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The New Neo-Colonial Landgrab
Author: Ava Danlog

The intensifying food crisis that started with the steeply rising prices of staple food from 2005-2008 had resource-hungry rich countries and private investors scrambling for vast tracts of land in developing countries to secure their food and biofuels

Donor governments, IFIs and even inter-governmental agencies present land grabbing as a win-win situation, addressing food security and stimulating agricultural and economic development in the host countries. However, a report by the Oakland Institute shows that land grabbing, contrary to solving food insecurity, in fact puts at risk the billions of hungry peasants and other vulnerable sectors all over the world.

 

The great land grab

Washington-based International Food Policy Research Institute (IFPRI)1 estimates at $30 billion the 20 million hectares of land being bought and leased for the past four years. This land area is already equivalent to 25% of Europe’s farmland. According to IFPRI, three main factors drive the land grab phenomenon: 1) rich nations securing their food supply; 2) the growing demand for biofuels; and 3) rise in investments in land and soft commodities.

The main target of land grabbing is sub-Saharan Africa, but Asian countries are also leasing hotspots like Cambodia, Laos, Myanmar, Thailand, Indonesia and the Philippines. These land deals are not necessarily from the North to South. At the forefront are rich countries who are short of arable land and water resources such as Japan, South Korea, China, India and the Middle East countries–Kuwait, Qatar, Saudi Arabia and the United Arab Emirates. 

With the onset of factors threatening food security the previous years, rich nations scarce in land and water resources and highly dependent on food imports started looking at growing their food in developing nations to allay fears of food shortages and rapidly increasing food prices. The Gulf States’ spending for food imports for example, ballooned from US$8 billion to US$20 billion from 2002 to 2007. 

Qatar, which only has 1% of its total land area suitable for farming, bought 40,000 hectares in Kenya and recently bought land in Cambodia and Vietnam to grow rice, and in Sudan to grow wheat, corn and oils. The United Arab Emirates purchased 324,000 hectares in Pakistan in June 2009.

China , in an effort to boost its rice production from 100,000 to 500,000 tons in the next five years bought farmlands in Zimbabwe, Mozambique and other Asian countries to secure supply for its growing population. South Korea bought over one million hectares in Mongolia, Argentina, Sudan and Indonesia. 

The grab for vast fertile lands is not only fueled by food insecurity. With the ambitious targets set by oil-dependent countries for agrofuels production, investors from the Organization for Economic Cooperation and Development (OECD) group of countries and the private sector, naturally set their sights on producing crops for agrofuels in developing nations owing to the relatively cheap labor, land cost and land availability to some degree.

The investors in these new land deals are not the traditional transnational agribusiness corporations like Dole or Unilever. Today’s emerging farm owners (or new landgrabbers), according to a study by GRAIN2, are private equity fund managers, specialized farmland fund operators, hedge funds, pension funds, big banks and other finance capitalists–although in many cases governments and International Financial Institutions (IFIs) are the principal brokers.

Financial investors are infamous for making superprofits by putting money where they can maximize returns in the shortest amount of time. Applying that logic to agricultural production means buying cheap land in poor countries while displacing those who need them the most, planting high-valued commercial crops for export, depleting the soils through intensive farming, pulling out after a number of years and leaving the local communities with “a desert”.3

The role of governments and IFIs

On the other hand, host governments of developing countries agree to these land deals for the following reasons: infrastructure investment; access to research and technology; credit for markets; and ideally, to support the local food system.4 

IFIs also facilitate these transactions by providing funding and promoting private sector investment in agriculture and by working directly with host governments to encourage an investment-friendly environment for foreign investment. 

Key actors such as the International Financial Corporation (IFC), the private sector of the World Bank (WB), plans to boost private sector investments by increasing lending to agribusiness by up to 30% in the next three years. 

Private sector investments in agribusiness means incorporation of large tracts of land which entails a myriad of concerns in accessing land, securing property rights, and the time and cost of obtaining permits to develop the land. 

The IFC and and the Foreign Investment Advisory Service (FIAS) assist private investors in overcoming these obstacles by working directly with governments to encourage a “business enabling environment”. This involves designing and implementing effective policies and procedures which help foreign companies keep their profit in the country, provide tax incentives, secure property rights more easily, and make serviced land available for new investment. They even encourage changing land laws in order to increase the land area under foreign ownership.5 These measures discriminate against the smallholder producers, preventing communities to benefit from the capital that is generated.

In addition to IFIs, other actors such as donor governments, research institutions, international governance agencies and the Food and Agriculture Organization (FAO), perpetuate land grabbing as a win-win situation. According to Jacques Diouf of the FAO, “when such deals take into account interest of both parties they help increase agricultural production in developing countries, provide jobs, boost export, and bring in new technologies to improve farm efficiency there”.6 With the growing popularity of the win-win rhetoric, there is a convergence of factors leading to a strategy that will legitimize large-scale land investments. 

The real deal

The financial structure and donor country support that encourage land grabbing will clearly rake in profits for the investors, but at the expense of the millions of impoverished farmers in developing countries. 

The famous British Marxist historian Eric Hobsbawm famously said that of all societal changes of the last half-century, the most dramatic and far-reaching is the death of the peasantry. Forcing small independent farmers to become plantation farmers in industrial and large-scale agriculture is a characteristic consequence of the expansion of capitalism in the developing world.7 And history has proven that the entry of large-scale agriculture in areas dominated by small-scale farmers leads to social unrest, social and economic inequities and even political unrest. Land ownership disputes have a long and violent history. 

The immediate impact of industrial, plantation-style farms is the displacement of small-scale farmers and rural dwellers. The proponents claim that land grabbing will inject investment and create employment. But the truth of the matter is, farmers will be forced off their lands and will be employed to produce food not for their consumption, but which will be exported back to the country of the investors. So rather than solving food insecurity, it will only lead to more hunger. 

Another danger is that these land deals come in direct conflict with existing land reform programs, which should be in place to attain food security. Farmers must be given direct control and be given secure and equitable access to land to produce food. However, land grabbing places pressures on land tenure systems, which affect majority of small-scale producers without formal tenure over their land, as well as indigenous groups. With the food and economic crises, genuine land reforms are even more urgent to stimulate domestic economic activity and create jobs, but these big land deals threaten the effective implementation of such programs. 

In the Philippines for example, the proposed Genuine Agrarian Reform Bill (GARB) had the Saudi and European investors worried. Saudi investors were planning to purchase thousands of hectares of lands for planting and raising livestock and poultry. According to media reports, the EU is pressuring the Philippine government to lift its ban on foreign ownership of land through the WTO provisions. Foreign control and ownership of farmlands will eventually diminish access to local food sources.

Another issue to consider is land degradation. UN statistics show that land degradation affects as much as two-thirds of the world’s agricultural land. By 2025, there could be as many as 1.8 billion people suffering from water scarcity and about two-thirds of the total population could be subjected to water stress if current patterns of production and consumption are not altered. These new land deals do not consider the sustainable development of agricultural lands to preserve the environment, and the health and livelihood of the communities.

Pushing for genuine agrarian reform

It is very ironic to think that governments of developing countries sell and lease their fertile lands to produce food and biofuels for the consumption of richer nations, when in fact, these countries are facing severe food insecurity and landlessness and rely heavily on food imports. Countries being targeted for investments are recipients of food aid from the World Food Programme (WFP) such as Cambodia, Niger, Burma, Ethiopia and Tanzania. 

Developing countries targeted by land grabbing are among the world’s poorest and are thus not in the best position to refuse investments. Ultimately, host countries will lose control over their own food production and supplies. 

And contrary to the long list of benefits that communities are supposed to receive from these land deals such as infrastructure development, creation of jobs, and boosting local production and stimulating the economy, peasants and other marginalized sectors such as the women and indigenous peoples lose their land and livelihood, in addition to worsening poverty and food insecurity in general. 

In response, peasant organizations push for genuine land reforms towards rural development as the key towards sustainable domestic food production, which will address the food insecurity issue. The Asian Peasant Coalition (APC), for example, a regional network of peasant organizations, is consolidating its ranks to step up its efforts to push for genuine agrarian reform. 

Its campaign against land grabbing, the five-month “Asia-wide Peasants’ Caravan for Land and Livelihood” kicked off in Sri Lanka in July 2009. Counterpart events happened in other Asian countries and will culminate with a peasant’s caravan in India this November 2009. 

The APC believes that genuine agrarian reform and people’s food sovereignty, or respecting the peoples’ right to food and to produce food, are keys to address the food security issue.8

Endnotes

1    International Food Policy Research Institute. “’Land Grabbing’ by Foreign Investors in Developing Countries: Risks and Opportunities” IFPRI Policy Brief. April 2009.
2    GRAIN. “The new farm owners: Corporate investors lead the rush for control over overseas farmland.” Against the grain. October 2008. 
3    Coordinator of MASIPAG in the Philippines, cited in GRAIN (2009)
4    Alexandra Spieldoch, Institute for Agriculture and Trade Policy. “The Social Costs of Overseas Land Acquisitions: Implications for Food Security and Poverty Alleviation”. 5 May 2009 
5    Shepard Daniel and Anuradha Mittal.The Oakland Institute. “The Great Land Grab. Rush for World’s Farmland Threatens Food Security for the Poor”. 2009
6    Ibid. 9
7    Ibid. 11
8    Asian Peasant Coalition. “Stop Global Land Grabbing! Struggle for Genuine Agrarian Reform and People’s Food Sovereignty”. 2009

Ava Danlog is a Program Assistant for IBON International