Global Land Grab
By Terry J. Allen
Fear of unrest and hunger for profit are sparking massive acquisitions of farmland.
A 21st-century land rush is on. Driven by fear and lured by promises of high profits, foreign investors are scooping up vast tracts of farmland in some of the world's hungriest countries to grow crops for export.
As the climate changes and populations shift and grow, billions of people around the globe face shortages of land and water, rising food prices and increasing hunger. Alarm over a future without affordable food and water is sparking unrest in a world already tinder-dried by repression and recession, corruption and mismanagement, boundary disputes and ancient feuds, ethnic tension and religious fundamentalism.
World leaders feel the heat. Calling food security concerns "extremely significant," a 2009 U.N. report noted, "The acquisition of land internationally is one possible strategic choice to address the challenge."
Fortunately for nervous rulers, the strategy of growing food abroad as shelter against the fires of revolution dovetails nicely with the goals of private and public capital. Governments drawing on sovereign wealth funds, and rich investors accessing state subsidies, have negotiated deals to acquire tens of millions of acres of farmland in Africa, South America and South Asia. When they export the food to their home countries, the valuable water used to grow the crops will ride along as a free bonus.
The largest investors in foreign croplands hail from China, India and South Korea, along with Saudi Arabia and other oil-rich Gulf states. What these countries have in common is that all were shaken financially or politically by the 2007-08 food crisis. And all lack sufficient land or water to ensure that they can feed their populations in the coming years--especially if, as the Food and Agriculture Organization (FAO) warns, climate change continues to "exacerbate land degradation and water scarcity in many places, and to increase the frequency of extreme weather events affecting harvests."
Available for chump change and unsecured promises, land around the world is changing hands at a rate unprecedented since the Colonial Era, when white men applied the ink of nationalism and greed to redraw maps of Africa, Asia and the New World. Seated at polished tables in Europe, they deployed merchants, missionaries and armies to lay claim to cultures and continents--and to the human, agricultural and mineral resources they held.
The "new colonialism" is less like a crusade and more like an ordinary business transaction floated on a promise of "win-win." The deal-makers include international agribusinesses, investment banks, hedge funds and commodity traders, as well as pension funds, foundations and individuals attracted by the lure of cheap land and high profits. Even universities, including Harvard and Vanderbilt, are getting into the act, according to an extensive report by the Oakland Institute, a progressive policy think tank.
Most of the land deals occur in the private sector, "though often with strong financial and other support from government, and significant levels of government-owned investments," according to the FAO. Conforming to this pattern and awash in oil income, the Saudi "government earmarked $5 billion to provide loans at preferential rates to Saudi companies to invest in countries with strong agricultural potential," writes Mae-Wan Ho of the U.K.-based Institute of Science in Society, including large swaths of Indonesia and Thailand for rice, and possibly 6,000 acres for wheat in war-ravaged Sudan.
The investors are negotiating land transfers all the way from the top, with heads of states, down to tribal chiefs and impoverished landowners. Water rights, tax breaks and waivers on labor and environmental standards often sweeten the deals.
When they cannot buy land outright at prices ranging from cheap (a few dollars an acre) to stolen ("You get a bottle of Johnnie Walker, kneel down, clap three times, and make your offer of Johnnie Walker whiskey," in one transaction reported by the Oakland Institute), investors lease vast tracts for as long as 99 years and for as little as 40 cents per acre per year.
According to the U.N.'s International Fund for Agricultural Development (IFAD), some 2 billion people in the developing world depend on 500 million smallholder farms for their livelihoods. In Asia and sub-Saharan Africa, these small farmers produce about 80 percent of the food that local people consume.
But with spectacular speed, patchworks of plots that used to support local populations through subsistence farming and grazing are being amalgamated into massive industrial plantations. In Awassa, Ethiopia, a "plastic and steel structure already stretches over 50 acres--the size of 20 soccer fields," writes John Vidal in South Africa's Mail and Guardian.
With a 99-year lease for 2,500 acres, the developer, Saudi Sheikh Mohammed al-Amoudi, has brought in Spanish engineers and Dutch water technology, and hired 1,000 women to pick and pack 50 tons of food a day, writes Vidal. "Within 24 hours, it has been driven 200 miles to Addis Ababa and flown 1,000 miles to the shops and restaurants of Dubai, Jeddah and elsewhere in the Middle East."
Since long before the days of Roman bread-and-circus politics, leaders have feared the threat of hungry masses. Some have even felt their pain: "[D]uring the last major rise in food prices in 2007 and 2008, [the consequences] were grave," U.S. Secretary of State Hillary Clinton told a May FAO gathering in Rome. "For hundreds of millions of people, the staples of life, like rice, wheat or corn, were suddenly out of reach. People who were already vulnerable fell into an even greater danger zone." But her next sentence made clear that humanitarian concerns were not the only motivation for establishing food security. "Anger and frustration over food prices sparked riots in dozens of countries," she said.
The years 2007 and 2008 marked a turning point for both environmental consciousness and food insecurity. Before then, agricultural land had expanded by less than 10 million acres a year. But with the pile up of evidence for global warming, no one but the ideologically blinkered could see extensive droughts and other weather-related catastrophes as flukes. Sharply diminished yields triggered exporting countries to ban or curb grain sales, pushed prices up and helped trigger a series of riots that shook dozens of countries. World Bank President Robert Zoellick warned in 2008 that "33 countries around the world face potential social unrest because of the acute hike in food and energy prices."
By 2009, deals were being struck for 111 million acres, with 75 percent in sub-Saharan Africa, according to a World Bank report. A year later, the bank upped the total to nearly 140 million acres.
These "land grabs," says Lester Brown, encompass "an area that exceeds the croplands devoted to corn and wheat combined in the United States." Brown, winner of a MacArthur Fellowship and the 1987 U.N. Environment Prize, is the founder of the Worldwatch Institute and the Earth Policy Institute.
Then, as if out of nowhere, the Arab Spring struck this year. Longstanding un- and underemployment and repression were key triggers, but as the London-based International Institute for Strategic Studies noted, a "proximate factor behind the unrest was a spike in global food crises, which in turn was due in part to the extreme weather throughout the globe over the past year." The Pentagon's U.S. Quadrennial Defense Review called climate change a "threat multiplier."
In the seven months before Egypt's President Hosni Mubarak was driven from power in February, the trading price of wheat had more than doubled. In August 2010, faced with droughts and wildfires, Russia had prioritized its own populations and restricted most grain exports, ensuring that prices would skyrocket. The choked supply line seriously impacted Egypt, which imports more than half its food.
By early 2011, some 21 countries had imposed export control measures including limits and outright bans on the foreign sale of particular crops.
Saudi Arabia had a ringside seat as the Arab Spring spread across the region. The House of Saud understood that national (i.e., their own) security rests on its ability to buy the quiescence, if not loyalty, of its citizens with affordable food and social welfare programs that make Sweden look like Tea Party paradise.
The sheiks had been watching the writing in the sand since the 1970s, when, after the Arab oil-export embargo, they realized their vulnerability: Just as the West was dependent on them for oil, they were dependent on others for food. The prospect of being forced to bend the stiff royal knee to Western-imposed economic pressures inspired the Saudis to apply their oil technology to drilling deep for water. Within a short period of time, using heavy irrigation, the country became self-sufficient in wheat. But unlike underground water supplies that are replenished by precipitation, fossil aquifers can be drained dry with jaw-dropping rapidity--and that is what is happening under the Arabian Peninsula.
Within a few decades, the prehistoric aquifer was almost exhausted, and by 2007, just when food riots were roiling the region, the Saudi wheat harvest had dropped precipitously. By 2016, the Saudi Ministry of Agriculture predicts the country will have to import 100 percent of the wheat it needs to feed its nearly 26 million people.
Saudi Arabia is one of 18 countries--which together contain half the world's people--where water for irrigation is draining aquifers. But the export of "virtual water" incorporated into growing crops promises not only ecological problems, but political trouble downstream. Large-scale irrigation in Ethiopia and Sudan, for example, diverts water from the upper Nile River basin and cuts into Egypt's already limited water supply.
Despite water woes, Sudan welcomes investors. "It's the first country that gives us land without complicated procedures," Mohammed Rasheed al-Balawi, a former agriculture manager of the Saudi firm Hadco, told the Financial Times. "The area is big, the people are friendly [and] they gave us the land almost free."
Trading in human livelihoods
That characterization of terms is hotly disputed. Although both investors and host countries often refer to acquired land as under-developed or empty, the deals typically displace herders and small farmers, who are not consulted and, in any case, lack legal deeds. The World Bank estimates that between 2 and 10 percent of Africa's land is held under formal land tenure, and most of that is in urban areas.
"The foreign companies are arriving in large numbers, depriving people of land they have used for centuries," Ethiopian Nyikaw Ochalla told Vidal. The deals are done secretly. "The only thing the local people see is people coming with lots of tractors to invade their lands."
As foreign investors pour in--from Arab princedoms, India, South Korea, China and other nations--hundreds of thousands of Ethiopians are being relocated. Many, "viewed as 'squatters,' are forcibly removed with no compensation," Frederic Mousseau, policy director at the Oakland Institute, said in a press release.
Ironically, key targets of foreign agro-investment include the world's hungriest countries: In Ethiopia, 13 million people receive international food aid and 41 percent are undernourished. The country's massive transfer of physical wealth to foreign corporations is overseen by Prime Minister Meles Zenawi. One of the parties he controls, the Tigrayan People's Liberation Front, owns at least five parastatal companies and has major stakes in the agricultural products market. A carefully worded 2009 World Bank report noted that in Ethiopia "there is an impression that endowment and state-owned enterprises benefit from privileged access to policymakers and resources and are consequently able to compete on unfair terms."
Zenawi's regime has granted control of 1.48 million acres to foreign entities. Since 2007 it has approved at least 815 foreign-financed agricultural projects and is now offering up at least 7.4 million acres, some leased for only 40 cents per acre per year, according to the Mail & Guardian.
"Karuturi, an Indian company, which owns large swaths of the region, is heavily involved in burning forests and grasslands to make way for potential farmland" for biofuels, according to Nebiyu Eyassu reporting in Pambazuka News.
Compensation, when it occurs, can be paltry. In Ethiopia's Gambella region alone, 45,000 families in 49 villages have been "dislocated," Ethiopian-born writer and filmmaker Fikre Tolossa told the Commonwealth Club of California this March. "They will be resettled not too far from the lands they have been dispossessed of, so that they will be an ideal resource for cheap labor, should the need arise. After having lost their vast lands, they will end up owning a tiny piece of land: [3.2 acres] per family."
If African men fare poorly in these deals, women often fare worse. Most of Africa's small-scale farming is traditionally done by women who are rarely consulted about land deals. "[W]omen are more likely than men to spend the income they control on food, healthcare and their children's education," the International Food Policy Research Institute wrote in a 2011 report. So taking away the small plots they use to feed their families and generate income removes an important brake on hunger and extreme poverty for current and future generations.
Foreign investors are banking on a better outcome: up to 25 percent profits, buoyed by loose environmental and labor regulations common in desperately poor and corrupt countries. "Lack of transparency and of checks and balances in contract negotiations creates a breeding ground for corruption," the FAO said, adding with understatement, "and deals that do not maximize the public interest."
One of the public costs, lax environmental regulation, is a key perk for investors. If history is any guide, eventually--but not before great profits can be extracted--industrial monoculture agriculture will deplete soil and water; the perpetual chemical inputs including fertilizers, pesticides and herbicides will poison the environment; and pest and disease problems will strangle biodiversity.
But even when host governments impose contractual restrictions and protections, "there does not appear to be any significant enforcement of lease terms," according to the Oakland Institute report. "Our agreement with government is purely commercial," a foreign investor in Ethiopia told the Institute. "Government is charging us a rent. What we choose to do on the land for our own commercial intent is our own business. There are ... no constraints, no contracts, none of that."
The terms of Ethiopia's land deals and how they are enforced are subject to the will of Zenawi, who was "re-elected" last year by 99.6 percent, down from 99.9 percent in 2008. The U.S. State Department has accused his authoritarian regime of serious human rights violations, including politically-motivated killings and torture by state security services. Human Rights Watch charges that "development assistance is underwriting the Ethiopian government's repression."
The "land grab" in Ethiopia's Gambella and Oromia regions has elements of ethnic cleansing, says Rashid Songolo, a spokesman for Oromo Liberation Front, an Oromo people's movement in exile. Property held by Oromos, Ethiopia's largest ethnic group, has been selectively sold to foreign developers, he told In These Times, "as a form of punishment and looting for those societies that sympathize with opposition political groups like OLF. The Oromos are being displaced and forced into refugee camps all over the world and into modern day slavery, because of the new 21st-century colonization."
Evidence gathered by Human Rights Watch tends to support this charge. It described Zenawi's EPRDF party apparatchiks, including militias and spies, as deciding, based on loyalty, who gets donor-financed fertilizer, seeds, food aid and jobs. The New York Times reported that one farmer said he was told: "Unless you join the EPRDF, you could die and your family will starve to death."
One of the largest investors in Ethiopian farmland, Saudi businessman (and Ethiopian-born) Sheikh Mohammed al-Amoudi, is closely linked to the Zenawi's regime and enjoys his support. Amoudi is also "close to the Saudi royal family, which sees him as a can-do guy and encourages his growing business empire in Ethiopia," according to Forbes.
A self-made billionaire 12 times over and the second-richest man in Saudi Arabia, Amoudi grows wheat, rice, vegetables and flowers for the Saudi market on four farms in Ethiopia. His Saudi Star company leases 2,500 acres housing the Awassa greenhouse complex. In the next few years, he plans to spend $2 billion on acquiring and developing 1.25 million acres of farmland.
Amoudi, whose mother was Ethiopian, says his projects are designed "to improve the livelihood of my people and help in the development of my country, and not as some might think to amass personal wealth or siphon my country's wealth. ... I need not prove this. ...
[T]hose who bear responsibility for character defamation and false allegations should learn that there are consequences for their action."
Beyond the 'white man's burden'
Even Saudi oil wealth pales before China's enormous economic engine. With $332 billion in assets, the China Investment Corporation is one of the world's largest sovereign wealth funds. And like the Saudis, China's concerns about growing unrest and food insecurity are factors in its increasing investment in foreign farmland.
China's "embrace of [Africa] is strategic, planned, long-term and still unfolding," writes Deborah Brautigam, an American University specialist in China-Africa relations. She argues that China is more concerned with economic expansion than food security, which significant portions of its leadership believe is better ensured by adequate home production.
That may be difficult to achieve. While the United States has almost 3 acres of farmland per person, China has only .23 acres. And 5,000 years of intensive farming has depleted China's soil, industrialization has poisoned much of its water, and development and urbanization have depleted rivers and land so that even as population and per capita consumption increase, the country has lost more than 20 million acres of arable land--just since the mid-1990s.
Although it is not clear that the outcome is different because of it, China has been described (and not only for the literal reason) as being unencumbered by the old "white man's burden" of having to couch investment as altruism or even win-win. In a diplomatic cable published by WikiLeaks, Ambassador Johnnie Carson, the U.S. Assistant Secretary of State for the Bureau of African Affairs, called China "a very aggressive and pernicious economic competitor with no morals. ... China is not in Africa for altruistic reasons [but] ... for China primarily." The high-horsed pronouncement took place, ironically enough, at a meeting in Nigeria with international oil companies--whose ventures are hardly distinguished by altruism.
In addition to Africa, China is investing in diverse cropland in Australia and New Zealand and looking to Indonesia for biofuels and to South America for soy for livestock production to feed its increasingly affluent population's taste for meat and dairy. China's South American interests are so extensive that some Brazilians, while crediting Chinese investment for their booming economy, fear for their autonomy.
"They are moving in," Carlo Lovatelli, president of the Brazilian Association of Vegetable Oil Industries, told Alexei Barrionuevo of The New York Times, "looking for land and reliable partners. But what they would like to do is run the show alone."
"Some experts," the Times noted, "say the partnership has devolved into a classic neo-colonial relationship in which China has the upper hand." Last year 98 percent of China's exports to Brazil were manufactured products, while almost 84 percent of Brazil's exports to China were raw materials.
But it is not as if Brazil or other countries suddenly lost an idyllic independence. Some Brazilian farmers "say they share Chinese officials' goal of breaking the stranglehold of international trading companies like Cargill and Archer Daniels Midland," Barrionuevo notes.
For the richer, not poorer
Over the last few decades, the United States--which long controlled industrial agriculture around the world, along with much of the global economy--has been losing ground. As the largest holder of U.S. debt, China has become, in effect, Washington's banker, while the United States, the world's largest grain producer, has become China's farmer, a Forbes blog noted. Foreign agricultural land offers China a great place to invest its giant trade surplus--much of it courtesy of the U.S. consumers who buy up Chinese goods--as well as a hedge against food insecurity.
That insecurity is widespread and growing. After decades of promises and thousands of schemes, much of the world remains desperately malnourished. And now, as China, the United States and others jockey for land and power, the weight of shifting empires and changing climate is threatening to crush international cooperation on ending hunger. Over the last few years there has been "an ominous retreat from the idea of common purpose based on shared values," said former U.N. Secretary General Kofi Annan. "We have seen a worrying rise in protectionism, unilateral export bans, land grabs and exclusive deals that meet the food needs of the rich but not the poor."
As fear of food insecurity mounts, even rich countries are not immune to foreign investment schemes that draw resources from one country to feed another.
A new foreign investment strategy aims to secure part of the U.S. grain harvest even before it reaches the open market, Brown told In These Times. South Korea, which imports 70 percent of its grain, has opened an office in Chicago. The public-private enterprise is planning to build grain elevators and "contract for crops directly from U.S. farmers, bypassing the large international trading firms," he says. And "[w]ith China's 1.4 billion increasingly affluent consumers starting to compete with U.S. consumers for the U.S. grain harvest," Brown writes in Foreign Policy, "cheap food, seen by many as an American birthright, may be coming to an end."
The new politics of food scarcity
Many investors say that they give back at least as much as they take. "We've really created something out of nothing in Africa," said Anthony Poorter, Africa director for EmVest, the African subsidiary of Emergent Asset Management. "There are no shady deals."
In areas with hungry people, inadequate roads and other infrastructural deficiencies, foreign capital is sorely needed to develop more rational farming operations that can promote prosperity, food security and jobs. And there is little doubt that monoculture industrial farming, genetically engineered seeds and input from pesticides and chemical fertilizers can more quickly create higher yields than small-scale subsistence farming. Properly managed, supporters of expo-agriculture argue, investment dollars can bring educational opportunities, healthcare and the possibility of safer, higher living standards to subsistence farmers and impoverished rural populations.
Some investors also believe they are serving humanity: "Unless food production is boosted 50 percent before 2050," said Poorter's boss, Emergent CEO Susan Payne, "we face serious shortages globally." Her company, which "went on record in 2007 to identify food security as the next energy security," invests in 14 countries in sub-Saharan Africa and is aiming for an annual return of 25 percent or more.
But just as international development aid schemes, such as USAID's, conform to the geopolitical strategies and economic goals of the dispensing country, private investment is shaped by an inner imperative: the need to turn a profit. Whatever the investors promise, or however decent they are as individuals, their bottom line is the bottom line.
"There is a real risk that the current scramble for land will transfer wealth from the poor and the marginalized to those who have access to capital and markets, with deeply regressive consequences," warned UN Special Rapporteur Olivier de Schutter.
And as with many previous development plans, unintended consequences may pile up the human and economic costs. The investor country's sought-after political and food stability may translate into instability in the host country, and that in turn may boomerang back on the investors and their backers. "This [land grab] is creating insecurity in the global food system that could be a much bigger threat to global security than terrorism," says the Oakland Institute's Mousseau.
Backlashes have already occurred. When word leaked that Madagascar planned to sell 3 million acres to the South Korean firm Daewoo Logistics, popular outrage quashed the deal and toppled Madagascar's government. In the Philippines, as food prices were spiking in 2007, outcries from Filipino farmers stopped China from buying 2.5 million acres on which to grow export crops.
A pro-Oromia website warned that the situation in Ethiopia offered the "potential for a catastrophic unrest and poses a huge security headache not only for the country but for the whole world."
These targeted peoples decry the new "land grab" as a more sophisticated incarnation of old colonialism--driven today by a tangle of factors, including climate change, population growth, fear of social unrest, diminishing water and land, trade restrictions, erosion and pollution, the volatility of commodity prices and markets, speculation, the energy crisis, agro-energy/biofuel production, the global financial crisis, carbon trading and on and on.
Private and government investors defend win-win agro-investment as part of the solution to world hunger and an important step on the path to prosperity. Reliance on the market and private profit-driven investment, they say, is an improvement over decades of failed NGO and "humanitarian" development schemes that failed to feed the planet's almost 1 billion hungry people, or raise up the 2 billion who live on less than $2 a day.
From either viewpoint, it is clear that the geopolitics of food scarcity has undergone a major shift. Land is the new gold and mining it for export food, extracting its water to incorporate into crops and taking advantage of cheap labor and lax environmental laws are now, as Brown puts it, "integral parts of a global power struggle for food security."
And all sides agree: When people are hungry enough, they are likely to choose the risk of revolution over the certainty of starvation. Governments that are unable to secure affordable food for their populations are vulnerable to the kind of social unrest that has long been part of history's hunger not only for food, but for justice.