Rich countries carry out '21st century land grab'

Debora Mackenzie, New Scientist 4 Dec 08;

HISTORY may be repeating itself. Until the mid-20th century, many European countries grew rich on the resources of their colonies. Now, countries including China, Kuwait and Sweden are snapping up vast tracts of agricultural land in poorer nations, especially in Africa, to grow biofuels and food for themselves.

The land grabs have sparked accusations of neocolonialism and fears that the practice could worsen poverty. Yet some organisations think this could be a chance for poor countries to trade land and labour for the technology and investment vital for developing their own food and energy production.

The rush for land was triggered by this year's food crisis and the European push for biofuels. The South Korean firm Daewoo made headlines last week when it sought a 99-year lease on 1.3 million hectares of Madagascar to grow maize and oil palm. The deal is far from unusual.

A number of companies are growing sugar cane in Tanzania, for example, to make bioethanol for European countries to meet European Union targets. This year, investors from Gulf states initiated so many farm projects in Africa and south-east Asia that the UN Food and Agriculture Organization (FAO) urged caution to prevent a political backlash.

"Egypt is investing in Sudan; Libya in Ukraine; Saudi Arabia in Thailand; China in Africa, the Philippines and Russia," says Joachim von Braun, head of the International Food Policy Research Institute (IFPRI) in Washington DC.

As population growth and dwindling oil supplies make farmland the strategic resource that oilfields are now, the hunger for land looks set to increase. China has 20 per cent of the world's people and only 9 per cent of the farmland, and that is dwindling. According to a detailed analysis by the NGO Grain, Chinese companies and the government have since 2007 leased or purchased 2 million hectares of foreign farmland.

Financial firms have been quick to get in on the act too, and are moving their money from food to the land that produces it. The British hedge fund manager Dexion Capital, for instance, plans to invest $270 million in 1.2 million hectares in Australia, Russia and South America.

The question is whether incoming technology and investment can be harnessed to increase food production for the poorer countries themselves. Although the global financial crisis has halted the rise in food prices, this week IFPRI warned that the slowdown will also cut investment in farming, which will raise food prices by up to 27 per cent by 2020.

All foreign deals so far pledge to turn "unused" or "underutilised" land into farmland to yield food. This might sound good on paper, but the reality is not so clear cut.

First, is the land really unused? Many analysts agree that most land that can be farmed is already in use, but some disagree. "Africa still has lots," says Peter Hartmann, head of the non-profit International Institute for Tropical Agriculture in Ibadan, Nigeria. He says for every hectare of African farmland there are around 2.5 hectares of "equivalent rainfed arable land" unused for want of technology or capital.

But seemingly unoccupied land is probably used for at least part of the year by someone, says Michael Taylor of the International Land Coalition (ILC), which groups 65 agencies, from local farm groups to the World Bank, concerned with land access. Nomadic herders, rarely a priority for governments, are being dispossessed by bioethanol developments in Kenya, he says, and they also depend on the "unused" land that Madagascar offered Daewoo. Ethiopia's communal lands, such as grazing areas, are being leased to private investors, says anthropologist Marco Bassi of the University of Oxford. "This will destroy shifting cultivators and pastoralists."

In many cases, land is used by such people because its soil or water is unsuitable for intensive cultivation. The danger, then, is that foreign leaseholders might extract what they can from these areas, then leave once soil and water resources have been exhausted.

Some people see upsides, though. "I could imagine such land use benefiting people," says Hartmann. Foreign investors build roads, storage and port facilities that local farmers can also use to sell crops - a bottleneck in much of African agriculture.

"Such investments are not to be generally condemned," says von Braun. Leaseholders might press for better tax situations for farmers, while host countries could insist on local hiring. Some investors are even offering schools and healthcare facilities, although in the past such promises have notoriously not been kept.

The best option would be for foreign firms to contract local small farmers to grow crops for them, says Paul Mathieu of the FAO. "Investors could say, if you use this seed and follow our advice we promise to buy the crop. That could be a win-win situation." German company Flora Eco Power produces biodiesel in Ethiopia in this way.

"These deals could provide more security and predictability for poor farmers than just selling crops on open markets," agrees Duncan Green of Oxfam.

However, existing arrangements of this kind are generally "between partners with vastly unequal power", says Green, and they offer few guarantees for locals. Hartmann and von Braun say a code of conduct is needed, and that it must include provisions for local producers, property rights, sustainable management and transparent rules. The FAO is now trying to write such guidelines, says Mathieu.

They will be no good if no one uses them, though, and so far there is little sign that investors are keen to work with locals. Many Chinese projects, for example, bring in farmers from China. If the foreign-owned farms simply take the crops and run, offering nothing to local people, it could be a recipe - as Europe's colonialists discovered - for trouble.