shall organize trade unions to negotiate wages and employment with co-operation firms, which would prevent the profit encroaching on wages. Agricultural industry workers should set up trade unions to issues such as wages and employment to start trade negotiations with investors in order to prevent the phenomenon of wage occupation profit. Wages of agricultural workers should be the regional average wage and average earnings of the combined enterprise.Thirdly, in view of sample survey data of relative experts, the paper analyzes distribution method of the of overseas cultived land investments. It analyzes the distribution interests'weight range among land elements, labor elements, capital elements, management elements, and technological elements. Capital elements, land elements and technical factors in total income distribution ratio should be 20%～29%, while labor elements and management of total income should be 10%～19%. The reasonable proportion of share revenues among investment side is also discussed, which are the host country, land owners, agricultural workers, and other participants. Investors should enjoy more ultimate yield, its values for 37.3%; Host and land owners sharing the profit is relatively close, with their values for 17.92% and 18.52% respectively; agricultural workers can get 15.46% of final total earnings interests; the other parties should obtain yields opposite less, its values for 10.96%. Furthermore, with the Cobb-Douglas function the paper also uses the Weighted Least Squares to get the C-D equation of overseas cultivated land investment between participate subject and production factors. Judging from the regression results, investors, the host factors are associated with relatively high land; land owners and other involved parties and closely relate with labor, technology elements; agricultural industry workers have a significant relationship with labor factor. It also shows that agriculture industrial workers do not participate in the income distribution. It also readjusted the ultimate benefit of all participants by production elements accordingly. Adjusted from the ultimate interests of the participants were:investor is 36.54%, the host country receives 17.72%,20.48% available to land owners, agricultural workers are entitled to 14.70%, other participants will receive 10.56%.At last, from investment enterprise, national government and citizen's point of view, the paper also analyzes such investment strategy. By the investment environment, policy, law, cultural background and comprehensive factors, farmland multinational investment enterprise should make the full evaluation of positive and negative influences of this trade, and plan product sales strategy and investment management models by complying with local actual condition. To reflect the fair trade, regional ecological environment in host countries should be protected. The government should take overseas cultivated land investment as the countries strategic, and actively integrated various resources to achieve maximum benefits comprehensively by coordinating external relations and providing risks asylum safeguards. The government should also change the institutional role:from free trade market "night watchman" to "operators" roles change. Government and enterprises would be closely linked. By supporting fair trade labeling system, fairness and ecology of the international agricultural trade could be achieved, and social and ecological benefits of this trade might be promoted as well. Although China has not carried out the overseas farmland investment in large-scale, yet the advantages and disadvantages, opportunities and challenges will exist together. Meanwhile, China implements agricultural "going out" strategy step by step, and has been established oversea farms in Africa, Southeast Asia and other regions. That will be also involved benefits distribution problems. So, interest distribution mechanism research on overseas cultivated land investment will benefit the Chinese enterprises sharing agriculture comprehensive interest, and to achieve win-win situation development.