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The blog of the Wilson Center's Environmental Change and Security Program
  • Land Grab: The Race for the World’s Farmland

    May 12, 2009 By Michael Kugelman & Susan L. Levenstein
    The world is experiencing a grain rush. With increasing frequency, wealthy, food-importing, and water-scarce countries—particularly the Arab Gulf states and the rich countries of East Asia—are investing in farmland overseas to meet their food-security needs. Similarly, the private sector is pursuing farmland deals abroad, with many investors perceiving land as a safe investment in an otherwise-shaky financial climate.

    These investments are sparking both hope and fear. Some believe the deals can boost global agricultural productivity and farm yields, thereby bringing down global grain costs. Others, however, point to the land acquisitions’ negative impacts on small-scale farmers. On May 5, the Asia Program and four other Wilson Center programs hosted a half-day conference that considered the implications for investors, host countries, and food security, highlighting case studies from Asia, Africa, Europe, and the former Soviet Union.

    Global Trends

    The private sector—including private firms, agribusiness and trading houses, and sovereign wealth funds—now plays a key role in overseas land investment, noted David Hallam of the Food and Agriculture Organization. These investors come from China, the Arab Gulf states, South Korea, and Japan, and they have mainly targeted Africa. Hallam asserted that these investors could potentially benefit developing countries through asset and advanced-technology transfers, employment opportunities, and economic and infrastructure development.

    Alexandra Spieldoch of the Institute for Agriculture and Trade Policy examined the “lopsided” power relations that prevail in foreign land acquisitions. Smallholders in poor countries like Sudan, Ethiopia, Madagascar, Zimbabwe, and Pakistan “have no political voice,” making them vulnerable to exploitation. The loss of land invites political conflict and violence, as exemplified by the public outcry in Madagascar over that country’s proposed land deal with South Korea’s Daewoo. Gary R. Blumenthal of World Perspectives, Inc., acknowledged that displacing small farmers in favor of large agribusiness activities generates “social push-back,” but contended that modern farms and private-sector funding are necessary to feed the world’s hungry and growing population.

    Ruth Meinzen-Dick of the International Food Policy Research Institute discussed prospects for a “code of conduct” to regulate foreign land deals. She proposed that such a code have teeth and be modeled after the European Union’s code of conduct on bribery. Meinzen-Dick argued that questions regarding land use, land tenure, property rights, environmental concerns, and transparency should be settled before finalizing land deals. She also underscored the key role of governments in safeguarding and monitoring people’s rights, and of the media and civil society in increasing transparency and keeping up the pressure against “unjust expropriations.”

    Case Studies: Asia, Africa, Europe

    Raul Q. Montemayor noted that in Asia, some local people are facilitating land deals on behalf of foreign investors. In the southern Philippines, “goons and rogue elements” have been “let loose” to terrorize farmers, compelling the latter to lease their land—or evacuate. Montemayor argued that Asian farmers stand to benefit little financially from leasing their land to agribusiness enterprises. Those who have done so are receiving rental payments between 50 cents and a dollar per day. Yet he argued that any Asian farmer with his or her own standard two-hectare plot can generate the same, if not higher, daily income without renting out land.

    Chido Makunike, a Senegalese agricultural commodities exporter, declared that without understanding local conditions, agribusiness investments in Africa are destined to fail. Like Spieldoch, he singled out the deal between Daewoo and the Malagasy government, which would have given Daewoo a 99-year lease on 1.3 million hectares of land—with Madagascar receiving little in return. The deal collapsed after it triggered political unrest. “It’s not enough to look at risk factors,” Makunike argued. “You must look at the sentiments of the people.” In Africa, far from being perceived as a mere “economic resource,” land has cultural, sentimental, and political meanings, and its loss was “one of the strongest symbols of dispossession” during the colonial era.

    Carl Atkin of Bidwells Agribusiness highlighted investment opportunities in Central and Eastern Europe and the former Soviet Union. Land in these areas boasts high-performing and resilient soil, and production costs are low. However, there are also considerable challenges. Infrastructure is lacking, and grain storage is problematic. Obtaining land titles can be “complex,” and land tenancy laws can be “very archaic.” According to Atkin, however, the biggest challenge is local management: “Can people on the ground get things done?”
    Though they indicated varying levels of support for overseas farmland acquisitions, all panelists agreed that international investment in agriculture can be a good thing—if done the right way.

    While Meinzen-Dick and others lobbied for an international code of conduct to govern the transactions, other panelists insisted that foreign land investment must respect regulations in host countries. Montemayor, for example, called for “clear rules consistent with national policy goals,” and implored foreign investors to respect local laws.

    Michael Kugelman is a program associate with the Wilson Center’s Asia Program; and Susan L. Levenstein is a program assistant
    Topics: Africa, agriculture, Asia, food security, Middle East, Philippines
    • Anonymous

      Thank you for your infomation. We used and sited this blog entry in our Economics research project.

    • http://www.blogger.com/profile/12214477766353192454 Joe

      I'm very intrested in the topic. It seems to me that Africa and other developing countries are becoming a battle ground in sort of ways for the richer and more powerful countires. It is almost like a new "Cold War" and instead of military build up, it's turning into a lan grab and a battle for the hearts and minds of the people. Examples that come to mind are in this article, but it look like we have some catching up to do in this area.

    • http://www.blogger.com/profile/12214477766353192454 Joe

      I was wondering what the USA stance on foreign land investment was? It would also be interesting to know what the US would do in a situation such as Madagascar where the people rioted over a plan to sell over 1/2 the countries arable land to a foreign company. If that situation would have escalated would we have taken the side of the Daewoo, a South Korean company or the people of Madagascar? Keep in mind that South Korea is one of our strongest allies in East Asia.

    • Anonymous

      Joe,

      I was one of the organizers of this event (and lead editor of a follow-on publication due out any day). Your question about U.S. views on foreign land acquisitions is an intriguing one; to this point, America has been very quiet and said little, at least on an official level. I imagine the U.S. government would take what you can regard as the conventional stand–a hedging position in which you point out all the potential positives (much-needed investment in agriculture and higher farm yields, plus better technology and local employment), but also note the potential problems (threats to small-holder livelihoods, environmental threats, and the shades of "neocolonialism" at play). However, Washington's position could be stronger depending on the context. One major target of these land acquisitions is Pakistan; if the Saudis and other Persian Gulf nations follow through on deals in Pakistan (which are widely opposed by Pakistan's population), and resistance fuels more instability, then you may hear something a bit more emphatic from the United States. –Michael Kugelman

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