The New Land Rush

Fears of violence and a hunger for profit are sparking a worldwide run on farmland
by Terry J. Allen, from In These Times
January-February 2012
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A 21st-century land rush is on. Driven by fear and lured by promises of high profits, foreign investors are scooping up vast tracts of farmland in some of the world’s hungriest countries to grow crops for export.

As the climate changes and populations shift and grow, billions of people around the globe face shortages of land and water, rising food prices, and increasing hunger. Alarm over a future without affordable food and water is sparking unrest in a world already tinder-dried by repression and recession, corruption and mismanagement, boundary disputes and ancient feuds, ethnic tension and religious fundamentalism.

World leaders feel the heat. Calling food security concerns “extremely significant,” a 2009 U.N. report noted, “The acquisition of land internationally is one possible strategic choice to address the challenge.”

Fortunately for nervous rulers, the strategy of growing food abroad as shelter against the fires of revolution dovetails nicely with the goals of private and public capital. Governments drawing on sovereign wealth funds, and rich investors accessing state subsidies, have negotiated deals to acquire tens of millions of acres of farmland in Africa, South America, and South Asia. When they export the food to their home countries, the valuable water used to grow the crops will ride along as a free bonus.

The largest investors in foreign croplands hail from China, India, and South Korea, along with Saudi Arabia and other oil-rich Gulf states. What these countries have in common is that all were shaken financially or politically by the 2007–08 food crisis. And all lack sufficient land or water to ensure that they can feed their populations in the coming years.

 

Available for chump change and unsecured promises, land around the world is changing hands at a rate unseen since the colonial era, when white men applied the ink of nationalism and greed to redraw maps of Africa, Asia, and the New World. The “new colonialism” is less like a crusade and more like a business transaction floated on a promise of “win-win.”

The deal-makers include international agribusinesses, investment banks, hedge funds, and commodity traders, as well as pension funds, foundations, and individuals attracted by the lure of cheap land and high profits. Even universities, including Harvard and Vanderbilt, are getting into the act, according to an extensive report by the Oakland Institute, a progressive policy think tank.

Most of the land deals occur in the private sector, “though often with strong financial and other support from government, and significant levels of government-owned investments,” according to the Food and Agriculture Organization. Conforming to this pattern and awash in oil income, the Saudi government “earmarked $5 billion to provide loans at preferential rates to Saudi companies to invest in countries with strong agricultural potential,” reports the U.K.-based Institute of Science in Society, including large swaths of Indonesia and Thailand for rice, and possibly 6,000 acres for wheat in war-ravaged Sudan.

The investors are negotiating land transfers all the way from the top, with heads of state down to tribal chiefs and impoverished landowners. Water rights, tax breaks, and waivers on labor and environmental standards often sweeten the deals.

When they cannot buy land outright at prices ranging from cheap (a few dollars an acre) to stolen (“You get a bottle of Johnnie Walker, kneel down, clap three times, and make your offer of Johnnie Walker whiskey,” in one transaction reported by the Oakland Institute), investors lease vast tracts for as long as 99 years and for as little as 40 cents per acre per year.

According to the U.N.’s International Fund for Agricultural Development, some 2 billion people in the developing world depend on 500 million smallholder farms for their livelihoods. In Asia and sub-Saharan Africa, these farmers produce about 80 percent of the food that local people consume.

But with spectacular speed, patchworks of plots that used to support local populations through subsistence farming and grazing are being amalgamated into massive industrial plantations. In Awassa, Ethiopia, a “plastic and steel structure already stretches over 50 acres—the size of 20 soccer fields,” writes John Vidal in South Africa’s Mail and Guardian.

With a 99-year lease for 2,500 acres, the developer, Saudi Sheikh Mohammed al-Amoudi, has brought in Spanish engineers and Dutch water technology, and hired 1,000 women to pick, pack, and send 50 tons of food a day to the Middle East, writes Vidal.

 

The years 2007 and 2008 marked a turning point for both environmental consciousness and food insecurity. Before then, agricultural land had expanded by less than 10 million acres a year. But with the pileup of evidence for global warming, no one but the ideologically blinkered could see extensive droughts and other weather-related catastrophes as flukes. Sharply diminished yields triggered exporting countries to ban or curb grain sales, pushed prices up, and helped trigger riots that shook dozens of countries. World Bank President Robert Zoellick warned in 2008 that “33 countries around the world face potential social unrest because of the acute hike in food and energy prices.”

By 2009 deals were being struck for 111 million acres, with 75 percent in sub-Saharan Africa, according to a World Bank report. A year later, the bank upped the total to nearly 140 mil-lion acres.

These “land grabs,” says Lester Brown, founder of the Worldwatch Institute and the Earth Policy Institute, encompass “an area that exceeds the croplands devoted to corn and wheat combined in the United States.”

Then, as if out of nowhere, the Arab Spring struck in 2011. Long-standing un- and underemployment and repression were key triggers, but as the International Institute for Strategic Studies noted, a “proximate factor behind the unrest was a spike in global food crises, which in turn was due in part to the extreme weather throughout the globe over the past year.”

In the seven months before Egypt’s President Hosni Mubarak was driven from power in February, the trading price of wheat had more than doubled. In August 2010, faced with droughts and wildfires, Russia gave its own people first priority and restricted most grain exports, ensuring that prices would skyrocket. The choked supply line seriously affected Egypt, which imports more than half its food.

By early 2011 some 21 countries had imposed export control measures including limits and outright bans on the foreign sale of particular crops.

 

Saudi Arabia had a ringside seat as the Arab Spring spread across the region. The House of Saud understood that its security rests on its ability to buy the quiescence, if not the loyalty, of its citizens with affordable food and social welfare programs that make Sweden look like a Tea Party paradise.

The sheiks had been watching the writing in the sand since the 1970s, when, after the Arab oil-export embargo, they realized their vulnerability: Just as the West was dependent on them for oil, they were dependent on others for food. The prospect of being forced to bend the stiff royal knee to Western-imposed economic pressures inspired the Saudis to apply their oil technology to drilling deep for water. Using heavy irrigation, the country soon became self-sufficient in wheat. But unlike underground water supplies that are replenished by precipitation, fossil aquifers can rapidly be drained dry—and that is what is happening under the Arabian Peninsula.

Within a few decades, the prehistoric aquifer was almost exhausted, and by 2007, when food riots were roiling the region, the Saudi wheat harvest had dropped precipitously. The Saudi Ministry of Agriculture predicts that by 2016 the country will have to import 100 percent of the wheat it needs to feed its nearly 26 million people.

Saudi Arabia is one of 18 countries—which together contain half the world’s people—where water for irrigation is draining aquifers. But the export of “virtual water” incorporated into growing crops promises not only ecological problems, but also political trouble downstream. Large-scale irrigation in Ethiopia and Sudan, for example, diverts water from the upper Nile River basin and cuts into Egypt’s already limited water supply.

Despite water woes, Sudan welcomes investors. “It’s the first country that gives us land without complicated procedures,” Mohammed Rasheed al-Balawi, a former manager of the Saudi firm Hadco, told the Financial Times. “The area is big, the people are friendly, [and] they gave us the land almost free.”

That characterization of terms is hotly disputed. Although both investors and host countries often refer to acquired land as underdeveloped or empty, the deals typically displace herders and small farmers, who are not consulted and, in any case, lack legal deeds. The World Bank estimates that between 2 and 10 percent of Africa’s land is held under formal land tenure, and most of that is in urban areas.

As foreign investors pour in—from Arab princedoms, India, South Korea, China, and other nations—hundreds of thousands of Ethiopians are being relocated.

Ironically, key targets of foreign agro-investment include the world’s hungriest countries: In Ethiopia, 13 million people receive international food aid and 41 percent are undernourished. The country’s massive transfer of physical wealth to foreign corporations is overseen by Prime Minister Meles Zenawi. One of the parties he controls owns at least five state-affiliated companies and has major stakes in the agricultural products market. Zenawi’s regime has granted control of 1.48 million acres to foreign entities, according to the Mail and Guardian.

                               

Foreign land investors are banking on profits of up to 25 percent, buoyed by loose environmental and labor regulations common in desperately poor and corrupt countries. “Lack of transparency and of checks and balances in contract negotiations creates a breeding ground for corruption,” the FAO says, adding with understatement, “and deals that do not maximize the public interest.”

One of the public costs, lax environmental regulation, is a key perk for investors. If history is any guide, eventually—but not before great profits can be extracted—industrial monoculture agriculture will deplete soil and water; perpetual chemical inputs including fertilizers, pesticides, and herbicides will poison the environment; and pest and disease problems will strangle biodiversity.

But even when host governments impose contractual restrictions and protections, “there does not appear to be any significant enforcement of lease terms,” according to the Oakland Institute report. “Government is charging us a rent,” a foreign investor in Ethiopia told the institute. “What we choose to do on the land for our own commercial intent is our own business. There are . . . no constraints, no contracts, none of that.”

 

With $332 billion in assets, the China Investment Corporation is one of the world’s largest sovereign wealth funds. And like the Saudis’, China’s concerns about growing unrest and food insecurity are factors in its increasing investment in foreign farmland.

China’s “embrace of [Africa] is strategic, planned, long-term, and still unfolding,” writes Deborah Brautigam, an American University specialist in China-Africa relations. She argues that China is more concerned with economic expansion than with food security, which significant portions of its leadership believe is better ensured by adequate home production.

That may be difficult to achieve. While the United States has almost 3 acres of farmland per person, China has only .23. And 5,000 years of intensive farming has depleted China’s soil, industrialization has poisoned much of its water, and development and urbanization have depleted rivers and land so that even as population and per capita consumption increase, the country has lost more than 20 million acres of arable land—just since the mid-1990s.

 In addition to its interest in Africa, China is investing in diverse cropland in Australia and New Zealand and looking to Indonesia for biofuels and to South America for soy for livestock production to feed its increasingly affluent population’s taste for meat and dairy. China’s South American interests are so extensive that some Brazilians, while crediting Chinese investment for their booming economy, fear for their autonomy.

“They are moving in,” Carlo Lovatelli, president of the Brazilian Association of Vegetable Oil Industries, told the New York Times, “looking for land and reliable partners. But what they would like to do is run the show alone.”

“Some experts,” the Times noted, “say the partnership has devolved into a classic neocolonial relationship in which China has the upper hand.”

 

Many foreign land investors say that they give back at least as much as they take. “We’ve really created something out of nothing in Africa,” says Anthony Poorter, Africa director for EmVest, the African subsidiary of Emergent Asset Management. “There are no shady deals.”

In areas with hungry people, inadequate roads, and other infrastructural deficiencies, foreign capital is sorely needed to develop more rational farming operations that can promote prosperity, food security, and jobs. And there is little doubt that monoculture industrial farming, genetically engineered seeds, and input from pesticides and chemical fertilizers can more quickly create higher yields than small-scale subsistence farming. Properly managed, supporters of expo-agriculture argue, investment dollars can bring educational opportunities, health care, and the possibility of safer, higher living standards to subsistence farmers and impoverished rural populations.

Some investors also believe they are serving humanity: “Unless food production is boosted 50 percent before 2050,” says Poorter’s boss, Emergent CEO Susan Payne, “we face serious shortages globally.” Her company, which “went on record in 2007 to identify food security as the next energy security,” invests in 14 countries in sub-Saharan Africa and is aiming for an annual return of 25 percent or more.

But just as international development aid schemes, such as USAID’s, conform to the geopolitical strategies and economic goals of the dispensing country, private investment is shaped by an inner imperative: the need to turn a profit. Whatever the investors promise, or however decent they are as individuals, their bottom line is the bottom line.

“There is a real risk that the current scramble for land will transfer wealth from the poor and the marginalized to those who have access to capital and markets, with deeply regressive consequences,” warns U.N. Special Rapporteur Olivier de Schutter.

Backlashes have already occurred. When word leaked that Madagascar planned to sell 3 million acres to the South Korean firm Daewoo Logistics, popular outrage quashed the deal and toppled Madagascar’s government. In the Philippines, as food prices were spiking in 2007, outcries from Filipino farmers stopped China from buying 2.5 million acres on which to grow export crops.

It is clear that the geopolitics of food scarcity has undergone a major shift. Land is the new gold, and mining it for export food, extracting its water to incorporate into crops, and taking advantage of cheap labor and lax environmental laws are now, as Brown puts it, “integral parts of a global power struggle for food security.”

When people are hungry enough, they are likely to choose the risk of revolution over the certainty of starvation. Governments that are unable to secure affordable food for their people are vulnerable to the kind of social unrest that has long been part of history’s hunger not only for food, but also for justice.

Terry J. Allen is a senior editor at In These Timeswhose work has appeared in The Boston Globe, Harper’s, The American Prospect, New Scientist, and Salon. Excerpted from In These Times (Sept. 2011), a nonprofit magazine teeming with progressive debate, commentary, and investigative journalism. www.inthesetimes.com 

Cover-169-thumb.jpgHave something to say? Send a letter to editor@utne.com. This article first appeared in the January-February 2012 issue of Utne Reader.


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