“To feed the world, we have to double global food output in 21 years,” says
Dr John Purchase, CEO of the Agricultural Business Chamber. “Meanwhile we’re seeing phenomenal lifestyle changes, especially in the East, where consumers are demanding more animal protein instead of vegetable protein. How will we meet these needs? I don’t think it’ll only be by technology and efficiency gains.” Expanding food production at the same rate as demand will be difficult as global farm land is disappearing rapidly, making this target harder to achieve.
About 50 million acres (over 20 million hectares) vanish each year to urbanisation, population growth, and economic and industrial development. In Iraq, 30% of farm land is expected to be lost through upriver damming in Turkey. Vietnam lost 1,2 million acres (485 623ha) of farm land from 2001 to 2007 through developments including over 100 golf courses. In China and India many of the most fertile areas are being developed for roads and factories.
“There’s a new wave of investment in land by developed countries like the US and developing countries like China, as a result of the pressure to satiate the world’s energy and food requirements in the long term,” says Dr Purchase.
Neocolonial land grabs
In October 2008, the global food security-focused NGO called Grain issued a report citing over 100 examples of what are termed “neocolonial land grabs”. The Food and Agriculture Organization (FAO) estimates the amount of additional land required to meet projected food demand in 2050 would be about 3 billion hectares – and nearly all of this will be in developing countries. Africa, with only 14% or 184 million hectares of its arable land under cultivation, is a prime target for such land grabs. “Africa is the last region with potential for considerable horizontal expansion in terms of commercial agriculture,” Dr Purchase explains.
Dr Mohammed Karaan, dean of the Faculty of AgriSciences at Stellenbosch University, says many countries have been pushed to invest in good natural resources, which are becoming increasingly scarce. “Countries with surplus money are pushing to find land, water and good climate. Angola, Mozambique, Tanzania, Madagascar, Sudan and Senegal are all good examples of where foreigners have invested in these agricultural resources.”
Dr Karaan says until now, the US has led foreign purchasing, although its forays were mostly into South America. “Japan is also very active and to some extent, Taiwan.
“But China has probably taken the lead in terms of investing in foreign farm land because it has the most available cash. China is a giant in terms of consumption and it needs resources to feed itself.” The country has widespread interests on the African continent as well as in Burma, Laos, Russia and Kazakhstan.
Dr Karaan says another investor that shouldn’t be ignored is the oil-rich, water-poor Middle East, which has surplus cash and is looking to secure food supplies. Gulf Cooperation Council countries are expected to import 60% of their food by 2010, according to the FAO. Arab investors are increasingly attracted to Africa’s agriculture, construction and telecom sectors and are viewed by African states as a useful counterweight to China’s influence. Sudan is already attracting its share of petrol dollars. The United Arab Emirates has farms in several Sudanese provinces, growing wheat and maize. Oil producer Abu Dhabi announced plans in July 2008 to develop 70 000 acres (28 328ha) of farm land to grow alfalfa for animal feed, and possibly maize, beans and potatoes in Sudan.
The fine print
The terms of these land deals vary according to requirements. Some involve land purchases, others long-term leases, while some require large investments in existing farms. Others are based on barter-type principles. For example, in May 2008, the Libyan government gave Ukraine an oil and gas contract in exchange for 247 000ha of Ukrainian land to produce its own food. Some East African countries, like Ethiopia, lure investors by leasing their arable land at minimal cost. The hope is that the resultant job creation, access to capital, agricultural know-how and investment in farming infrastructure will be compensation enough.
But it doesn’t always work out that way. There are numerous examples of investors using only the country’s land and water resources and bringing in outsiders to supply fertiliser, seed, specialised labour and tractors. A few years ago, Libya snatched up an offer to acquire control of 100 000ha in the Office du Niger, Mali’s main rice-producing area. As part of the deal, Libya agreed to improve local infrastructure, including enlarging a canal and improving a road. But when it came to awarding these contracts and to finding a supplier of rice seeds, local firms were snubbed in favour of Chinese and Libyan ones.
Land grabs by foreign countries have become a serious issue in Africa – serious enough to bring down presidents. In one of the most controversial deals, South Korea’s Daewoo recently acquired a 99-year lease on 1,3 million hectares of land in Madagascar to grow palm oil and maize. The agreement represented half the islands’ arable land and caused widespread anger, fuelling revolts which lead to the death of 135 people and the downfall of President Marc Ravalomanana. The day after Andry Rajoelina took power, the new president announced the deal was off.
The Seychelles also recently cancelled a large new hotel development by an international investor which was zoned for 20ha of prime agricultural land. This followed strong objection from local residents worried about food security. The land will now remain state property.
In Pakistan, small-scale farmers protested in January 2009 against the government’s plans to invite foreign investors to establish large-scale farms, cultivated with heavy machinery. Investors would be allowed to repatriate the whole crop. Pakistan already suffers from a food shortage and imports wheat every year, and farmers fear foreign investors taking a share of the country’s production would worsen food security.
While other deals are doomed to fall under the axe of the global credit crunch, the global food shortage means the snapping up of foreign land will continue.
Activity by governments is still driving many deals – Angolan state media recently reported that Beijing had granted the country a US$1 billion (over R9 billion) agricultural loan. In February, the Chinese president went on a four-nation tour to cement ties with African countries.
“The question for South Africa is how are we going to manage the investment?” asks Dr Purchase. “We must be part of the new businesses investors are bringing to Africa and more specifically into the Southern African Development Community. Many of our local companies are already developing more of an African vision and are providing agribusinesses with services like management and inputs.”
www.grain.org/briefings, Countries are Renting Farmland Abroad, Kent Garber. |fw
The world’s not only short of food, it’s also short of fuel. This has led to an explosion of agrofuel and non-food oil plantations in developing countries. “There’s no doubt the need for oil and energy is another key driver of foreign land buying,” says Dr John Purchase, CEO of the Agricultural Business Chamber. “Europe, for example, is establishing jatropha plantations in Mozambique and Zambia.” Japan and the US are also very active, working their agrofuel interests into various aid, trade and investment agreements with the African continent. Brazil has cut deals for ethanol imports and technology transfer with several African countries including Senegal, Nigeria, Mozambique and Angola. China has secured a long-term deal for Nigerian cassava for its domestic ethanol distilleries.
Africa is an obvious target for agrofuel developers with its large land mass and relatively cheap labour. Fifteen African countries – nicknamed the Green Opec – have a combined arable land base larger than India available for agrofuel crop production.
The Mozambican government favours jatropha and the country has seen a rash of biofuel investment. But in South Africa, it’s currently illegal to plant or propagate jatropha without a permit. This repelled European company Biodiesel Africa, which moved its plantations from South Africa to Mozambique and built two refineries.
China recently requested 2 million hectares for jatropha cultivation in Zambia, the biggest lease of land in a country which faces a food shortage following flooding and drought during last year’s growing season.
UK-based D1 Oils has planted more than 156 000ha of jatropha in countries across Africa including Swaziland and Zambia, as well as India and Southeast Asia. Germany’s Flora EcoPower is investing US$77 million (over R705 million) in Ethiopia. Also, Swedish ethanol producer Sekab Group plans to produce 100 million litres of ethanol a year in Tanzania by 2012. Also about to jump on board is British-based energy firm Cams Group, which last year bought 45 000ha in Tanzania to produce 240 million litres of ethanol a year from sweet sorghum. British firm Sun Biofuels also plans to grow jatropha in Tanzania to supplement yields from its other plantations in Ethiopia and Mozambique. Sources: www.farmlandgrab.blogspot.com, www.grain.org/briefings.
Angola is particularly active in wooing investors as it strives to diversify its oil-dependent economy. Its efforts are bearing fruit as Brazilian building giant Odebrecht has announced plans to invest in Angola’s sugar and ethanol sector. In March 2008 US banana giant Chiquita Brands arrived in Angola with the intention of rebuilding the banana industry. In January 2009, pan-African investment company Lonrho secured a 50-year lease to develop 25 000ha of rice paddies in Angola. Lonrho is also negotiating two bigger land deals, one on the Malian stretch of the Niger River and another on the shores of Lake Malawi, bringing to 150 000ha the total land in Africa being developed by Lonrho’s agricultural arm. Angola actively woos investors