South Korea leases Madagascar land to grow food crops

Straits Times 20 Nov 08;

SEOUL: Daewoo Logistics of South Korea has secured farmland in Madagascar, off Africa, to grow food crops for its country, in a deal that was probably the largest of its kind, foreign media reported.

The Seoul-based company said it had leased 1.3 million hectares of farmland - about half the size of Belgium - from Madagascar's government for 99 years, the Financial Times said on Tuesday.

The move by Daewoo Logistics follows similar deals by other countries short of arable land and comes after wild fluctuations of food prices early this year.

Al-Qudra Holding, an investment company based in Abu Dhabi, said in August that it planned to buy 400,000ha of arable land in countries in Africa and Asia by the end of the first quarter of next year.

Malaysia's biggest palm planter is looking to develop plantations in Africa, and Kuwait has leased rice fields in Cambodia and plans to import food from the Asian country.

The United Nations' Food and Agriculture Organisation warned this year that the race by some countries to secure farmland overseas risked creating a 'neo-colonial' system, the Financial Times reported.

Those fears could be intensified by the fact that Daewoo Logistics' farm in Madagascar represents about half of the African country's arable land, according to United States government estimates.

One million hectares in the western part of Madagascar will be dedicated to corn, and 300,000ha in the east to oil palm planting, said Mr Shin Dong Hyun, who is in charge of the project for Daewoo Logistics.

The ultimate annual production targets will be four million tonnes for corn and 500,000 tonnes for palm oil. Four million tonnes of corn comprise more than half of South Korea's annual corn needs.

The corn and palm oil harvests, which are crops for feed and biofuels, would be shipped back to South Korea. South Korean President Lee Myung Bak said in April that the country may seek to farm rice and other grain overseas, possibly signing 50-year leases for agricultural land in Russia's Far East.

REUTERS, BLOOMBERG, AGENCE FRANCE-PRESSE

South Korean company takes over part of Madagascar to grow biofuels
The African island state of Madagascar has agreed to allow a South Korean company to take over huge tracts of its territory for farmland in a deal showing the worldwide scramble for resources across the continent.
Richard Spencer, The Telegraph 20 Nov 08;

Daewoo Logistics is taking a 99-year lease on 3.2 million acres of land, half the size of Belgium, to grow maize and biofuels, building its own roads and other infrastructure to service the new farms that will be created on currently undeveloped open space.

The amount is almost half the currently farmed land in the country.

The deal is a sign of the concern of many countries, particularly the intensely populated nations of the far east, about ensuring the safety and reliability of food and other supplies in an increasingly competitive world.

Chinese companies have signed similar deals across a number of African nations in recent years, even sending its own workforce to join local residents in working their new estates.

The Madagascar deal is striking by its size and, according to some reports, its financing. Daewoo Logistics, one of a new breed of Korean companies born from the break-up of its traditional, huge conglomerates after the Asian financial crisis, says it may have to pay nothing for the land.

What the four Madagascar regional governments with which it has negotiated stand to gain are jobs, roads and experience of advanced agricultural techniques.

Shin Dong Hyun, the Daewoo manager in charge of the project, said it was hoping to form a consortium with a Korean animal feed company and Chinese firms to run the project.

It was hoping eventually to grow 5 million metric tons of maize a year and 500,000 tons of palm oil, a major form of biofuel. It will use local labour and some expertise from South Africa.

South Korea is one of the most densely populated nations on earth, with 49 million people squeezed on to space the size of Scotland and Wales. Its shortage of arable land makes it the world's third largest importer of maize.

The company is working within a government-set ambition of increasing the amount of grain it produces either at home or through its own ventures abroad to half its supplies, from just over a quarter at present.

"We plan to improve productivity to produce 10 metric tons of maize per hectare but it will take quite a long time to reach that level," Mr Shin said.