Andrew Leonard at Salon's How the World Works blog finds a interesting wrinkle in the skyrocketing global foodstuff pricing story. He writes, "According to a report in Monrovia, Liberia's The News, the chief executive officer of China's China-Africa Development Fund pledged 5 billion dollars of investment in African agriculture over the next 50 years -- including, specifically, rice production."

He concludes:

The announcement isn't going to move the price of rice this year, or next, but it's a pretty clear indicator of which way the world has to go if global food production is to be boosted to match world demand while keeping prices affordable. The developed world, (and in this case, we'll include China in that category, with its $1.68 trillion dollars worth of currency reserves) must find ways to invest in Africa, where there is labor, and land, and a desperate need for inputs, both financial and physical. How about it -- Africa: breadbasket of the world, instead of basket case?

But not so fast. It's just as possible that a massive Chinese infusion of cash in exchange for Liberia's agricultural economy will have bad effects as good. Often in these situations, the infrastructure points the way. After the IMF and World Bank put pressure on Mozambique to end subsidies and privatize portions of its cashew industry, Indian buyers essentially collapsed the market by taking advantage of the poor infrastructure in the country. Because there will be no big-board-set market price for the rice, a Chinese investment could kick start an industry that China will then have monopsony control over.

China's move is clearly strategic. Despite the prevailing wisdom that China is firing on all pistons for the foreseeable future, costs are rising there and agriculture isn't keeping up. Outsourcing agriculture to Africa, so China can focus on more high-yield activities like electronics manufacture and the like, is a sound move. Only time will tell if the outsourcing will be a source of wealth or a new source of misery.

Photo courtesy Flickr user JVick Images and used under Creative Commons