Foreign Corporations Scramble To Buy African Land Raising Food Security Concerns

The Spain-based group Genetic Resources Action International (GRAIN), recently released a study of 416 recent land grabbing deals across 66 countries in which some 35 million hectares of land have been sold or leased to foreign investors, including those from the US.

The International Land Coalition (ILC) reported that between 2000 and 2010, roughly 203 million hectares of land were leased or sold in developing countries, mainly in Africa, to foreign investors from the US, China, the UK, and other countries. “This land area is equivalent to over eight times the size of the United Kingdom,” the ILC said in a separate analysis of land grabs released last January.

Foreign investors have been scouting out cheap arable land in developing countries for years, but land grabs have become much more popular since the global food crisis in 2008. While developing countries like those in the Horn of Africa continue to suffer from famine, armed conflict, and droughts, foreign corporations, governments, and fund managers have swept in to secure large land holdings on offshore farms to ensure food security and oftentimes for speculation.

In one recent land grab, the Abu Dhabi-based Al Qudra Holding obtained concessions for 31,000 hectares of agricultural land in Algeria, where 23% of the population lives below the poverty line, on which it intends to produce potatoes, olives and dairy products, all for export.

The United Nations Food and Agriculture Organization (FAO) has said that this type of investment policy can be a “win-win” situation. A study by the independent public policy think tank Oakland Institute, reported that “the World Bank has laid out a set of principles for ‘responsible agro-investment’ that in theory, could make this case.”

However, rights advocates argue that in practice, land grabs threaten food security and violate the rights of the people who are already living and farming on these lands.

The Real Interests in Land Grabs

Although land grabs did gain popularity following the 2008 global food crisis, less than 20 percent of commodity produced through land deals is actually contributing to the food supply. While 78% of grabbed land is used for agricultural production, three-quarters is used for biofuels. Mineral extraction, industry, tourism, and forest conversions make up the remaining 22 percent.

Rising gas prices, tensions between the west and oil-giant Iran, and an overall trend to ‘go green,’ have all contributed to the increased demand for an environmentally-friendly replacement for fossil fuels, which many believe can be found in biofuels, liquid fuels made from plants.

According to a survey by the Guardian, British firms are leading the way in biofuel plantations, with 11 of its companies linked to half of the total biofuel farms from Mozambique to Senegal. Italy has seven companies, Germany and Francetied with six, and the United States is fifth with four companies reportedly operating biofuel plantations in the region.

However, many critics believes that biofuels may do more harm to the environment than good. Oxfam has warned that the price of food will more than double in the next 20 years due to a combination of factors including biofuels, which take away from land that could be used to produce food. Others fear that biofuels can actually increase greenhouse gas emissions due to the deforestation caused by displaced farmers who need to clear land.

James Smith, professor of African and Development Studies at Edinburgh University, said to the Guardian, “Private investment is running far ahead of our knowledge of the impacts of biofuels, such as land dispossession. This action is eroding the UK’s position of enlightenment on development issues.”

Several US companies have stakes in overseas land grabs for both energy, food, and speculative reasons. Black River Asset Management, a hedge fund owned by US agribusiness giant Cargill, is acquiring land mainly in South America and Asia with 50,000 hectares for crops in Brazil reported in 2010.

The Teachers Insurance and Annuity Association – College Retirement Equities Fund (TIAA-CREF), one of the largest managers of retirement funds in the US, invests in sugarcane and soybean production in Brazil through a holding company, called Mansilla. TIAA-CREF holds 424,000 hectares, partially for speculation. Mansilla is also partially owned by a company with a major ethanol alliance with Shell.

Harvard Management Company, the endowment fund of Harvard University, has made investments in the African farmland fund of the UK’s Emergent Asset Management and recently purchased Big Sky Dairy Farms in New Zealand for USD 34 million in 2010. The US company Maple Energy acquired land in Peru to produce ethanol for export to the US and Europe along with many other US companies that have made land investments worldwide.

Free and Fair Investments?

Local governments often claim that these land investments will boost the economy, contribute to long-term food security, and transfer technology to small-scale local farmers. Though the Oakland Institute (OI), which published areport on land investment deals in Ethiopia, found no mechanisms in place to educate farmers and observed increased incentives within the country to export food at the expense of the local food supply.

Not only does land acquisition affect the food supply, but so does water acquisition – which is sometimes included in the investment contract. “It is alarming that investors are free to use water with no restrictions,” reported OI investigators after hearing of an investor building a dam on a local river with disregard for the country’s environmental regulations.

Companies and governments alike insist that these land deals are carried out on unused land and that no farmers are displaced through these transactions. Yet many areas affected by these land grabs are inhabited by pastoralists who have lived across these areas for centuries without owning property rights.

OI reported that in Ethiopia, where people do not have the right to land, “virtually every investment site we visited involved the loss of some local farmland, and every investment area exhibited a variety of land uses and socio-cultural/ecological values associated with it prior to land investment.”

An analysis of 12 land deals by the Institute for Environment and Development (IIED) found that some contracts grant long-term rights to vast areas of land, including priority rights to water, at very inexpensive prices with vague promises of jobs or future investments.

Some contracts offered clearer guidelines regarding job training, local procurement, greater attention to local food security, and a more equitable exchange payment for land. Most leases involved payments ranging from less than USD 2 per hectare/year to USD 13.80 per hectare/year.

New Colonialism

Anuradha Mittal, Executive President of Oakland Institute, believes modern land grabs are no different than in the colonial times when trading companies grabbed land across Asia, Africa, and the Americas.

Mittal, born and educated in India, says, “It is appalling that India, once colonised, has turned into a coloniser. Ethnic indigenous communities are being hunted down like animals to clear land for Indian firms and businesses. India is behind the government of Ethiopia that is unleashing this kind of terror.”

Mittal told Outlook India that there is a need for foreign direct investment (FDI) in developing countries, but she insists that nations who wish to invest in these places have a responsibility to do so in a manner that protects social, environmental, and food needs of local populations.

The chief executive of Sun Biofuels, Richard Morgans believes the responsibility lies in the local governments to regulate policies. Morgans said to the Guardian, “Our company produces sustainable and ethical biofuels – categorically yes. We would welcome higher sustainability standards, but you do have to balance this with economic development. If you are a local [in Tanzania or Mozambique] and need a job, you probably aren’t worried about whether the orangutans sleep at night. It’s also insulting to say African governments can’t run their own affairs.”

But according to Mittal, saying a country like India is not responsible for any wrongdoing associated with its 300,000 hectares in Ethiopia, is like “the British government trying to argue that colonialism in India was not its doing but that of the East India Company and a few rogue generals like Dwyer.”

It seems the Scramble for Africa has never ended – over a century after European nations met to partition the continent, the scramble for land and resources continues with even more countries joining the mix with no regard for the long-term consequences it has on the people of Africa and other continents target to the land grab.

One Ethiopian newspaper published an open letter to the people of India, asking: “What would Gandhi say today were he to know that Indians, who were only freed from the shackles of colonialism in recent history, were now at the forefront of this “land-grabbing” as part of the race for foreign control over African land and resources; currently being called the Neo-Colonialism of Africa?”