Global Land Grab

{{#badges:FoodRightsNetwork}} The Global Land Grab is the "global rush to buy up or lease farmlands abroad as a strategy to secure basic food supplies or simply for profit."

"Across Africa and the developing world, a new global land rush is gobbling up large expanses of arable land. Despite their ageless traditions, stunned villagers are discovering that African governments typically own their land and have been leasing it, often at bargain prices, to private investors and foreign governments for decades to come.

"Organizations like the United Nations and the World Bank say the practice, if done equitably, could help feed the growing global population by introducing large-scale commercial farming to places without it.

"But others condemn the deals as neocolonial land grabs that destroy villages, uproot tens of thousands of farmers and create a volatile mass of landless poor. Making matters worse, they contend, much of the food is bound for wealthier nations."

Land grabs occur for food security reasons and for financial returns. In both cases, the private sector is in control, even though in land grabs for food security, government policy often plays a role.

The 2008 Food Crisis and Its Impact

From a 2008 report by GRAIN:

"Today’s food and financial crises have, in tandem, triggered a new global land grab. On the one hand, “food insecure” governments that rely on imports to feed their people are snatching up vast areas of farmland abroad for their own offshore food production. On the other hand, food corporations and private investors, hungry for profits in the midst of the deepening financial crisis, see investment in foreign farmland as an important new source of revenue. As a result, fertile agricultural land is becoming increasingly privatised and concentrated."

In the same 2008 report, GRAIN distinguished recent land grabs from historic examples of landgrabbing, saying:

"The two big global crises that have erupted over the last 15 months – the world food crisis and the broader financial crisis that the food crisis has been part of – are together spawning a new and disturbing trend towards buying up land for outsourced food production. There are two parallel agendas driving two kinds of land grabbers [food security and financial returns]. But while their starting points may differ, the tracks eventually converge."

Land Grabs for Food Security

When grain prices reached record highs in 2008, countries reliant on imported food faced crises.

"A number of countries which rely on food imports and are worried about tightening markets, while they do have cash to throw around, are seeking to outsource their domestic food production by gaining control of farms in other countries. They see this as an innovative long-term strategy to feed their people at a good price and with far greater security than hitherto. Saudi Arabia, Japan, China, India, Korea, Libya and Egypt all fall into this basket...Convinced that farming opportunities are limited and the market can’t be relied upon, “food insecure” governments are shopping for land elsewhere to produce their own food. At the other end, those governments being courted for the use of their countries’ farmland are generally welcoming these offers of fresh foreign investment."

Land Grabbing by China

Although China is "remarkably self-sufficient in food," it is home to a huge population with agricultural lands disappearing due to industrialization. Additionally, "its water supplies are under serious stress." Also, "with more than US$1.8 trillion in foreign exchange reserves, China has deep pockets from which to invest in its own food security abroad."

According to GRAIN in 2008:

"Through China’s new geopolitical diplomacy, and the government’s aggressive “Go Abroad” outward investment strategy, some 30 agricultural cooperation deals have been sealed in recent years to give Chinese firms access to “friendly country” farmland in exchange for Chinese technologies, training and infrastructure development funds. This is happening not only in Asia but all over Africa as well, through a range of highly diverse and complex projects. From Kazakhstan to Queensland, and from Mozambique to the Philippines, a steady and familiar process is under way, with Chinese companies leasing or buying up land, setting up large farms, flying in farmers, scientists and extension workers, and getting down to the work of crop production. Most of China’s offshore farming is dedicated to the cultivation of rice, soya beans and maize, along with biofuel crops like sugar cane, cassava or sorghum. The rice produced abroad invariably means hybrid rice, grown from imported Chinese seeds, and Chinese farmers and scientists are enthusiastically teaching Africans and others to grow rice “the Chinese way”."

In 2008, China's Ministry of Agriculture drew up policies "to encourage domestic companies to rent or buy land abroad for farming, especially for planting soy bean... The MOA had identified five regions, including Central Asia, Russia, Africa, Southeast Asia, and South America, for five major Chinese state-owned farming companies to invest in." China is looking for locations in countries with good relations with China that are politically stable and rich in resources. The government encourages large, well-funded, experienced countries with "a pool of talent" to invest abroad.

China's main concern are soybeans, as it is the world's largest importer of soybeans. As of 2008, China would need an extra 13.3 million hectares to be self-sufficient in soybeans, and yet the country is losing land due to urbanization and climate change.

Land Grabbing by the Gulf States

Another major group of players are the Gulf States: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. As desert nations, these countries lack arable land for agriculture but possess lots of oil and - as a result - money.

"The current food crisis has hit the Gulf States exceptionally hard. Because they depend on food from abroad (especially from Europe) and their currencies are pegged to the US dollar (except for Kuwait, but only since last year), the simultaneous rise in food prices on the world market and the fall in the US dollar have meant that they have imported a lot of “extra inflation”. Their food import bill has ballooned in the last five years from US$8bn to US$20bn. And since their populations are largely made up of low-wage migrant workers who build their cities and staff their hospitals, it is absolutely necessary for the Gulf’s political dynasties that they provide food at reasonable prices."

In order to ensure a future food suppply, Saudi Arabia, facing water shortages, decided to stop producing their staple, wheat, domestically by 2016. Instead, they will produce it elsewhere and ship it to Saudi Arabia "provided that the whole process was firmly under their own control."

The United Arab Emirates faces a different situation, as 80% of its population are migrant workers, mostly Asians who prefer rice as a staple.

"Under the aegis of the Gulf Cooperation Council (GCC), [the UAE] banded together with Bahrain and the other Gulf nations to formulate a collective strategy of outsourcing food production. Their idea is to secure deals, particularly in sister Islamic countries, by which they will supply capital and oil contracts in exchange for guarantees that their corporations will have access to farmland and be able to export the produce back home. The most heavily targeted states are, by far, Sudan and Pakistan, followed by quite a number in south-east Asia (Burma, Cambodia, Indonesia, Laos, Philippines, Thailand and Vietnam), Turkey, Kazakhstan, Uganda, Ukraine, Georgia, Brazil … the list goes on."

The Gulf States' long term strategy involves initial involvement by governments to "prime the pump" (i.e. "organising the deals and working out specific bilateral policy arrangements, e.g. getting food export restrictions specially waived or opening embassies where the contracts will be carried out") with an ultimate take-over by the private sector. They also plan for some of the food they grow to go to communities in the producing country. They are prone to talk about "win-win" outcomes, and will often swap food for energy (i.e. contracts to provide oil and gas supplies in return for land to grow food).

Other Land Grabbers

Other land grabbing nations include Japan and South Korea, wealthy nations that each get about 60 percent from their food abroad. "Indeed, Korean food corporations are already buying up land in Mongolia and eastern Russia to produce food for export back home. The government, meanwhile, is exploring various options itself in Sudan, Argentina and south-east Asia." A third nation is India. "The country has major problems with costs of production (their biggest concern), declining soil fertility and long-term water supplies, to name just a few. In addition, struggles over access to land have become incredibly complicated, especially because of the widespread social resistance to Special Economic Zones. Spurred by the global food crisis, and probably not wanting to be left out, a number of Indian agribusiness chiefs as well as the government-owned State Trading Corporation (STC) now see a need to produce some of the country’s food abroad." India plans to grow oilseed crops, pulses, and cotton abroad while still growing wheat and rice at home.

Land Grabs for Investment

A second reason for land grabbing is financial investment.

"Given the current financial meltdown, all sorts of players in the finance and food industries – the investment houses that manage workers’ pensions, private equity funds looking for a fast turnover, hedge funds driven off the now collapsed derivatives market, grain traders seeking new strategies for growth – are turning to land, for both food and fuel production, as a new source of profit. Land itself is not a typical investment for a lot of these transnational firms. Indeed, land is so fraught with political conflict that many countries don’t even allow foreigners to own it. And land doesn’t appreciate overnight, like pork bellies or gold. To get a return, investors need to raise the productive capacities of the land – and sometimes even get their hands dirty actually running a farm. But the food and financial crises combined have turned agricultural land into a new strategic asset. In many places around the world, food prices are high and land prices are low. And most of the “solutions” to the food crisis talk about pumping more food out of the land we have. So there is clearly money to be made by getting control of the best soils, near available water supplies, as fast as possible."

GRAIN distinguishes between "typical transnational agribusiness operations, where Cargill might invest in a soya bean crushing plant in Mato Grosso in Brazil," and land grabbing, in which the transnational corporation acquires the farmland itself. It identifies the two main players as the food industry and, "much more significantly," the finance industry. Currently, the most common food industry players are Japanese and Arab trading and processing corporations. The finance industry is looking for "save havens" and they see land as a smart bet as cheap land is available and there will always be demand for food. As the finance industry looks to land as an investment, agencies like World Bank, its International Finance Corporation and the European Bank for Reconstruction and Development are eager to help by "greasing the way for this investment flow and “persuading” governments to change land ownership laws so that it can succeed."

Land Grabbing by Japan

In Japan:

"Five trading conglomerates dominate Japan’s food and agribusiness market: Mitsubishi, Itochu, Mitsui, Marubeni and Sumitomo. They are involved in purchasing, processing, shipping, trading and retail. They mostly focus on serving the needs of the domestic Japanese market. But because that market is ageing and shrinking, growth has to be found elsewhere."

These corporations are "moving overseas (to capture new markets) and upstream (towards production)." They are now acquiring farmland in China, Brazil, the Philippines, and elsewhere.

Land Grabbing by Financial Corporations

Major financial players include Deutsche Bank, Goldman Sachs, BlackRock Inc, Morgan Stanley, Renaissance Capital, Alpcot-Agro, Black Earth Farming, which each acquired land "to produce grains, oils, meat and dairy for those in the hungry world market … that is, for those who can pay." Targeted countries include: Malawi, Senegal, Nigeria, Ukraine, Russia, Georgia, Kazakhstan, Uzbekistan, Brazil, Paraguay, even Australia. "They have all been identified as offering fertile land, relative water availability and some level of potential farm productivity growth. The time horizon investors are talking about is, on average, 10 years – with a clear understanding that they have to make the land productive and to build marketing infrastructure, not sit back idly – with projected annual rates of return of 10–40% in Europe or up to 400% in Africa."

Land Grabbees

The governments of countries in which land grabs are taking place often invite the large scale foreign land acquisitions. "After all, for them it means fresh inflows of foreign capital to build rural infrastructure, upgrade storage and shipping facilities, consolidate farms and industrialise operations. There are plenty of research and breeding programmes promised in several of these deals as well." Often governments change laws of land ownership or take other actions to invite investment:

"The Kazakh government, in its bid to attract foreign farmland investors, has implemented land share policies and permanent land use rights. Ukraine is expected to lift its ban on the sale of farmland to foreigners very soon. Sudan, where most land is owned by the government, is issuing 99-year leases for a very low cost, if not for free...

"In the background, the World Bank and the EBRD, among others, are actively advising governments to modify land ownership policies and practices so that foreign investors have more incentives to put money into farmland abroad. According to World Bank officials, changing land ownership laws is an integral target of the Bank’s US$1.2bn package to deal with the food crisis in Africa."

Role of International Organizations

The United Nations

The United Nations Food and Agriculture Organization (FAO) has been cautiously optimistic about the land grabs, but wary of the potential for negative publicity.

According to a 2008 Wall Street Journal article:

"Jacques Diouf, the director-general of the Food and Agriculture Organization, has campaigned for years for more foreign investment in the global agriculture sector. But he said he is advising the Gulf states against outright land purchases, which he says could trigger political backlash in developing countries that are struggling to feed their own populations. Mr. Diouf said he doesn't want unintended scandals to cause this new wave of investment into agriculture to dry up.

""Foreign direct investment in agriculture is the only way we are going to eradicate global poverty," he said. "I have no problem in Arabs doing the investment. Where I start getting worried is [a situation in which investors] rush and buy land all over the place," said Mr. Diouf. "Land is a political hot potato," he said. "My job is to avoid...provoking a negative response in the developing world." (emphasis added)

"Joint ventures would maximize returns for both the investors and the developing countries, Mr. Diouf said...

"The deals have raised concern that agriculture resources could be dominated by foreign investors who will ship food overseas. In politically unstable countries, meanwhile, critics worry that large-scale foreign investments could prop up unpopular regimes or exacerbate longstanding legal disputes over land ownership, much as big foreign oil or mining concessions have done.

"Mr. Diouf said he supports the proposed Gulf food deals, saying if they are constructed correctly they have the potential to transform developing economies by providing jobs both in agriculture and other supporting industries like transportation and warehousing.

"He said he told members of the ruling families of Abu Dhabi and Dubai, the two biggest emirates of the United Arab Emirates, to concentrate investment on joint-venture projects in which they provide capital, management expertise and salaries to local workers.

The World Bank

A World Bank report on "large scale land acquisitions" (also known as land grabbing) says:

"One of the highest development priorities in the world must be to improve smallholder agricultural productivity, especially in Africa. Smallholder productivity is essential for reducing poverty and hunger, and more and better investment in agricultural technology, infrastructure, and market access for poor farmers is urgently needed. When done right, larger-scale farming systems can also have a place as one of many tools to promote sustainable agricultural and rural development, and can directly support smallholder productivity, for example, through outgrower programs. However, recent press and other reports about actual or proposed large farmland acquisition by big investors have raised serious concerns about the danger of neglecting local rights and other problems. They have also raised questions about the extent to which such transactions can provide long-term benefits to local populations and con- tribute to poverty reduction and sustainable development."

In the same report, the Bank recognizes the issues associated with land grabs, saying: "Too often, they have included a lack of documented rights claimed by local people and weak consultation processes that have led to uncompensated loss of land rights, especially by vulnerable groups; a limited capacity to assess a proposed project’s technical and economic viability; and a limited capacity to assess or enforce environmental and social safeguards."

However, the Bank sees land grabbing as a potential way to increase farm yields on currently cultivated land, particularly in Sub-Saharan Africa, without expanding deforestation. This sentiment is very much in line with advocates of a "Second Green Revolution," including many agrochemical companies (such as those within the Global Harvest Initiative), that expanding industrialized agriculture to Sub-Saharan Africa is the path forward to increasing food production without cutting down the rainforests.

To this end, the Bank says:

"In particular, none of the Sub-Saharan African countries of most interest to investors is now achieving more than 30 percent of the potential yield on currently cultivated areas. So, increasing productivity on existing farmland would have a much bigger impact than simply expanding the land area at current yields."

Resources and articles

Related Sourcewatch articles

• Food Sovereignty
• Food Sovereignty Portal
• Via Campesina
• GRAIN

External Resources

• Food Crisis and the Global Land Grab

External Articles

2011:

• Via Campesina, Final Declaration: Stop Land-Grabbing Now!, Food Crisis and the Global Land Grab, GRAIN organizational website, November 19, 2011
• Courtney Comstock, "Meet The Millionaires And Billionaires Suddenly Buying Tons Of Land In Africa," Business Insider, June 30, 2011.
• "Pension funds: key players in the global farmland grab," GRAIN, June 20, 2011.
• Hedge funds 'grabbing land' in Africa, BBC News, June 8, 2011.
• Mike Eckel, "The Great Asian Land Grab: How a World Bank program helped displace tens of thousands of urban poor. ," Foreign Policy, May 13, 2011.
• "It's time to outlaw land grabbing, not to make it 'responsible'!," GRAIN, April 17, 2011.
• "New agricultural agreement in Argentina: A land grabber’s “instruction manual”," GRAIN, January 27, 2011.

2010:

• Neil MacFarquhar, "African Farmers Displaced as Investors Move In," New York Times, December 21, 2010.
• "Saudi investors poised to take control of rice production in Senegal and Mali?," GRAIN, November 29, 2010.
• "World Bank report on land grabbing: beyond the smoke and mirrors," GRAIN, September 8, 2010.
• John Vidal, How food and water are driving a 21st-century African land grab, The Observer, March 7, 2010.

2009:

• "Grabbing land for food," GRAIN, January 18, 2009.

2008:

• T. Michael Jonny, "Africa: China Earmarks U.S.$5 Billion for Food Production on Continent," AllAfrica.com, April 23, 2008.
• "Chinese debate pros and cons of overseas farming investments," African Agriculture, May 11, 2008.
• Li Ping, "Hopes and Strains in China's Oversea Farming Plan," Economic Observer, June 30, 2008.
• Cleofe Maceda, "UAE signs MoU with Philippines to ensure food supply," GulfNews.com, July 22, 2008.
• Margaret Coker, "U.N. Food Chief Warns on Buying Farms," Wall Street Journal, September 10, 2008.
• "Seized: The 2008 landgrab for food and financial security," GRAIN, October 24, 2008.