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A Global Scramble For Lucrative Farmlands ( 0) Printer friendly page Print This
By Sam Urquhart
Counter Currents
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.
Mad-agascar

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.
Ethiopia

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."
Sudan

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."

Counter Currents

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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