Ag Development Deals in Africa Raise Concerns

By Kathleen Masterson

For the better half of the last decade, foreign investors have been flocking to get their hands on arable land in Africa.  Worries about food security and rising grain prices have driven a flurry of foreign investment deals in Tanzania, Mali, South Sudan, Ethiopia and Mozambique.

Investors from the U.S., China, South Korea and other nations are leasing or negotiating leases for more than 138 million acres in Africa (about the size of Michigan), according to a 2011 World Bank report,  though some accounts put the number much higher.

Many investors describe their project as bringing development, technology and food to impoverished areas, but critics describe the land leases and purchases as plantation-style land grabs.  They are concerned that the large development projects may undermine smaller, local efforts to increase food production because many foreign investors aim to grow and sell grain and biofuels to foreign markets, doing little for the local economy and health.  Local farmers also may be losing their land rights.

“Agreements to lease or cede large areas of land in no circumstance should be allowed to trump the human rights obligations of the states concerned,” United Nations investigator Olivier De Schutter told Africa Renewal.

But critics say it's already happening.

The poor are bearing disproportionate costs, but reaping few benefits, according to a  report released last week by the International Land Coalition and the International Institute for the Environment and Development.  

The authors write that "poor governance, including the weak protection of the resource rights of the poor, corrupt and unaccountable decision-making" are sidelining citizens' rights and allowing foreign companies to come in and develop the land with little oversight.  They write that women and smaller farmers are particularly vulnerable.

That sentiment is echoed in  World Bank and Food and Agriculture Organization reports. But those authors say if properly developed, these projects have potential to bring infrastructure development, including transportation, technology, tax revenues, and jobs.  

A U.S. funded investment project in Tanzania says it is doing just that.  AgriSol Energy (based in Iowa and Connecticut) is negotiating a 99-year lease for as much as 800,000 acres (1,250 square miles) of land in the east African country to develop a massive grain-and-livestock operation. 

Iowa agribusiness investor Bruce Rastetter is leading the project, and he said small-scale agriculture can work alongside a large-scale private agricultural operation.

"If the two were incompatible, I personally would not be involved in this project," he told the Des Moines Register.

Rastetter also said his plan "is the farthest thing from a land grab that could exist. It is so much different than the model that over time has taken advantage of Africa."

Rastetter declined a follow-up interview with me, but offered another contact who has not returned calls.

The Oakland Institute, a California-based policy think tank, is concerned that the AgriSol project will displace some 160,000 refugees from Burundi who have been living on the land for 40 years.  These communities have turned the once-fallow land into small-scale agriculture operations.  

“This is land which has been feeding so many families, and large-scale commercial agriculture is mechanized, it does not create jobs for these small-holder farmers. At best some might become share-croppers, some might become plantation workers, at most. But it's going to deny their food security,” said Anuradha Mittal, executive director of the institute.

Mittal said the Oakland Institute is not opposed to the company and its partners making a profit, but it is concerned that the people living on the land have not had a voice in the process.

“How do we actually benefit the national economy?” she asked, “because a lot of these projects are going into African nations with the promises of job creation, of boosting the agriculture economy.” 

Mittal said investors are asking the Tanzanian government to give them strategic investor status, which would mean tax holidays and time without import duties for any equipment they bring in.

Investigations by FAO, the World Bank and independent organizations conclude that government failure to negotiate more beneficial and equitable leases is a looming problem in most of the land deals.  According to the World Bank report, failure to properly screen proposals before approving , to negotiate proper taxes, and to involve citizens in the process all contribute to the danger of a "race to the bottom" to attract investors.