The 21st-Century Land Rush

The International Food Policy Research Institute (IFPRI) recently reported that nearly three dozen countries designated as “alarming” or “serious” on its Global Hunger Index scale are leasing vast swaths of farmland to international investors. IFPRI revealed that these foreign investors are cultivating crops and then immediately spiriting them out of these hunger-riven nations. Seven countries with high hunger levels—Cambodia, Ethiopia, Indonesia, Laos, Liberia, the Philippines, and Sierra Leone—have each agreed to deals that collectively constitute more than 10% of their total agricultural area (the figure approaches 20% in Sierra Leone). Oxfam just announced a similar finding: Two-thirds of large-scale land acquisitions have occurred in countries with “a serious hunger problem.”

Why are the world’s most food-insecure nations ceding precious food resources to outsiders? The answer requires a closer look at these land deals, which IFPRI has described as a new phase of the world food crisis.

According to Oxfam, since 2001 foreigners have acquired nearly 230 million hectares of farmland (the size of Western Europe), with most of this land being obtained since 2008. According to the World Bank, 60 million hectares’ worth of deals were announced in 2009 alone. The amount of relinquished land in poor nations, says Oxfam, equates to an area the size of London sold off every six days.

Asian (particularly Chinese, South Korean, and Indian), European, and Gulf governments and corporations, in pursuit of food and energy resources or simply seeking profits, are snapping up precious arable land in sub-Saharan Africa, Southeast Asia, Latin America, and the former Soviet Union. Most of these target areas are food-insecure (some are dependent on international food aid), impoverished, and corruption-prone, and few of their citizens enjoy robust land rights.

This is not to say, however, that large-scale land acquisitions are strictly a matter of wealthy investors preying on the developing world’s destitute. Africans and Asians are both investing intraregionally, and Australia and New Zealand have emerged as attractive investment destinations. The largest potential land deal announced to this point—a staggering 6 million hectares to grow soy and corn in Mozambique—has been pursued by Brazil.

This global land rush is not new. Several centuries ago, European colonialists and U.S. fruit corporations gobbled up enormous expanses of global farmland. However, several characteristics set today’s investments apart from their predecessors. One, suggested by the Brazil-Mozambique example, is sheer scale. Ten deals announced since 2007 involve at least 100,000 hectares of land, and there are five deals that constitute at least a million hectares. A study released this past summer by the United Nations and International Institute for Environment and Development (IIED) concludes that 2.5 million hectares have been acquired in just five countries (Ghana, Ethiopia, Madagascar, Mali, and Sudan), including almost 1.5 million hectares in Sudan alone. To get a sense of the magnitude, consider that the typical developing-world farmer has a plot of just two hectares.

Another difference from the past is product type. In previous centuries, the focus was on cash crops such as tea and bananas. Today, the emphasis is on grains and potential biofuels such as wheat, rice, sorghum, soy, corn, palm oil, and sugarcane. These are staples that meet the food and energy needs of millions.

Problematic deals

Given the need for greater investment in developing-world agriculture—a low-yield, inefficient sector whose struggles helped precipitate the 2007–2008 world food crisis—one may point to these land deals as an encouraging development that will boost agricultural productivity and benefit the local economy. Unfortunately, they are deeply problematic.

Generally speaking, they have not resulted in benefits for local communities, because most of the deals hire very few local laborers, transfer few agricultural technologies to local communities, and, most critically, sell few harvests to local markets. According to a study released by European researchers earlier this year, about two-thirds of foreign land investors operating in developing nations intend to export all of their production. Many investors don’t even bother to farm their land, instead preferring to sit on it for speculative purposes. A 2011 World Bank study found that farming has begun on only about 20% of publicly announced deals.

Projects that have been implemented pose considerable environmental threats. Land investors favor large-scale industrial agriculture, which emphasizes fossil fuel–based technologies, pesticides, and fertilizers. They also embrace deep plowing and heavy water use, which degrade land and tax natural resources. Deforestation is a major concern as well. Indigenous communities in Indonesia have lodged a formal complaint with the World Bank that accuses a palm oil company of destroying their forests. Yet the problem extends far beyond Indonesia. My new edited volume, The Global Farms Race, features research led by University of Georgia professor Laura German. She reveals that in both Southeast Asia and sub-Saharan Africa, forest conversions to oil palm production (one of the major crops figuring in land deals) have resulted in 100% deforestation rates. They have also caused extensive damage to indigenous animal species, including the elimination of 60% of a bird species in Malaysia.

Additionally, farmland investments imperil the basic needs of local communities by appropriating land they have long accessed for food, water, and medicine. In Ethiopia, an Indian agribusiness firm is growing food for export on land that previously cultivated teff, Ethiopia’s staple grain. Even worse, researchers and journalists have documented numerous cases of people suffering outright displacement. Land rights organizations allege that a Thai sugar company’s acquisition of 20,000 hectares in Cambodia uprooted hundreds of locals. According to Human Rights Watch, a resettlement program has “forcibly displaced” tens of thousands of Ethiopians in Gambella state, where more than 40% of the land has been set aside for investment. And in Uganda, a British firm’s seemingly benign project—the planting of new forest land—has displaced 20,000 people.

Some deals have sparked community unrest. In 2009, an unsuccessful attempt by a South Korean corporation to acquire 1.3 million hectares of farmland in Madagascar set off widespread national protests and helped oust the government that had championed the deal. More recently, in 2011, a Ugandan mob, angry about an Indian firm’s plan to clear rainforest for sugarcane production, killed an Indian man. That same year, furious Kenyans told the Guardian newspaper that they had been evicted from the Tana Delta to enable investors to construct a sugar plantation and vowed to respond with “guns and sticks … it will be war.” Another potential flashpoint is Papua, an Indonesian region wracked by a separatist insurgency led by indigenous Papuans. Here, a Saudi firm has acquired more than a million hectares on a Jakarta-controlled estate. With non-Papuans expected to be brought in as laborers, observers fear an exacerbation of strife.

Finally, large-scale land acquisitions could deliver a serious blow to a global food economy already hampered by sluggish harvests, high commodities prices, and recession. Imagine if major food-importing nations, spooked by volatile food markets and fearful of export bans, continue to undertake large-scale food production abroad instead of importing through commodities markets. This could mean lower market demand, reduced supplies, and, in all likelihood, even higher prices for those still dependent on food from market sources. (Food prices have risen by nearly 4% in poor countries since 2011, according to UN estimates.) The most vulnerable would be poor food importers, such as West African nations, with insufficient capital to follow the lead of wealthier importers and invest in farmland overseas.

The intention here is not to paint all land deals with a critical brush; there are undoubtedly success stories. Researchers from IIED have discovered contracts for several deals in Africa that apply international environmental standards and contain explicit investor commitments on employment and training. The World Bank has singled out several projects that generate employment for local smallholders. And New York Times reportage has described how Chinese acquisitions of Russian farmland are generating win-win results for both countries: China produces food and other resources desperately needed back home, yet also sells some of its harvests in local Russian markets, and even hands out free produce to those who happen to stop by its farms. Beijing also supplies scores of its own agricultural laborers, a boon for Russia’s land-rich yet sparsely populated rural regions. Such examples, however, represent exceptions, not norms.

Rising stakes

The race for farmland has no end in sight, because the drivers of large-scale land acquisitions promise to persevere in the years ahead. These include volatile commodities markets, extreme weather events, disappearing natural resources, population growth, and skyrocketing demand for food and biofuels.

Additionally, investors have powerful incentives to push forward. With food security under constant threat, food-importing governments must obtain food for their populations, and by producing it overseas, they bypass the perils of unpredictable markets. Meanwhile, private-sector financiers have compelling commercial reasons to continue to hoard land overseas, given high global demand for food (and biofuels) and the dwindling global supply of land and water resources needed for its production.

As long as the land deals continue, the threats outlined above will remain and could grow more acute as investments continue to proliferate. Imagine the long-term environmental implications of large-scale farming projects across central Africa, South America, and Southeast Asia, regions that not only host many land deals but also are home to most of the world’s shrinking rainforests. Consider how the intensification of large-scale plantation agriculture could erode smallholder agriculture and snuff out local farming skills. And contemplate the possibility of long-time regional food export hubs, such as Southeast Asia’s rice production areas, becoming net importers, as outside investors devour local cropland and send their harvests back home, leaving the region with insufficient land to maintain its own export regime. Raul Montemayor, who runs a small farmers’ organization in the Philippines, warns in The Global Farms Race that large-scale land acquisitions, coupled with Asia’s rice demand, population growth, and expected climate change effects along the Mekong River, could well spark such a shift.

What can be done?

Because the chief motivations and incentives remain so strong, little can be done to halt large-scale land acquisitions. The international community has no ability (much less the right) to prevail on investors, most of them wealthy and powerful, to stop their activities. Therefore, Oxfam’s recent demand that the World Bank suspend its financial support for large-scale acquisitions is misguided.

Additionally, unlike in the past, host governments enthusiastically support these investments, because of the bridges, ports, and roads that investors promise to incorporate into their projects (large revenue boosts for host government coffers certainly don’t hurt either). Host officials have offered a range of inducements to foreign investors, from tax holidays to private security forces. Prevailing on host governments to stop signing off on such land projects, therefore, is unrealistic as well.

The most practical strategy is to accept the existence of the land deals and encourage policy changes that blunt their harmful effects. National governments seeking agricultural investments should tighten regulations governing foreign acquisitions of land, and they should make more vigorous efforts to limit the damage these deals cause to food security, livelihoods, and the environment. These governments should also establish greater protections for vulnerable smallholders. One example is to provide legal assistance to small farmers to ensure that their interests are better protected in contract negotiations. Another is facilitating the ability of citizens to secure land titles, which would make them less vulnerable to land predations. The charity Concern Worldwide recently helped 6,000 Tanzanians obtain such documents in a country where only 10% of the population holds them.

Several host governments are already taking such measures. Argentina and Brazil are passing laws to limit foreign land ownership. Cambodia and Laos have even declared freezes on new land concessions. Admittedly, however, there is no guarantee that these policies will achieve their intended goals. Additionally, they have yet to be established in most of the popular African targets of land acquisitions, such as Ethiopia, Sudan, and Kenya.

The international community also has an important role to play. Normative measures, such as the implementation of international codes of conduct to ensure equitable and sustainable land deals, have little utility, given that such efforts are unenforceable and unlikely to be heeded voluntarily. Instead, international nongovernmental organizations and the media should showcase success stories, such as those few deals that actually deliver on investor promises and those governments that have acted to mitigate the deleterious aspects of land deals. The international community should also seek to shame the most egregious investors by producing extensive reportage on the most damaging deals.

Even while establishing measures to minimize the harmful effects of these investments today, additional efforts should take a more long-term view and strengthen the alternatives to large-scale land acquisitions, so that nations have more-innocuous ways of securing food sources when commodities markets are too volatile. The private-sector firm Syngenta is developing genetically engineered drought-resistant wheat and corn crops. This innovation could eventually provide parched Gulf nations with an indigenous solution to food insecurity that makes forays abroad unnecessary. And in another major development, after years of political resistance, Southeast Asian nations have finally agreed to form a regional rice pool. If such plans are consummated, these countries may have less of an incentive to turn to outside investors to enhance food production.

Finally, efforts should be made to ramp up international investments in agriculture that focus less on large-scale production and more on small-scale, targeted initiatives. Investors can finance irrigation development, higher-yield farming technologies, and training courses that enhance local communities’ agricultural skills.

Natural resource doomsday?

Increasingly, natural resource experts warn that the world is entering a Hobbesian period of resource scarcity in which nations must fight for the precious resources that remain. This era represents, to quote the title of Michael T. Klare’s newest book, “the race for what’s left.” Lester Brown’s new book, Full Planet, Empty Plates, tells a similarly scary story of dwindling food stocks, crop yields, and water and land resources colliding with rapid population growth and soaring food demand. “We are moving into a new food era,” he recently told the Guardian, “one in which it is every country for itself.”

Some may dismiss this talk as needless alarmism, but the story of large-scale land acquisitions seems to foreshadow this desperate, no-holds-barred resource scramble. Food-needy nations are taking matters into their own hands by eschewing food markets and growing their own food abroad. In most host nations, smallholder communities can only watch helplessly as these outsiders voraciously consume their precious land and water resources. Meanwhile, less capital-rich food importers, or those simply unwilling to venture abroad to obtain food, must make do with volatile and expensive food markets, and worry about the ramifications for their restive and hungry populations.

The takeaway? The global farms race is freighted with significance—for its participants, its spectators, and even those who, at their own peril, pay it little mind.

Michael Kugelman ([email protected]) is the senior program associate for South and Southeast Asia at the Woodrow Wilson International Center for Scholars in Washington, DC. He is the lead editor of The Global Farms Race: Land Grabs, Agricultural Investment, and the Scramble for Food Security. Follow him on Twitter @michaelkugelman.