A Global Scramble For Lucrative Farmlands
By Sam Urquhart
Friday, Jun 19, 2009
The Food Crisis Continues - In The Form Of A Global Scramble For Lucrative Farmlands
Governments - concerned about future food security - have been furiously signing deals with other governments across the world. Saudi Arabia has tied up 25,000 ha in Sudan to grow corn, soy and wheat, with Jordan and Syria inking similar deals. China has reportedly signed numerous deals, as in Laos , where a state rubber company has acquired 160,000 ha, and Mozambique , where 10,000 "settlers" are reportedly set to assist in the conversion of thousands of hectares to export crop production. Even tiny Mauritius has agreed a deal with Mozambique to farm 5,000 ha of land in a country where over 50 percent of the people live on less than a dollar a day.
Private investors have not been laggardly either. According to the NGO GRAIN, Deutsche Bank and Goldman Sachs are " taking control of China 's livestock industry" while the investment firm Blackrock has mobilized a $200 million hedge fund to invest in land. A Russian firm, Renaissance Capital, has snapped up 300,000 ha of Ukrainian land, while a Swedish firms, Black Earth Farming and Alpcot-Agro have acquired 331,000 ha and 128,000 ha respectively in Russia's black earth region.
In Africa , the American firm Jarch Capital claims to have rights on 800,000 ha of Sudanese land, while numerous biofuel companies have secured huge deals (and some have been knocked back). Meanwhile, in Asia, according to the International Institute for Sustainable Development, agri-giant Monsanto has bought the rights to 10,000 acres of farmland "for experimenting with GMOs" and "is looking for an additional 50-100,000 acres" in the near future.
And that's just a pinprick in the wider picture. GRAIN has documented over 180 such deals involving both governments and private investors. It's a pandemic of land acquisitions, with no known cure.
On the one hand, the shock of rising prices and the specter of food insecurity raised by the food crisis has shattered confidence in the world market, sending nations scrambling to secure land and water with which to grow essential crops. The Gulf states have been particularly active, having seen their food import bills rise from around $8 billion to nearly $20 billion in the past five years alone - concerns over water use have prompted Saudi Arabia to plan for an end to all wheat production by 2016.
Rising awareness of climate change has motivated governments and private investors, for different reasons. Water scarce nations have begun to "lock up" water resources in the form of land rights in anticipation both of future water stress and rising prices, China being a prime example. Across the world, governments have begun to link up with other governments to sign massive land deals.
On the other hand, stimulated by the prospect of looming price spikes (and windfall profits) in the future, private investors have begun to move into agriculture on an unprecedented scale. Land is being rapidly securitized. As veteran commodities trader Jim Rogers says , "I'm convinced that farmland is going to be one of the best investments of our time"
As GRAIN reported in 2008, " The two big global crises that have erupted over the last 15 months – the world food crisis and the broader financial crisis that the food crisis has been part of – are together spawning a new and disturbing trend towards buying up land for outsourced food production."
Rogers and long-time collaborator George Soros have been moving into global land investment - eyeing massive profits to be gained from future price spikes. As has Lord Jacob Rothschild, via a company called Agfirma Brazil . As he puts it, "we have an extraordinary situation. If you take governments' printing money as fast as they are, borrowing as fast as they are, and bailing out white-elephant corporations, we're surely going to have an inflationary situation fairly soon" a situation in which CNN's Brian O'Keefe comments, "owning a hard asset like land is a good hedge."
According to the FAO, such deals (or, more accurately, "land grabs") have seen almost 2.5 million hectares of farmlands allocated to foreign investors in just five sub-Saharan African countries since 2004, although the FAO's figures understate the true total by excluding investments under 1000 ha in extent. Huge areas of land are being sold to the highest bidder, with over 180 deals across the world having been documented by GRAIN, and the likelihood that there have been more, as such deals are generally concluded behind closed doors.
We simply don't know the true extent of the scramble for land, but the consequences will undoubtedly be vast.
A Global Big Deal
The scale of the wave of land grabs is truly global. From the black earth of Southern Russia and the Ukraine, to Cambodia, Indonesia and the Philippines in south-east Asia, to Pakistan, to Sudan, Zambia, Ethiopia, Mozambique and Madagascar in Africa and even into the Amazon, there is a sustained effort to open up communal landholdings to global investors, be they government or private.
But is this necessarily a bad thing? After all, as Joachim von Braun and Ruth Meinzen-Dick of the International Food Policy Research Institute have written in a recent policy briefing , "large-scale land acquisitions can be seen as an opportunity for increased investment in agriculture" while "Proponents of such investments list possible benefits for the rural poor, including the creation of a potentially significant number of farm and off-farm jobs, development of rural infrastructure, and poverty-reducing improvements such as construction of schools and health posts." [p]
Activists have long campaigned for more investments to be made in agriculture in the developing world, so large-scale land deals could provide one means of injecting better technologies, marketing systems and capital into areas that lack them. As the FAO's Chief of Trade Policy David Hallam argues, "the low level of investment in developing country agriculture, especially in Sub-Saharan Africa, over decades has been highlighted as a matter of concern and the underlying root cause of the recent world food crisis so any possibility of additional investment resources cannot be dismissed out of hand."
But both the IFPRI and Hallam are extremely cautious about such deals. As Hallam adds, " The focus needs to be on how these investments can be made “win-win” rather than “neo-colonialism”. Von Braun and Meinzen-Dick remind us that "unequal power relations in the land acquisition deals can put the livelihoods of the poor at risk" while, as "Land is an inherently political issue across the globe, with land reform and land rights issues often leading to violent conflict...the addition of another actor competing for this scarce and contested resource can add to socio-political instability in developing countries."
For GRAIN's Devlin Kuyek, the threats presently far outweigh the opportunities for countries hosting such land deals. As he says, given the disastrous development of mortgage based derivatives, there is "a ll the reason in the world to be concerned about how financial houses are going to be or are speculating in land" while, "if financial instruments are being developed for land, then that's a troubling prospect."
As Kuyek notes, "these deals are being promoted as win-win" but in reality "It's not just that they want to produce food. It's that they want to produce it in a away that makes profit. These are big natural resource projects, and need to be looked at through the same lens as dams and mines."
The world's leaders don't appear keen to remodel agriculture from above. As Kuyek says, no-one is really dealing with the fundamental problems within the global agricultural system. While nothing is done about a system which manufactures hunger, and "Nothing is being done to address speculation, or the amount of profits taken by the corporations in control of the food system" these land grabs are little more than "a band-aid over growing problem of food insecurity" - albeit band-aids which have the potential to make the wound much more dangerous.
This demands a response from activists and farmers. As Von Braun and Meinzen-Dick suggest, "Strong collective action institutions can give smallholders enough clout to effectively voice their concerns and negotiate on favorable terms with the other powerful actors." Like the indigenous of Peru (who are also seeing their lands prepared for allocation to private investors) farmers will need to mobilize to confront unequal deals and the governments that permit them. It's a daunting prospect.
There have already been signs that people won't accept the allocation of huge areas of farmland to foreign investors. In Madagascar , for example, the Korean giant Daewoo signed a deal with the government of Marc Ravalomanana that would have seen 1.3 million hectares of prime agricultural land devoted to growing food to feed Koreans. In a stroke of his pen, Ravalomanana had signed away half of Madagascar 's farmlands, sparking protests across the country.
The Daewoo deal was eventually crucial in allowing the military and Ravalomanana's rival Andry Rajoelina to take power in March 2009. Public support for the president melted away, and Rajoelina made reneging upon the Daewoo deal an immediate priority to shore up his support. As he put it , "In the constitution, it is stipulated that Madagascar's land is neither for sale nor for rent, so the agreement with Daewoo is cancelled" adding that "We are not against the idea of working with investors, but if we want to sell or rent out land, we have to change the constitution, you have to consult the people. So at this hour the deal is cancelled."
As Madagascar expert Prof. Nadia Horning of Middlebury College told me, "Ravalomanana's deal with Daewoo presented a perfect opportunity to tap into nationalistic sentiments given Malagasy people's attachment to land, which is thought of as the land of their ancestors - a critical aspect of Malagasy culture. Politically, approving the Daewoo land deal was suicidal for Ravalomanana."
Clearly, land is a powerful political force in countries like Madagascar , where at least 70 percent of the people subsist on less than one dollar per day . As GRAIN's Kuyek puts it, " land is fundamental to life, particularly in many countries of the south. It has the potential to split countries apart...governments are playing with fire, and better watch out what they are doing."
Ravalomanana did not seem to care much about how the people of Madagascar viewed his government (he has since been found guilty in absentia of buying a $60 million private jet from a scion of the Disney family using state funds). He's gone, but there continues to be no shortage of governments ready to sell their lands to foreign investors.
In Ethiopia , for instance, over 50 investors have registered their interest, or have signed deals, to begin the cultivation of biofuel crops on the country's soil. The NGO MELCA Mahiber reports that over 300,000 ha of land has already been allocated while the NGO adds that up to 1.65 million ha have been requested for future cultivation.
MELCA's coordinator Million Belay says that the reason for such deals is simple. "As a net importer of petroleum," he wrote, " Ethiopia is highly vulnerable to price shocks and supply problems of oil in the world market. It is therefore the Government's priority agenda for alternative fuels to partially substitute imported petroleum ." So from the government perspective, foreign firms producing biofuel for export is a win-win situation. But for others, the situation is not so clear cut.
As Belay told me, while the Ethiopian government says that it seeks to ensure environmental sustainability and food security, "the government doesn't force any companies to carry out environmental impact assessments" while "[it] says that projects should happen on marginal lands but our figures show that over 75 percent of lands allocated show that cultivation will happen on mainly forest lands, with some agricultural land."
For MELCA, the challenge is to alter government policy, and Belay is optimistic. As he told me, "disruption of farmland is still tiny, and we are doing our best to inform local governments in those areas" while "The level of awareness of impact of biofuels on food security is improving now amongst government circles, who are not approving everything as before." In Oromia, a program of land mapping has begun in order to assess potential land claims - which MELCA sees as a step forwards. But, Belay says, "there could be a public uprising if this continues" a prospect that has forced Addis Ababa to take "corrective measures."
Some areas of Ethiopia are more at risk than others, according to Belay. The highlands, where most Ethiopians live, are less vulnerable than the forested lowlands, where higher rainfall assists the cultivation of biofuel crops like oil palm and jatropha. As Belay says, these are "pastoral lands occupied by indigenous peoples who have no tribal deeds which could lead to problems" and, until now, "local governments have been cooperating with national government and investors to take land."
The future is, perhaps, more troubling. As Belay argues, "In the future, the government may be desperate for investment. Biofuels are just one element in the thinking of government, there is a push for big agriculture from every corner and biofuels fits into this kind of thinking."
"You'd think that food security would be a priority for any government," he adds, "but deals to produce food for foreign governments give cause for concern."
The wave of large-scale land deals is characterized by its opacity. As GRAIN's Kuyek told me "People need to be aware of what governments are doing...What's happening is pretty much behind closed doors" adding that "Fundamentally the main issue is transparency. Who is signing these deals? What land is being allocated?" At present, most studies of "land grabs" rely on media reports, yet hard evidence (and details of contracts) is hard to come by.
One of the shadiest deals of all is one which involves a U.S. firm seeking to invest in the south of Sudan . Jarch Capital, headed by ex-AIG trader Phillippe Heilberg and including ex-ambassador Joseph Wilson and neo-conservative commentator J. Peter Pham on its board, signed a deal to lease 400,000 ha of Sudanese land in 2008. In April 2009, the firm then doubled that amount - a pair of deals that the FAO reports is " absent from Sudan 's public available government statistics."
This is a huge amount of land. Jarch claims that it seeks to use it to grow food crops, yet there is reason to doubt this assertion. Heilberg was recently invited to be a key speaker at energy consultancy Glopac's "Africa Petroleum Frontiers Day." According to Ratio Magazine's Andrea Bohnstedt, Heilberg failed to mention in detail his agricultural commitments, " merely adding that his firm was looking at mineral prospects as well" before adding that "in a second phase, Jarch would focus on hydrocarbons."
As Bohnstedt noted, "The south has managed to obtain exemptions from US sanctions against Sudan for sectors like agriculture and mining, but not for hydrocarbons, so claiming a stake in the hydrocarbons sector may require a few acrobatics."
Jarch has apparently secured the massive land grabs via close connections to the ruling elite in south Sudan , bypassing the government in Khartoum . As the FAO documents, its partner in the region, a firm called LEAC, is controlled by one Gabriel Matip who in turn is the son of one of the south's leading politicians. And Jarch is counting on the regional government securing its investments, claiming that "They can't change the laws on me, because I've got the guns" while "As long as Gen. Matip is alive, my contract is good."
In other words, a massive African land grab appears to be acting as a foil for hydrocarbon investment, and is being backed by the threat of repression. This renders claims made by Jarch and its Sudanese partners in a February 2009 press release that " The only way to propel development in the South is via opening up mechanized agricultural schemes that would feed thousands of people" somewhat suspect.
But Jarch is not unique. After all as GRAIN's Kuyek told me "it's not just that they want to produce food. It's that they want to produce it in a away that makes profit."
A capacity for opacity
Deals like that concluded by Jarch Capital show how fraught with danger these "land grabs" actually are. While there may be possible benefits, because almost all such deals have been struck in secrecy and we cannot know their terms, it is impossible to tell what their effects might be.
As Carin Smaller and Howard Mann of the International Institute for Sustainable Development put it in a recent report , "For more empirically-based policy and legal work...there is a significant lack of concrete and verifiable material...for local communities and stakeholders and for broader policy development purposes, there appear to be virtually no actual contracts available in the public domain, and there is a dearth of information on negotiations in progress."
According to Smaller and Mann, this opacity may mask serious dangers in the small print of the contracts. The absence of legislation enshrining labor rights, environmental protection or communal land tenure in host countries may lead to what they call "a layering of international law over domestic law" meaning that investors will be able to appeal to international treaty law and contract law, while local communities have few means of seeking redress. Both forms of investor protection "start from the commercial perspectives, and often fail to expressly address the social, environmental, and other dimensions" leading to a potentially huge imbalance between the power of investors and the power of local people.
"Stabilization" clauses can be inserted into such deals at the request of investors - meaning that they will be protected against future changes to national law such as environmental regulations or labor laws. This is, as Smaller and Mann report, a particular worry in Africa , where a 2008 UN study found that investors demanded the greatest number of stabilization clauses.
But such clauses aren't the only means of investor protection. Some deals will fall under "International Investment Agreements" - treaties signed between nations that provide a means for investors to appeal against new regulations and list investor "rights" with which national law must comply.
There are also many clauses that can be inserted into contracts, which give foreign investors an advantage over domestic producers. "The requirement of national treatment," Mann and Smaller write, provides that "the host state [must] treat foreign investors...'in like circumstances' to domestic investors in a manner no less favorable than the domestic investors."
As they continue, "The key issue is what is meant by the term 'in like circumstances" asking "would a large commercial farmer with thousands of hectares of land be “in like circumstances” to a small-scale farmer with only a few hectares? If yes, the government would have to treat both farmers similarly."
Small farmer's competing for water and land would have little chance against foreign governments or private investors under such conditions.
This isn't just academic legal theorizing. The likelihood is that large-scale land deals in the developing world are hedged with requirements, which will impinge upon the ability of host countries to legislate against the effects of such deals. As Smaller and Mann conclude, "It is imperative that both the investing and receiving states are aware of the legal implications, the possible impact on the local population in terms of access to land, water and food, and the consequences that could arise when national laws change or during times of national crisis."
But as Mann told me while " transparency is absolutely critical" in reality "we know very little and have to surmise from news reports or contracts in other sectors." At the moment, "nobody knows the extent of the problem or the kind of mechanisms in place to protect community rights or the rights of indigenous peoples who may be affected, nor the scale of environmental protection against intensive agriculture."
In Mann's opinion, "without controls, these deals are a recipe for future conflict, both political, social and likely armed if the rights of foreign investors are pushed to the maximum."
Law isn't enough
But is raising awareness of the legal implications of such deals enough to protect small farmers against eviction and corruption? In some places, maybe so, but in the case of Cambodia , this is emphatically not the case.
Land grabbing in Cambodia has been occurring for years, but has increased in tempo as food and land prices have risen. By 2007, almost 1 million ha of Cambodian land had been allocated to private investors. Since then, protests have regularly challenged new deals, the latest of which may see 50,000 ha of farmland sold to the Kuwaiti government in exchange for a $500 million loan.
These deals have gone through regardless of what seems to be an exemplary legal framework. As Will Baxter wrote for Toward Freedom magazine in 2008, "According to Cambodia 's Land Law economic land concessions cannot exceed 10,000 hectares [but] Nine concessions...exceed this limit [while] In several cases, senators have acquired interests in two or more concessions under different company names which together exceed the 10,000 hectare limit." [
Cambodia 's major problem is corruption, which has decimated efforts to enforce the country's land law. Its Prime Minister, Hun Sen, is tightly connected to the Seang Kang Company, one of the nation's largest which, according to the NGO Global Witness, makes millions from illegal logging and property development. When Global Witness sought to expose Hun Sen's activity, the PM simply banned the organization from Cambodia .
While the legal framework may be fine, as Lao Mong Hay of the Asian Human Rights Commission puts it, "the powerful and the rich have abused that law and have granted concessions exceeding that limit" or, they have granted "separate but adjacent concessions to companies registered under different names but owned by the same people."
Meanwhile, "concessions have been made without transparency...and without following the procedure detailed in those regulations, such as consultations with local authorities and people to be affected by the concession, and [an] environmental survey" while "courts and other adjudicating authorities have failed to enforce that land law and those regulations because they are not independent and are under the influence or control of the powerful and the rich."
Despite years of resistance, Cambodia is an example of how legal frameworks are not enough to protect land rights. Might has prevailed. As Lao Mong Hay says, "The authorities have always claimed that the lands granted as concessions belong to the state" meaning that "the site can do what ever its likes about those lands...the affected people have no title to them and must accept any compensation offered."
But there are grounds for optimism, and those grounds lie in the resistance itself. Just this week, hundreds of protesters from four villages in Kratie province stood up to bulldozers from the firm CIV development, braving armed security guards. As VOA correspondent Chun Sekada reports , the villagers forced CIV to meet with them and to grant an extra concession of 150 acres on top of the 330 acres (out of 1,000 allocated to CIV) already secured via protests.
As the villagers in Kratie show, law isn't enough. Organization and resistance remains essential - the more so as much larger land deals are put into action and the land rights of thousands are threatened.
I'd Like to spend some time in Mozambique ...
Nowhere is this threat being realized more quickly and with less scrutiny than the south-east African nation of Mozambique . Mozambique has marketed itself as a paradise for biofuels producers , stressing its "surplus" farmland, tropical climate and access to markets via the soon to be expanded port of Maputo and a new international airport.
The government has wholeheartedly adopted a policy of encouraging investment in massive plantation agriculture. As Salvador Namburete, Mozambique 's Minister for Energy told the 2007 International Conference on Biofuels, his government believed that biofuels "are labor intensive, and can generate agricultural and agro-industrial employment, self-employment and income, particularly in rural areas, where the incidence of poverty is highest."
His comments came in the middle of a steep rise in food prices that analysts at the World Bank attributed directly to biofuel cultivation, yet the government has not been deterred: 30,000 ha of land has since been leased to the British firm CAMEC to produce biofuels from sugar cane.
As the International Institute for Environmental Development has documented , the Procana Project, as CAMEC's venture is known, "will abstract water from a dam, fed by a tributary of the Limpopo River, which also supports irrigated smallholder agriculture" Moreover, along with depriving small farmers of water, the lands on which CAMEC will grow its sugar were previously promised to those displaced from another large-scale project - the "Limpopo Transfrontier Park" - and these communities will receive nothing.
Mozambique has also opened its arms to foreign governments seeking land on which to grow food for export. China has reportedly signed a $2 billion deal that will involve 10,000 Chinese "settlers" and will, presumably, require tens of thousands of hectares as well. It's probably not a coincidence that Mozambique has since secured some $3 million in military aid from Beijing while, as AFP reports , "Chinese financing has funded such projects as a hydroelectric dam, a convention center and a national football stadium."
Mozambique is not unique, and nor is China . In Kenya , Qatar is currently seeking to arrange the lease or purchase of 40,000 ha in exchange for the refurbishment of the port at Lamu. Yet, as the Guardian reports, the deal "has attracted fierce opposition from environmentalists who say a pristine ecosystem of mangrove swamps, savannah and forests will be destroyed" while "Pastoralists, who regard the land as communal and rear up to 60,000 cattle to graze in the delta each dry season, are also opposed to the plan."
The pattern is familiar. Tanzania , to the south of Kenya , has reportedly set up a 2.5 million ha land "bank" and the UK firm Sun Biofuels has become the first to take advantage of the government's enthusiasm for agricultural investment by leasing 18,000 ha. In Sudan , a Saudi Arabian firm has leased 25,000 ha north of Khartoum while the Jordanian government has been assured another 25,000 ha block on the Nile . Even in the Democratic Republic of Congo, ravaged by years of war, the firm MagIndustries is setting up a 68,000 ha eucalyptus plantation and constructing a 500,000 tons per year wood-chipping plant.
It's a tsunami of land deals and, as all of the experts who have studied the phenomenon have agreed, no nation is truly prepared for its implications.
This is worrying, as the wave of "land grabs" carries with it huge social and environmental pitfalls. For one thing, the continuing encroachment of governments and private investors into indigenous lands is breaking apart communal landholding systems. In turn, this is compromising the ecosystems that such peoples maintain and subsist from.
Then there are the implications for small-scale agriculture in general. There is a perceived need to move towards "sustainable agriculture" which is less dependent upon fossil fuel inputs, more efficient, more socially equitable and has a low ecological impact.
But, these land grabs are compromising the prospects for small farmers, and seem to be boosting industrial-style plantations. As GRAIN's Kuyek told me, "The fact is that you're taking away lands from farmers who are the only way that you're going to move towards sustainable agriculture that meets the needs of local people."
But what can people do about land grabs? MELCA Mahiber provides one model - having lobbied the Ethiopian government and laboriously compiled its own research on large-scale agriculture projects within the nation's borders. But its success is far from certain. Cambodia shows the fragility of a legalistic solution. What is needed is collective action.
As the IFPRI researchers von Braun and Meinzen-Dick conclude "by acting collectively the poor can stimulate a shift in power relations." Kuyek is more strident. " People need to be aware of what governments are doing" he told me. "They need to insist on the right to know what leaders are signing away on their behalf, and to push for a process to uncover what is being done, and to allow the people to decide."
"These are their lands, and they need to take control of their lands. It's as simple as that."
For more information, visit International Food Policy Research Institute, GRAIN and their new initiative directly addressing this concern, Farm Land Grab.
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