Governments and corporations looking to outsource food and energy more directly themselves are promoting a new wave of land acquisitions, also known as "land grabs." Persian Gulf states are working out land deals in Africa, Asia, and Eastern Europe. India has set up agricultural projects in Brazil. South Korea recently tried to buy up nearly half of the island of Madagascar.
"If food was ever a soft policy issue before," editorializes The Financial Times, "it now rivals oil as a basis of power and economic security." Control over the land that produces this power remains as critical today as it was in the past.
The Real Deal
Among the extraordinary number of new land deals, some have resulted in contracts while others have fallen through. Journalists have reported on the details of the deals, but so far there is little solid research from which to draw. Still, the deals are happening to such a degree that the World Bank and the UN are developing Codes of Conduct for Foreign Land Acquisition. The African Union will also publish investment guidelines in July, and Japan is pushing the G8 to get behind them. New websites tracking these land deals include the international land coalition and GRAIN.
Foreign investment deals in agriculture are nothing new. In colonial times, European countries established plantation economies in Africa, Asia, and Latin America to export food. Today there is large-scale investment in mining natural resources and contract farming as a means to source global supply chains. Yet these new land grabs are mammoth. The Economist reports that whereas land deals in Sudan used to be around 240,000 hectares, today's deals are three times as large. Before it fell apart, the proposed land deal between Madagascar and the South Korean company Daewoo would have included nearly half of the country's arable land. The lease would have lasted 99 years, with virtually no required taxes or other benefits flowing back to Madagascar or to the local community. Not surprisingly, the public in Madagascar rose up in protest, which contributed to the overthrow of the government.
During colonial times and in the recent past, developing countries exported cash crops such as cocoa and coffee. Now they are now exporting basic food staples. In many developing countries where land acquisition is taking place, the populations are already food insecure. So why are they exporting food crops instead of feeding their populations? For example, Ethiopia is the largest recipient of food aid from the World Food Program, but is also outsourcing food to Saudia Arabia. Cambodia, Niger, Tanzania, and Burma are other examples of countries receiving aid and also serving as host countries for foreign land acquisition.
Who's Behind the Grab?
Contrary to past trends, countries in the Global South are initiating much of the investment. The Persian Gulf States, including Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, and the United Arab Emirates, are investing in many parts of Africa, as well as Asia and Eastern and Central Europe. These countries are rich in energy but lack arable land and water. For example, Saudi Arabia has acquired land in Sudan to plant wheat, which is inefficient to grow at home. China is also buying up large tracks of land throughout Africa to produce biofuels and to produce food. India's companies have formed a consortium to invest in corporate farming of oilseeds in Latin America, most notably Uruguay and Paraguay.
Companies seeking more stable long-term profits are investing in agricultural land. In countries that already have shaky governments or civil war, foreign corporate investment may not end up being that stable or even profitable. Deals have already fallen through because of the risk. Others firms like UK Sunbiofuels are ignoring the risks and moving full-steam ahead with investment in crops such as sugarcane for ethanol in Tanzania.
From the land deals, developing countries hope to gain more investment in infrastructure such as roads, ports and other facilities. They hope to acquire more technology, research and science. Their farmers need jobs and a place in the global market. Over the past few decades, as part of structural adjustment requirements and other domestic measures to facilitate trade, many developing countries have disinvested from their agriculture. International investment flows into these countries have also declined.
The result is that today, many countries lack productive capacity to grow and provide food for their populations. For example, most Least Developed Countries are now dependent on food imports and lack capacity to be self-sufficient in food production. To countries starved of investment and with little except natural resources to offer the global market, land deals are deceptively attractive.
This article is based on a longer piece written by Alexandra Spieldoch and Sophia Murphy, to be published by the Woodrow Wilson International Center. Alexandra Spieldoch, a Foreign Policy In Focus contributor, is also the director of the Trade and Global Governance program at the Institute for Agriculture and Trade Policy (IATP). www.fpif.org .