What's different about the current spate of land grabs in poor countries?

overview of the issues surrounding what it calls ‘outsourcing’s third wave’ (the first two were manufacturing and services) – deals in which foreign investors are buying up huge tracts of land in poor countries to produce food to ship back home (see map). Some highlights: Saudi investors are spending $100m to lease land from the Ethiopian government to produce wheat, barley and rice. From 2007-11, the World Food Programme is spending $116m on food aid for 4.6m Ethiopians threatened by hunger and malnutrition. (Shades of Ireland exporting food to England during the great famine of the 19th century). Compared with previous styles of foreign investment in agriculture (think banana companies in Central America), the current deals are different because of: 1. Scale: Sudan is setting aside about a fifth of its agricultural land for Arab governments. In total, between 15m and 20m hectares of farmland in poor countries have been subject to transactions or talks involving foreigners since 2006. That is equal to France’s total agricultural land. These deals are worth an estimated $20 billion-30 billion—at least ten times as much as an emergency package for agriculture recently announced by the World Bank and 15 times more than the American administration’s new fund for food security. The food produced could account for almost a fifth of world cereal trade. 2. Most of the deals focus on food and biofuels, whereas foreign investors previously focussed on cash crops (coffee, tea, sugar, bananas). 3. In the past, most foreign investment was private. Although some of today’s big deals involve multinationals (Morgan Stanley bought 40,000 hectares of the Ukraine in March), many more of the current crop involve government-government deals or parastatals like Sovereign Wealth Funds. The obvious motives for the deals are the spike in food prices and the subsequent decision of governments in several key producer countries to restrict their exports, threatening the food security of food importing countries such as the Gulf states, China and South Korea (the main participants in the deals). However, water shortages are another, hidden driver. Peter Brabeck-Letmathe, the chairman of Nestlé, claims: “The purchases weren’t about land, but water. For with the land comes the right to withdraw the water linked to it, in most countries essentially a freebie that increasingly could be the most valuable part of the deal.” He calls it “the great water grab”. Governments are promising would-be investors that the land is ‘empty’, but it often supports herders who graze animals on it. Land may be formally owned by the state but contain people who have farmed it for generations. Their customary rights are recognised locally, but often not accepted in law, or in the terms of a foreign-investment deal. Various bodies, including the FAO, IFPRI and the African Union are developing codes of conduct to improve the terms of the deals, covering issues such as respecting customary rights; sharing benefits among locals (ie, not just bringing in your own workers), increasing transparency (current deals are shrouded in secrecy) and abiding by national trade policies (which means not exporting if the host country is suffering a famine). According to the Financial Times, Japan also intends to raise the issue at the forthcoming G8 summit in Italy. Fine, but it’s going to be extremely hard to enforce such promises between players of such disparate power. For a much more detailed (110 page) report on land grabs in Africa, check out the new report ‘Land Grab or Development Opportunity?’, jointly published by IIED, FAO and IFAD. For previous posts on land grabs in Madagascar, see here. Global Dashboard and Javier Blas at the FT have also regularly covered the issue. Update 11 June: The UN Special Rapporteur on Food issued a set of 11 principles that should govern land grabs. ]]>

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7 Responses to “What's different about the current spate of land grabs in poor countries?”
  1. This ‘outsourcing’ has already claimed its first casualty. The proposed deal with Korea was a major factor in the recent coup in Madagascar. The deal was called off the day after president Ravalomanana resigned, as one of the first actions of the new government.

  2. We may be overlooking some of the sweetheart mining concessions in places like Peru and Ghana, where minerals are extracted, exported, with some revenue to the central government but little benefit to affected communities. With mineral resources, once the minerals are gone then many countries are left with a lot of pollution and the scarred landscape is not much good for anything else…will these grabbed lands, farmed intensively, be any better off? If soils are depleted and waters used up, this wave could be a really devastating one.

  3. Takumo

    About the possible Japanese proposal at the G8 you mention, it appears the intention is to agree on some kind of rule on agricultural investment that is win-win for both importers and exporters. Japan also seems concerned that a global scramble for food that could result from the current situation could pose a threat to its own food security, being the biggest food importer in the world, and prefers supporting food production in developing countries for the global market, where countries could purchase food. Whether they will decide to put forward the proposal at this year’s G8, and whether that proposal would put poor people’s right to food at its heart remain to be seen.

  4. I can relate, although as a 11th generation farmer in the states, I had to give it up and make a living elsewhere. Large scale farming caused it, but big farming is more efficient so it has less carbon footprint, and efficient farming means more healthy CO2 eating plants per acre of land. Either way it is a great spin that makes great sense. agriculture weigh scales help make it all more efficient.

  5. Agricultural outsourcing is a good thing as long as the home country will be paid enough to support its own population especially the poor and to make sure that the poor will not be stripped off with their land for their family’s survival. Countries can coexist and make cooperation in this manner, hoping also that corruption does not get into the way so that only the officials negotiating the outsourcing will benefit the transactions.

  6. elena

    Could you say me when and where the chairman of Nestlé said that: “The purchases weren’t about land, but water. For with the land comes the right to withdraw the water linked to it, in most countries essentially a freebie that increasingly could be the most valuable part of the deal.” He calls it “the great water grab”. I´m very interested in water grab.
    Duncan: Sorry Elena, don’t have that to hand right now, but Google should do the job!