Land grabbing
Encyclopedia
Land grabbing is the contentious issue of large-scale land acquisitions; the buying or leasing of large pieces of land in developing countries, by domestic and transnational companies, governments, and individuals. While used broadly throughout history, land grabbing as used today primarily refers to large-scale land acquisitions following the 2007-2008 world food price crisis. By prompting food security
fears within the developed world and newfound economic opportunities for agricultural investors and speculators, the food price crisis caused a dramatic spike in large-scale agricultural investments, primarily foreign, in the Global South for the purposes of food
and biofuels
production. Initially hailed by investors and some developing countries as a new pathway towards agricultural development, investment in land has recently been criticized by a number of civil society, governmental, and multinational actors for the various negative impacts that it has had on local communities.
, showed that over 46 million ha in large scale farmland acquisitions or negotiations were announced between October 2008 and August 2009 alone, with two-thirds of demanded land concentrated in Sub-Saharan Africa. It is important to note that of the World Bank’s 464 examined acquisitions, only 203 included land area in their reports, implying that the actual total land covered could more than double the World Bank’s reported 46 million ha. The most recent estimate of the scale, based on evidence presented in April 2011 at an international conference convened by the Land Deal Politics Initiative, estimated the area of land deals at over 80 million ha .
Of these deals, the median size is 40,000 ha, with one-quarter over 200,000 ha and one-quarter under 10,000 ha . 37% of projects deal with food crops, 21% with cash crops, and 21% with biofuels . This points to the vast diversity of investors and projects involved with land acquisitions: the land sizes, crop types, and investors involved vary wildly between agreements. Of these projects, 30% were still in an exploratory stage, with 70% approved but in varying stages of development. 18% had not started yet, 30% were in initial development stages, and 21% had started actual farming. The strikingly low proportion of projects that had actually initiated farming signifies the difficulties inherent in large-scale agricultural production in the developing world.
Investment in land often takes the form of long-term leases
, as opposed to outright purchases, of land. These leases often range between spans of 25 and 99 years . Such leases are usually undertaken between national or district governments and investors. Because the majority of land in Africa is categorized as “non-private land” as a result of government policies on public land ownership and a lack of active land titling, governments own or control most of the land that is available for purchase or lease . Purchases are much less common than leases due to a number of countries’ constitutional bans on outright sales of land to foreigners
.
The methods surrounding the negotiation, approval, and follow-up of contracts between investors and governments have attracted significant criticism for their opacity and complexity. The negotiation and approval processes have been closed in most cases, with little public disclosure both during and after the finalization of a deal. The approval process, in particular, can be cumbersome: it varies from approval by a simple district-level office to approval by multiple national-level government offices, and is very subjective and discretionary . In Ethiopia, companies must first obtain an investment license from the central government, identify appropriate land on the district level and negotiate with local leaders, then develop a contract with the regional investment office. Afterwards, the government will undertake a project feasibility study and capital verification process, and finally a lease agreement will be signed and land will be transferred to the investor . Meanwhile, in Tanzania, even though the Tanzania Investment Centre facilitates investments, an investor must obtain approval from the TIC, the Ministry of Agriculture, the Ministry of Lands and Housing Development, and the Ministry of Environment, among which communication is oftentimes intermittent .
(fact). Other primary areas of note are in Southeast Asia and Latin America.
One common thread among governments has been the theme of development
: target governments tout the benefits of agricultural development, job creation, cash crop
production, and infrastructure provision as drivers towards economic development and eventually modernization. Many companies have promised to build irrigation, roads, and in some cases hospitals and schools in order to carry out their investment projects. In return for a below-market-rate $10/ha annual payment for land, Saudi Star promised "to bring clinics, schools, better roads and electricity supplies to Gambella”. Governments also count new job creation as a significant feature of land acquisitions.
The issue of agricultural development is also a significant driving factor, within the larger umbrella of development, in target governments' agreement to investment by outsiders. The Ethiopian government's acceptance of cash crop-based land acquisitions reflects its belief that switching to cash crop production would be even more beneficial for food security than having local farmers produce crops by themselves . Implicit in the characterization of African agriculture as "underdeveloped" is the rejection of local communities' traditional methods of harvesting as an inadequate form of food production.
On a smaller scale, some deals can also be traced to a personal stake in the project, or possibly due to corruption or rent-seeking. Given the ad hoc, decentralized, and unorganized approval processes across countries for such transactions, the potential for lapses in governance
and openings for corruption are extremely high. In many countries, the World Bank has noted that investors are often better off learning how to navigate the bureaucracies and potentially pay off corrupt officers of governments rather than developing viable, sustainable business plans .
enforces in a stricter way a long existing law that limits the size of farmland properties foreigners may purchase, having halted a large part of projected foreign land purchases..
In Argentina
, as of September 2011, a projected law is discussed in parliament that would restrict the size of land foreign entities can acquire to 1000 hectare..
es, governments, and speculative investors. Governments and companies in Gulf States have been very prominent along with East Asian companies. Many European and American-owned investment vehicles and agricultural producers have initiated investments as well. These actors have been motivated by a number of factors, including cheap land, potential for improving agricultural production, and rising food and biofuel prices. Building on these motivations, investments can be broken down into three main categories: food, biofuel, and speculative investment. Forestry
also contributes to a significant amount of large-scale land acquisition.
Agricultural sector companies most often view investment in land as an opportunity to leverage their significant monetary resources and market access
to take advantage of underutilized land, diversify their holdings, and vertically integrate their production systems. The World Bank identifies three areas in which multinational companies can leverage economies of scale: access to cheap international rather than domestic financial markets
, risk-reducing diversification of holdings
, and greater ability to address infrastructural
roadblocks. In the past few decades, multinationals have shied away from direct involvement in relatively-unprofitable primary production, instead focusing on inputs and processing and distribution . When the food price crisis hit, risk was transferred from primary production to the price-sensitive processing and distribution fields, and returns became concentrated in primary production. This has incentivized agribusinesses to vertically integrate in order to reduce supplier risk that has been heightened by the ongoing food price volatility. These companies hold mixed attitudes towards food imports and exports: while some concentrate on food exports, others focus on domestic markets first.
While company-originated investments have originated from a wide range of countries, government-backed investments have originated primarily from the food-insecure Gulf States. Examples of such government-backed investments include the government of Qatar’s attempt to secure land in the Tana River Delta
and the Saudi government's King Abdullah Initiative . Additionally, sovereign wealth fund
s acting as the investments arms of governments have initiated a number of agreements in Sub-Saharan Africa. Since the population of the Gulf states is set to double from 30 million in 2000 to 60 million in 2030, their reliance on food imports is set to increase from the current level of 60% of consumption . The Director General of the Arab Organisation for Agricultural Development echoed the sentiment of many Gulf leaders in proclaiming, “the whole Arab World needs of cereal, sugar, fodder and other essential foodstuffs could be met by Sudan alone” .
The effect of the rise in popularity in biofuels was two-fold: first, demand for land for biofuel production became a primary driver of land sales in Sub-Saharan Africa; second, demand for biofuels production crowded out supply of traditional food crops worldwide. By crowding out food crops and forcing conversion of existing food-producing land to biofuels, biofuels production had a direct impact on the food supply/demand balance and consequently the food price crisis. One researcher from the IFPRI estimated that biofuels had accounted for 30 percent of the increase in weighted average grain prices .
Controversially, many hedge funds and private equity funds have engaged in speculative investments on land and food. These entities, such as BlackRock
and Emergent Asset Management Ltd., are either investing in land as a part of a larger agricultural-based fund or in land on its own as a stand-alone investment. The latter investment strategy is most clearly seen in investments by Jarch Capital in South Sudan. Philippe Heilberg, chairman of Jarch Capital, has taken to investing in South Sudan because of his focus on land in conflict regions or weak states
. While few – if any – other investors emulate Mr. Heilberg’s conflict-centric investment strategy, all share a common focus on undervalued land, much of which is concentrated in Sub-Saharan Africa.
: in a 2003 study, the World Bank estimated that only between 2 and 10 percent of total land in Africa is formally tenured . Much of the lack of private ownership is due to government ownership of land as a function of national policy, and also because of complicated procedures for registration of land and a perception by communities that customary systems are sufficient . World Bank researchers have found that there existed a strong negative statistical link between land tenure recognition and prospective land acquisitions, with a smaller yet still significant relationship for implemented projects as well . They concluded that “lower recognition of land rights increased a country’s attractiveness for land acquisition,” implying that companies have actively sought out areas with low land recognition rights for investment .
Consultations have been found extremely problematic due to the fact that they oftentimes reach just village chiefs but neglect common villagers and disenfranchised groups. World Bank researchers noted that “a key finding from case studies is that communities were rarely aware of their rights and, even in cases where they were, lacked the ability to interact with investors or to explore ways to use their land more productively” . When consultations were even conducted, they often did not produce written agreements and were found to be superficial, glossing over environmental and social issues . In Ghana and elsewhere, chiefs often negotiated directly with investors without the input from other villagers, taking it upon themselves to sell common land or village land on their own . Moreover, investors often had obtained approval for their projects before beginning consultations, and lacked any contractual obligation to carry out promises made to villagers .
There also exists a knowledge gap between investors and local populations regarding the land acquisition process, the legal enforceability of promises made by investors, and other issues. The inability of villagers to see and study the laws and regulations around land sales severely deteriorates communities’ agency in consultations. In the case that consultations do occur with communities, it is important to note that some take place in spans lasting only two to three months, casting doubt on whether such short time frames can be considered as adequate consultation for such large, wide-reaching, and impactful events.
An additional concern with consultations is that women and under-represented populations are often left outside looking in during the consultation process. Large-scale projects in Mozambique rarely included women in consultations and never presented official reports and documents for authorization by women . This holds true even in the case that women are the primary workers on the land that is to be leased out to companies. Meanwhile, pastoralists and internally displaced people were oftentimes intentionally excluded from negotiations, as investors tried to delegitimize their claims on land. This led to a lack of awareness on the part of these vulnerable groups until lease agreements have already been signed to transfer land. This oversight in consultations further disenfranchises previously overlooked communities and worsens power inequities within local villages.
There also exist a number of issues with the process of actually relocating locals to other areas where land is less fertile. In the process of relocation, often changed or lost are historical methods of farming, existing social ties, sources of income, and livelihoods. This holds drastic impacts especially in the case of women, who rely greatly upon such informal relationships .
One addition to many contracts between governments and investors is a Stabilisation Clause, which insulates investors from the effect of changed governmental regulations. Such clauses severely restrict the government’s ability to change any regulations that would have a negative economic impact on the investment. While advantageous for businesses, these stabilization clauses would severely hinder the ability of governments to address possible social and/or environmental concerns that become apparent after the beginning of the project.
, which relies heavily on fertilizers, machinery and inputs, over smallholder agriculture. As foreign investors begin to develop the land, they will for the most part start a shift towards such large-scale agriculture to improve upon existing “unproductive” agricultural methods. The threat of the conversion of much of Africa’s land to such large-scale agriculture has provoked a severe pushback from many civil society organizations such as GRAIN, La Via Campesina, and other lobbyists for small-scale agriculture .
Foreign investors, through large scale agriculture, increase the effectiveness of under-utilized resources of land, labor, and water, while further providing additional market connections, large-scale infrastructure development, and provision of seeds, fertilizers, and technology. Proposed increases in production quantity, as touted both by investors and hosts, are exemplified by Ethiopia’s Abera Deressa, who claims that “foreign investors should help boost agricultural output by as much as 40%” throughout Ethiopia . However, large scale mechanized agricultural production often entails the use of fertilizers and intensive farming techniques that have been criticized by numerous civil society actors as extremely ecologically detrimental and environmentally harmful over the long run . Over time, such intensive farming threatens to degrade the quality of topsoil and damage local waterways and ecosystems. As such, civil society actors have widely accused land investors for promoting “not agricultural development, much less rural development, but simply agribusiness development” . This trend towards large-scale agriculture that overrides local knowledge and sustainable local farming runs directly counter to the recent IAASTD report, backed by the FAO, UNDP, World Bank, and others, that in order to increase food security over the long term, sustainable peasant agriculture must be encouraged and supported .
On a larger scale, one major concern regarding land acquisitions is that, as of 2009, only 37% of land acquisitions were targeted for production of food crops, with the rest spread between cash crop and biofuel production, among other uses. In the case of Ethiopia, the government has in fact actively pushed for investment in cash crops such as soybean, palm oil, and biofuels, reasoning that “if we get money we can buy food anywhere,” as stated by Abera Deressa, the government minister in charge of agricultural development policy .
, signifying a renewed economic imperialism of developed over developing nations. Critics have pointed to the acquisitions of large tracts of land for economic profit, with little perceived benefit for local populations or target nations as a whole, as a renewal of the economically exploitative practices of the colonial period.
In South Sudan, numerous large scale land acquisitions have taken place in spite of the country's unresolved political and security situation at the time. One of the most prominent, involving a former AIG partner named Philippe Heilberg, garnered attention in Rolling Stone for his provocative pursuit of land in conflict-ridden regions. Heilberg, who is planning to invest in 800,000 ha of land in partnership with many of South Sudan's top generals and civilian officials, attracted criticism with his remarks (regarding Africa and land grabbing) that "the whole place is like one big mafia -- and I'm like a mafia head" .
Food security
Food security refers to the availability of food and one's access to it. A household is considered food-secure when its occupants do not live in hunger or fear of starvation. According to the World Resources Institute, global per capita food production has been increasing substantially for the past...
fears within the developed world and newfound economic opportunities for agricultural investors and speculators, the food price crisis caused a dramatic spike in large-scale agricultural investments, primarily foreign, in the Global South for the purposes of food
Food
Food is any substance consumed to provide nutritional support for the body. It is usually of plant or animal origin, and contains essential nutrients, such as carbohydrates, fats, proteins, vitamins, or minerals...
and biofuels
Biofuel
Biofuel is a type of fuel whose energy is derived from biological carbon fixation. Biofuels include fuels derived from biomass conversion, as well as solid biomass, liquid fuels and various biogases...
production. Initially hailed by investors and some developing countries as a new pathway towards agricultural development, investment in land has recently been criticized by a number of civil society, governmental, and multinational actors for the various negative impacts that it has had on local communities.
Current Situation and Details
The most comprehensive estimate of the scope of land acquisition, published in September 2010 by the World BankWorld Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, showed that over 46 million ha in large scale farmland acquisitions or negotiations were announced between October 2008 and August 2009 alone, with two-thirds of demanded land concentrated in Sub-Saharan Africa. It is important to note that of the World Bank’s 464 examined acquisitions, only 203 included land area in their reports, implying that the actual total land covered could more than double the World Bank’s reported 46 million ha. The most recent estimate of the scale, based on evidence presented in April 2011 at an international conference convened by the Land Deal Politics Initiative, estimated the area of land deals at over 80 million ha .
Of these deals, the median size is 40,000 ha, with one-quarter over 200,000 ha and one-quarter under 10,000 ha . 37% of projects deal with food crops, 21% with cash crops, and 21% with biofuels . This points to the vast diversity of investors and projects involved with land acquisitions: the land sizes, crop types, and investors involved vary wildly between agreements. Of these projects, 30% were still in an exploratory stage, with 70% approved but in varying stages of development. 18% had not started yet, 30% were in initial development stages, and 21% had started actual farming. The strikingly low proportion of projects that had actually initiated farming signifies the difficulties inherent in large-scale agricultural production in the developing world.
Investment in land often takes the form of long-term leases
Lease
A lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...
, as opposed to outright purchases, of land. These leases often range between spans of 25 and 99 years . Such leases are usually undertaken between national or district governments and investors. Because the majority of land in Africa is categorized as “non-private land” as a result of government policies on public land ownership and a lack of active land titling, governments own or control most of the land that is available for purchase or lease . Purchases are much less common than leases due to a number of countries’ constitutional bans on outright sales of land to foreigners
Economic nationalism
Economic nationalism is a term used to describe policies which emphasize domestic control of the economy, labor and capital formation, even if this requires the imposition of tariffs and other restrictions on the movement of labor, goods and capital. It opposes globalization in many cases, or at...
.
The methods surrounding the negotiation, approval, and follow-up of contracts between investors and governments have attracted significant criticism for their opacity and complexity. The negotiation and approval processes have been closed in most cases, with little public disclosure both during and after the finalization of a deal. The approval process, in particular, can be cumbersome: it varies from approval by a simple district-level office to approval by multiple national-level government offices, and is very subjective and discretionary . In Ethiopia, companies must first obtain an investment license from the central government, identify appropriate land on the district level and negotiate with local leaders, then develop a contract with the regional investment office. Afterwards, the government will undertake a project feasibility study and capital verification process, and finally a lease agreement will be signed and land will be transferred to the investor . Meanwhile, in Tanzania, even though the Tanzania Investment Centre facilitates investments, an investor must obtain approval from the TIC, the Ministry of Agriculture, the Ministry of Lands and Housing Development, and the Ministry of Environment, among which communication is oftentimes intermittent .
Target Countries
The target locations of most land grabs lie in the Global South, with 70% of land grabs concentrated in Sub-Saharan AfricaSub-Saharan Africa
Sub-Saharan Africa as a geographical term refers to the area of the African continent which lies south of the Sahara. A political definition of Sub-Saharan Africa, instead, covers all African countries which are fully or partially located south of the Sahara...
(fact). Other primary areas of note are in Southeast Asia and Latin America.
One common thread among governments has been the theme of development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
: target governments tout the benefits of agricultural development, job creation, cash crop
Cash crop
In agriculture, a cash crop is a crop which is grown for profit.The term is used to differentiate from subsistence crops, which are those fed to the producer's own livestock or grown as food for the producer's family...
production, and infrastructure provision as drivers towards economic development and eventually modernization. Many companies have promised to build irrigation, roads, and in some cases hospitals and schools in order to carry out their investment projects. In return for a below-market-rate $10/ha annual payment for land, Saudi Star promised "to bring clinics, schools, better roads and electricity supplies to Gambella”. Governments also count new job creation as a significant feature of land acquisitions.
The issue of agricultural development is also a significant driving factor, within the larger umbrella of development, in target governments' agreement to investment by outsiders. The Ethiopian government's acceptance of cash crop-based land acquisitions reflects its belief that switching to cash crop production would be even more beneficial for food security than having local farmers produce crops by themselves . Implicit in the characterization of African agriculture as "underdeveloped" is the rejection of local communities' traditional methods of harvesting as an inadequate form of food production.
On a smaller scale, some deals can also be traced to a personal stake in the project, or possibly due to corruption or rent-seeking. Given the ad hoc, decentralized, and unorganized approval processes across countries for such transactions, the potential for lapses in governance
Good governance
Good governance is an indeterminate term used in development literature to describe how public institutions conduct public affairs and manage public resources in order to guarantee the realization of human rights. Governance describes "the process of decision-making and the process by which...
and openings for corruption are extremely high. In many countries, the World Bank has noted that investors are often better off learning how to navigate the bureaucracies and potentially pay off corrupt officers of governments rather than developing viable, sustainable business plans .
Responses in Target Countries
Since 2010 BrazilBrazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
enforces in a stricter way a long existing law that limits the size of farmland properties foreigners may purchase, having halted a large part of projected foreign land purchases..
In Argentina
Argentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...
, as of September 2011, a projected law is discussed in parliament that would restrict the size of land foreign entities can acquire to 1000 hectare..
Drivers and Types of Land Investment
Investors can be generally broken down into three types of investors: agribusinessAgribusiness
In agriculture, agribusiness is a generic term for the various businesses involved in food production, including farming and contract farming, seed supply, agrichemicals, farm machinery, wholesale and distribution, processing, marketing, and retail sales....
es, governments, and speculative investors. Governments and companies in Gulf States have been very prominent along with East Asian companies. Many European and American-owned investment vehicles and agricultural producers have initiated investments as well. These actors have been motivated by a number of factors, including cheap land, potential for improving agricultural production, and rising food and biofuel prices. Building on these motivations, investments can be broken down into three main categories: food, biofuel, and speculative investment. Forestry
Forestry
Forestry is the interdisciplinary profession embracing the science, art, and craft of creating, managing, using, and conserving forests and associated resources in a sustainable manner to meet desired goals, needs, and values for human benefit. Forestry is practiced in plantations and natural stands...
also contributes to a significant amount of large-scale land acquisition.
Food
Food-driven investments, which comprise roughly 37% of land investments worldwide, are undertaken primarily by two sets of actors: agribusinesses trying to expand their holdings and react to market incentives, and government-backed investments, especially from the Gulf states, as a result of fears surrounding national food security.Agricultural sector companies most often view investment in land as an opportunity to leverage their significant monetary resources and market access
Market access
Market access for goods in the WTO means the conditions, tariff and non-tariff measures, agreed by members for the entry of specific goods into their markets. Tariff commitments for goods are set out in each member's schedules of concessions on goods. The schedules represent commitments not to...
to take advantage of underutilized land, diversify their holdings, and vertically integrate their production systems. The World Bank identifies three areas in which multinational companies can leverage economies of scale: access to cheap international rather than domestic financial markets
Capital market
A capital market is a market for securities , where business enterprises and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets...
, risk-reducing diversification of holdings
Diversification (finance)
In finance, diversification means reducing risk by investing in a variety of assets. If the asset values do not move up and down in perfect synchrony, a diversified portfolio will have less risk than the weighted average risk of its constituent assets, and often less risk than the least risky of...
, and greater ability to address infrastructural
Infrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
roadblocks. In the past few decades, multinationals have shied away from direct involvement in relatively-unprofitable primary production, instead focusing on inputs and processing and distribution . When the food price crisis hit, risk was transferred from primary production to the price-sensitive processing and distribution fields, and returns became concentrated in primary production. This has incentivized agribusinesses to vertically integrate in order to reduce supplier risk that has been heightened by the ongoing food price volatility. These companies hold mixed attitudes towards food imports and exports: while some concentrate on food exports, others focus on domestic markets first.
While company-originated investments have originated from a wide range of countries, government-backed investments have originated primarily from the food-insecure Gulf States. Examples of such government-backed investments include the government of Qatar’s attempt to secure land in the Tana River Delta
Tana River District
Tana River District is a district of Coast Province, Kenya. It is named after the Tana River itself. It has an area of and a population of 180,901 according to the 1999 census. The district capital is Hola ....
and the Saudi government's King Abdullah Initiative . Additionally, sovereign wealth fund
Sovereign wealth fund
A sovereign wealth fund is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds invest globally. Some of them have grabbed attention making bad investments in several Wall Street financial...
s acting as the investments arms of governments have initiated a number of agreements in Sub-Saharan Africa. Since the population of the Gulf states is set to double from 30 million in 2000 to 60 million in 2030, their reliance on food imports is set to increase from the current level of 60% of consumption . The Director General of the Arab Organisation for Agricultural Development echoed the sentiment of many Gulf leaders in proclaiming, “the whole Arab World needs of cereal, sugar, fodder and other essential foodstuffs could be met by Sudan alone” .
Biofuels
Biofuel production, currently comprising 21% of total land investments, has played a significant, if at times unclear, role. The use and popularity of biofuels has grown over the past decade, corresponding with rising oil prices and increased environmental awareness. The total area under biofuel crops more than doubled between 2004 and 2008, expanding to 36 million ha by 2008 . This rise in popularity culminated in EU Directive 2009/28EC in April 2009, which set 10% mandatory targets for renewable energy use, primarily biofuels, out of the total consumption of fuel for transport, by 2020 . Taken as a whole, the rise in biofuels popularity, while perhaps beneficial for the environment, sparked a chain reaction by making biofuels production a more attractive than food production and drawing land away from food to biofuel production.The effect of the rise in popularity in biofuels was two-fold: first, demand for land for biofuel production became a primary driver of land sales in Sub-Saharan Africa; second, demand for biofuels production crowded out supply of traditional food crops worldwide. By crowding out food crops and forcing conversion of existing food-producing land to biofuels, biofuels production had a direct impact on the food supply/demand balance and consequently the food price crisis. One researcher from the IFPRI estimated that biofuels had accounted for 30 percent of the increase in weighted average grain prices .
Agricultural Speculation
Some agricultural sector companies and private investors have targeted their investments towards agricultural speculation. It is probable that many companies have leased or purchased land on wholly speculative terms: of the World Bank’s identified deals, 48% of projects had been approved but either had not started or were in initial development stages. This has led the World Bank to conclude that many investors may have had speculative investing, rather than serious agricultural production, in mind.Controversially, many hedge funds and private equity funds have engaged in speculative investments on land and food. These entities, such as BlackRock
BlackRock
BlackRock, Inc. is an American multinational investment management corporation and the world's largest asset manager. BlackRock is headquartered in Manhattan, New York City, New York, United States and is the leading provider of investment, advisory, and risk management solutions...
and Emergent Asset Management Ltd., are either investing in land as a part of a larger agricultural-based fund or in land on its own as a stand-alone investment. The latter investment strategy is most clearly seen in investments by Jarch Capital in South Sudan. Philippe Heilberg, chairman of Jarch Capital, has taken to investing in South Sudan because of his focus on land in conflict regions or weak states
Failed state
The term failed state is often used by political commentators and journalists to describe a state perceived as having failed at some of the basic conditions and responsibilities of a sovereign government...
. While few – if any – other investors emulate Mr. Heilberg’s conflict-centric investment strategy, all share a common focus on undervalued land, much of which is concentrated in Sub-Saharan Africa.
Land Insecurity
One of the major issues is land tenureLand tenure
Land tenure is the name given, particularly in common law systems, to the legal regime in which land is owned by an individual, who is said to "hold" the land . The sovereign monarch, known as The Crown, held land in its own right. All private owners are either its tenants or sub-tenants...
: in a 2003 study, the World Bank estimated that only between 2 and 10 percent of total land in Africa is formally tenured . Much of the lack of private ownership is due to government ownership of land as a function of national policy, and also because of complicated procedures for registration of land and a perception by communities that customary systems are sufficient . World Bank researchers have found that there existed a strong negative statistical link between land tenure recognition and prospective land acquisitions, with a smaller yet still significant relationship for implemented projects as well . They concluded that “lower recognition of land rights increased a country’s attractiveness for land acquisition,” implying that companies have actively sought out areas with low land recognition rights for investment .
Local Consultation and Compensation
While commonly required by law in many host countries, the consultation process between investors and local populations have been criticized for not adequately informing communities of their rights, negotiating powers, and entitlements within land transactions.Consultations have been found extremely problematic due to the fact that they oftentimes reach just village chiefs but neglect common villagers and disenfranchised groups. World Bank researchers noted that “a key finding from case studies is that communities were rarely aware of their rights and, even in cases where they were, lacked the ability to interact with investors or to explore ways to use their land more productively” . When consultations were even conducted, they often did not produce written agreements and were found to be superficial, glossing over environmental and social issues . In Ghana and elsewhere, chiefs often negotiated directly with investors without the input from other villagers, taking it upon themselves to sell common land or village land on their own . Moreover, investors often had obtained approval for their projects before beginning consultations, and lacked any contractual obligation to carry out promises made to villagers .
There also exists a knowledge gap between investors and local populations regarding the land acquisition process, the legal enforceability of promises made by investors, and other issues. The inability of villagers to see and study the laws and regulations around land sales severely deteriorates communities’ agency in consultations. In the case that consultations do occur with communities, it is important to note that some take place in spans lasting only two to three months, casting doubt on whether such short time frames can be considered as adequate consultation for such large, wide-reaching, and impactful events.
An additional concern with consultations is that women and under-represented populations are often left outside looking in during the consultation process. Large-scale projects in Mozambique rarely included women in consultations and never presented official reports and documents for authorization by women . This holds true even in the case that women are the primary workers on the land that is to be leased out to companies. Meanwhile, pastoralists and internally displaced people were oftentimes intentionally excluded from negotiations, as investors tried to delegitimize their claims on land. This led to a lack of awareness on the part of these vulnerable groups until lease agreements have already been signed to transfer land. This oversight in consultations further disenfranchises previously overlooked communities and worsens power inequities within local villages.
Displacement
Another criticism of investment in land is the potential for large-scale displacement and of local peoples without adequate compensation, in either land or money. These displacements often result in resettlement in marginal lands, loss of livelihoods especially in the case of pastoralists, gender-specific erosion of social networks. Villagers were most often compensated as according to national guidelines for loss of land, loss of improvements over time on the land, and sometimes future harvests. However, compensation guidelines vary significantly between countries and depending on the types of projects undertaken. One study by the IIED concluded that guidelines for compensation given to displaced villagers in Ethiopia and Ghana was insufficient to restore livelihoods lost through dislocation .There also exist a number of issues with the process of actually relocating locals to other areas where land is less fertile. In the process of relocation, often changed or lost are historical methods of farming, existing social ties, sources of income, and livelihoods. This holds drastic impacts especially in the case of women, who rely greatly upon such informal relationships .
Employment
When not displaced, the conversion of local farmers into laborers also holds numerous negative consequences for local populations. Most deals are based on the eventual formation of plantation-style farming, whereupon the investing company will own the land and employ locals as laborers in large-scale agricultural plots. The number of jobs created varies greatly dependent on commodity type and style of farming planned . In spite of this volatility, guarantees of job creation are rarely, if ever, addressed in contracts. This fact, combined with the intrinsic incentives towards mechanization in plantation-style production, can lead to much lower employment than originally planned for. When employed, locals are often paid little: in investments by Karuturi Global in Ethiopia, workers are paid on average under $2 a day, with a minimum wage of 8 birr, or $0.48, per day, both of which are under the World Bank poverty limit of $2 per day .Government Negotiations
In addition to the lack of coordination between ministries, there exists a wide knowledge gap between government-level offices and investors, leading to a rushed and superficial investment review. Many government agencies initially overwhelmed by the deluge of investment proposals failed to properly screen out non-viable proposals. Due to the knowledge gaps between government agencies and investors, “in most countries it is implicitly presumed that investors will have the right incentive and be the best qualified to assess economic viability,” leading to a lack of reporting requirements or monitoring arrangements, key information on land uses and value of the investment, and checks on economic viability. The Sudanese government has been noted as having paid minimal attention to existing land rights, and neglecting to conduct any economic analysis on potential projects. In addition, many countries, including Cambodia, Congo, Sudan, and Ghana, have neglected to catalog and file even general geographical descriptions of land allocation boundaries .One addition to many contracts between governments and investors is a Stabilisation Clause, which insulates investors from the effect of changed governmental regulations. Such clauses severely restrict the government’s ability to change any regulations that would have a negative economic impact on the investment. While advantageous for businesses, these stabilization clauses would severely hinder the ability of governments to address possible social and/or environmental concerns that become apparent after the beginning of the project.
Environmental and Ecological Impact
Land investment has also been criticized for its implicit endorsement of large-scale industrial agricultureIndustrial agriculture
Industrial farming is a form of modern farming that refers to the industrialized production of livestock, poultry, fish, and crops. The methods of industrial agriculture are technoscientific, economic, and political...
, which relies heavily on fertilizers, machinery and inputs, over smallholder agriculture. As foreign investors begin to develop the land, they will for the most part start a shift towards such large-scale agriculture to improve upon existing “unproductive” agricultural methods. The threat of the conversion of much of Africa’s land to such large-scale agriculture has provoked a severe pushback from many civil society organizations such as GRAIN, La Via Campesina, and other lobbyists for small-scale agriculture .
Foreign investors, through large scale agriculture, increase the effectiveness of under-utilized resources of land, labor, and water, while further providing additional market connections, large-scale infrastructure development, and provision of seeds, fertilizers, and technology. Proposed increases in production quantity, as touted both by investors and hosts, are exemplified by Ethiopia’s Abera Deressa, who claims that “foreign investors should help boost agricultural output by as much as 40%” throughout Ethiopia . However, large scale mechanized agricultural production often entails the use of fertilizers and intensive farming techniques that have been criticized by numerous civil society actors as extremely ecologically detrimental and environmentally harmful over the long run . Over time, such intensive farming threatens to degrade the quality of topsoil and damage local waterways and ecosystems. As such, civil society actors have widely accused land investors for promoting “not agricultural development, much less rural development, but simply agribusiness development” . This trend towards large-scale agriculture that overrides local knowledge and sustainable local farming runs directly counter to the recent IAASTD report, backed by the FAO, UNDP, World Bank, and others, that in order to increase food security over the long term, sustainable peasant agriculture must be encouraged and supported .
Domestic and International Food Security
The most direct impact on food security comes from its impact on local villagers who are either dislocated elsewhere, or effectively co-opted into working under the new investors as laborers in the field. For those dislocated elsewhere, the disruption to traditional methods of farming can be severe: as land deals often target the most fertile areas of land, villagers can struggle to adapt to less-fertile fields. Moreover, villagers will suffer a loss in indigenous knowledge about microclimates, sustainable farming techniques, and crop viability that can take years if not decades to replace.On a larger scale, one major concern regarding land acquisitions is that, as of 2009, only 37% of land acquisitions were targeted for production of food crops, with the rest spread between cash crop and biofuel production, among other uses. In the case of Ethiopia, the government has in fact actively pushed for investment in cash crops such as soybean, palm oil, and biofuels, reasoning that “if we get money we can buy food anywhere,” as stated by Abera Deressa, the government minister in charge of agricultural development policy .
Neocolonialism
Foreign investment in land has been criticized by many civil society actors and individuals as a new realization of neocolonialismNeocolonialism
Neocolonialism is the practice of using capitalism, globalization, and cultural forces to control a country in lieu of direct military or political control...
, signifying a renewed economic imperialism of developed over developing nations. Critics have pointed to the acquisitions of large tracts of land for economic profit, with little perceived benefit for local populations or target nations as a whole, as a renewal of the economically exploitative practices of the colonial period.
Information Issues
In a joint research project between the FAO, IIED, and IFAD, Cotula et al. found that the majority of host countries lacked basic data on the size, nature, and location of land acquisitions through land registries or other public sources, and that “researchers needed to make multiple contacts…to access even superficial and incomplete information”. The World Bank’s own lack of land size information on over half of the reported land grabs that it researched points to the difficulties inherent in gaining access to and researching individual land acquisitions .Notable Cases
In Madagascar, the anger among the population about land sales led to violent protests. The South Korean corporation Daewoo was in the process of negotiations with the Malagasy government for the purchase of 1.3 million hectares, half of all agricultural land, to produce corn and palm oil. This investment, while one of many pursued in Madagascar, attracted considerable attention in Madagascar and led to protests against the government . While some civil society actors claim that the Daewoo investment led to the fall of the Malagasy government, these claims are unsubstantiated.In South Sudan, numerous large scale land acquisitions have taken place in spite of the country's unresolved political and security situation at the time. One of the most prominent, involving a former AIG partner named Philippe Heilberg, garnered attention in Rolling Stone for his provocative pursuit of land in conflict-ridden regions. Heilberg, who is planning to invest in 800,000 ha of land in partnership with many of South Sudan's top generals and civilian officials, attracted criticism with his remarks (regarding Africa and land grabbing) that "the whole place is like one big mafia -- and I'm like a mafia head" .
See also
- AgribusinessAgribusinessIn agriculture, agribusiness is a generic term for the various businesses involved in food production, including farming and contract farming, seed supply, agrichemicals, farm machinery, wholesale and distribution, processing, marketing, and retail sales....
- AgricultureAgricultureAgriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
- BiofuelBiofuelBiofuel is a type of fuel whose energy is derived from biological carbon fixation. Biofuels include fuels derived from biomass conversion, as well as solid biomass, liquid fuels and various biogases...
- Economic developmentEconomic developmentEconomic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
- Food securityFood securityFood security refers to the availability of food and one's access to it. A household is considered food-secure when its occupants do not live in hunger or fear of starvation. According to the World Resources Institute, global per capita food production has been increasing substantially for the past...
- Food sovereigntyFood sovereignty"Food sovereignty" is a term coined by members of Via Campesina in 1996 to refer to a policy framework advocated by a number of farmers, peasants, pastoralists, fisherfolk, indigenous peoples, women, rural youth and environmental organizations, namely the claimed "right" of peoples to define their...
- Industrial agricultureIndustrial agricultureIndustrial farming is a form of modern farming that refers to the industrialized production of livestock, poultry, fish, and crops. The methods of industrial agriculture are technoscientific, economic, and political...
- Land rights
- Land titlingLand titlingLand titling is a form of land reform in which private individuals and families are given formal property rights for land which they have previously occupied informally or used on the basis of customary land tenure...
- Sustainable agricultureSustainable agricultureSustainable agriculture is the practice of farming using principles of ecology, the study of relationships between organisms and their environment...
- 2007-2007 world food price crisis