Farming farmed out

Countries are rushing to sign food deals to secure future supplies
Reme Ahmad, Straits Times 27 Feb 10;

MANUFACTURING is not the only sector being outsourced in these changing economic times. Farming itself is being farmed out.

China, South Korea, India, and some Gulf states including Saudi Arabia have been busy signing deals to ensure that there is food on the table for generations to come.

They are leasing or planning to lease huge tracts of farm land in Africa, Asia and Latin America to plant rice, wheat and other crops which will be shipped home after they are harvested.

According to estimates by the Washington-based International Food Policy Research Institute last year, the total value of farmland deals signed in recent years, along with those in the pipeline, ranges from US$20 billion (S$28 billion) to US$30 billion.

These outsourced farms cover a total area of about 20 million ha. That adds up to 20 per cent of the entire amount of arable land in the European Union.

Cash-rich countries say that while they keep their own populations fed, such deals provide billions of dollars of funds for poor governments and create jobs in rural economies.

They also gain from infrastructure projects such as roads and ports.

Mr Abdul Rahim Khan, a farmer and general secretary of the Sarhad Chamber of Agriculture in Pakistan, said Gulf companies have signalled interest in the country's farmland.

'There is no risk in it as we will only lease out our lands we are unable to use,' he was quoted as saying by Pakistan's The News daily recently. 'We are not selling out our precious lands to the foreigners.'

Some governments actually canvass for foreign investments in their farmlands. Indonesia, for example, is targeting one of its most remote regions, Papua, for such deals.

But not everyone, including local farmers, are happy with the idea of foreigners coming in to cultivate their land and then shipping the harvest away.

News that Madagascar had agreed to lease about half of its arable land to grow corn for South Koreans caused a backlash. It led to a coup that overthrew the island nation's president last March. The new Madagascar leader promptly scrapped the deal with Daewoo.

In some parts of Africa and Asia, critics are calling this wave of investments 'neo-colonialism', 'new feudalism' or just plain robbery.

The phenomenon was driven partly by the spiralling prices of food in 2008 that made many nations realise their vulnerability to food shortages.

According to a study by a United Nations body, the world's population is expected to jump to 9.1 billion by 2050 from 6.8 billion today - an increase of 34 per cent.

Food supplies will be strained unless more crops are grown. Then there are the issues of water scarcity and climate change to grapple with.

The looming shortages are expected to be aggravated by the practice in some countries to plant crops for biofuel instead of food. Sugar and corn are two examples.

'The inventories of food are the lowest, not in years but in decades. Supply is going to remain down since we have serious production problems,' Mr Jim Rogers, a global investor, was quoted as saying recently by India's Business Standard newspaper.

'At the same time, people are eating more and we are burning some of our foods as fuels.'

Foreign farmers welcome in Papua
Official cites 2.5 million ha of land ideal for cultivation in Merauke
Wahyudi Soeriaatmadja, Straits Times 27 Feb 10;

JAKARTA: Indonesia is about to try turning some of its vast tracts of fertile land into the colour of money.

The Agricultural Ministry is putting the finishing touches on a programme aimed at getting foreign and local investors to mass-produce crops both for the Indonesian market and for export.

The programme will allow foreign and local investors to lease and manage food estates in Merauke, a regency in the eastern-most province of Papua.

Senior ministry official Hilman Manan was quoted by Agence France-Presse last week as saying that Merauke had 2.5 million ha of land which was ideal for cultivation.

'The area is flat and has a good climate. Its soil is appropriate,' he said.

'Sumatra is already congested with other plantations...and Kalimantan is full of mining areas and many plantations.'

Japan, South Korea and some Middle Eastern countries have expressed interest in the programme, he said.

Large-scale farming by Indonesian and foreign firms has been going on for years. But it has mostly been confined to oil palm. Commodities such as corn and sugar cane are still imported.

In recent years, land-scarce countries have tried to lease Indonesian soil to grow crops for their own people.

Saudi Arabia's Bin Laden group last year reportedly considered developing up to two million ha of farmland in Papua to grow basmati rice. The US$4.3 billion (S$6 billion) plan apparently stalled in October because of land acquisition problems.

Earlier this month, the partly government-owned Minerals Energy Commodities Holdings from the United Arab Emirates said it was keen on renting 100,000ha of land in Kalimantan to produce rice, sugar cane, oil palm and fruit.

On Thursday, a ministry spokesman told The Straits Times that local governments in Merauke, home to only 175,000 people, were eager for foreign investment and for the estate scheme to take off.

'We cannot do this mass farming on Java because we need to protect small farmers,' he added.

He was echoing earlier concerns that the scheme, if launched nationwide, would crush small-scale farmers in Java, Bali and Nusa Tenggara.

There are an estimated 42.6 million small-scale farmers, mostly in heavily populated Java. About 70 per cent of Indonesia's food supply comes from the island.

Ministry officials say the Merauke food estate will have a mix of crops - from rice padi, maize, soya bean and sugar cane to oil palm. Indonesia is now the world's top producer of palm oil.

To make sure that the estates are not seen by residents of the areas as a form of 'land grab', investors will be given only up to 100,000ha each to develop, with a 35-year land-use lease. This can be extended later.

Investment firms will be given tax and custom duty breaks but they have to be joint ventures, with foreigners holding a 49 per cent stake at most.

'We will also mandate the amount of produce that can be exported and what has to stay in the domestic market,' said the Agricultural Ministry spokesman.

Businesses such as the PT Bangun Tjipta Saran conglomerate have said that they are raring to grow corn and sugar cane. But they say they desperately need the government's help to develop infrastructure such as roads, a port and new airport runways.

Food production to stay largely domestic
Concern in Russia and Africa over Chinese farming in their lands
Grace Ng, Straits Times 27 Feb 10;

BEIJING: While food security may be a looming problem, the key is still to plant more at home, a top Chinese official said this week.

China is struggling to feed its 1.3 billion people - who make up about 22 per cent of the world's population - on just one-tenth of the earth's arable land.

As pollution and overuse of chemicals like pesticides erode the soil's fertility, the country is facing growing threats to its food security.

China's solution to resolving the issue of food security is to focus on domestic production, said Mr Han Jun, a top rural policy adviser to Beijing, at a press briefing on China's rural policy on Tuesday.

'The basic policy (of the central government) is to balance supply and demand of agricultural production,' he said.

'We do not feel that going to rent and farm land in other countries... is a reliable policy option. It is not right.'

Last December, Kazakh President Nursultan Nazarbayev caused a furore when he publicly said that China was interested in renting one million hectares of farmland in his country.

This sparked two days of demonstrations by locals in the commercial capital of Almaty ahead of Chinese President Hu Jintao's visit to the country. The protesters waved placards saying 'Mr Hu Jintao, we will not give up Kazakh land'.

Similar fears about Beijing's intentions in securing food from overseas have also sprouted in Brazil - where more than 6,600ha of soya beans are being farmed by Chinese - as well as in African countries like Uganda where some 350 Chinese are cultivating 4,000ha of land.

Among the most famous groups of Chinese farmers are the 'Baoding villagers' from northern Hebei province. Over the past decade, more than 13,000 of them have settled in Africa and even married locals and raised families there.

Indeed, concerns are rising among China's neighbours like Russia, as well as in Africa, about the influx of Chinese farmers on their land.

That has prompted speculation that Beijing is dispatching an army of farmers to harvest food on foreign soil.

Mr Han acknowledged that some local governments such as Hebei and Chongqing have encouraged rural Chinese to migrate overseas to farm.

But he insisted that this trend does not stem from official policy.

'Chinese rural workers are the world's most hard-working and most able to endure hardship,' he said. 'As long as there is money to be earned, they will do the work - no matter how difficult, how dirty, how dangerous.'

Mr Han was responding to a question from a Belarus journalist about Beijing's policy on overseas farming amid growing concerns from neighbours like Russia and Kazakhstan where thousands of Chinese farmers have rented land to plant crops.

These Chinese farmers are planting vegetables for local consumption, and not to feed Chinese mouths, Mr Han noted.

Mr Han, a top researcher at a rural economy think-tank advising China's State Council, insisted that Beijing did not have a policy of encouraging people to become landlords in other countries or to rent land on a large scale.

'We have also taken concerns of neighbours seriously,' he said, noting that the government has told companies dispatching Chinese workers abroad to improve their skills and to remind them to abide strictly by the laws and regulations in the host country.

Land for hire
Straits Times 27 Feb 10;

# Egypt runs farms growing corn in Zambia, rice in Niger, and vegetables in Tanzania. Now it plans to grow wheat in Uganda.

# Pakistan's Board of Investment plans to put about 9.1 million ha of farmland up for lease to foreign countries and companies.

# An Australian investment group, BKK Partners, says its client is targeting 100,000ha of Cambodian land to grow rice, bananas, sugar cane, palm oil and teak. Investments worth US$600 million (S$847 million) planned.

# Jordan is planning a joint grain venture with Kazakhstan, involving US$50 million in investments.

# Investment group Saudi Star is eyeing 350,000ha in Ethiopia to plant rice, maize, sugar cane and oilseeds.

# Indonesia is targeting 1.6 million ha on Papua island for agriculture projects.

# Libya is planning farmland projects worth US$500 million in Brazil.

# United Arab Emirates' Minerals Energy Commodities Holdings is in talks to lease 100,000ha of farmland in Kalimantan, where the company has a railway and coal project worth about US$1 billion.