Global Policy Forum

Food Fears Feed Global Scramble for Land

The modern-day rush for farmland accelerated after the 2007-2008 food price crisis, in part due to concerns that the planet would not be able to feed a projected 9 billion people by 2050. In order to protect the future food security of their own populations, countries started to acquire large tracts of farmland in foreign states to produce export crops. In this article, the author argues that with fundamental drivers like food prices remaining high, interest in farmland is here to stay.   

By Katie Nguyen


May 2, 2012

It was designed to increase production and exports of vegetable oil, a commodity in short supply after World War Two, and foster growth in post-war Britain and Tanganyika.

Instead, Britain's scheme to carve out million-acre plantations for growing groundnuts in what is now Tanzania ended in disaster - scuppered by the thick bush that rendered machines to clear land for cultivation useless, and a lack of suitable soil and rainfall for the crop to grow.

Sixty years on, similarly controversial projects are back in fashion in Africa and other parts of the developing world as investors - from foreign governments to wealthy individuals - hunt for land to grow food.

Champions of the deals say they are good for agriculture and ultimately global food security. They say they provide a welcome injection of cash, new seeds, technology and knowledge into a sector that is often the neglected pillar of poor countries' economies.

But critics describe them as secretive "land grabs" snatched at knockdown prices, which threaten to push smallholder farmers off their land and deprive countries struggling with chronic hunger of fertile, arable land they need for themselves.

"There's a huge variety to these (deals). It's not all bad," Rajiv Shah, head of the U.S. Agency for International Development (USAID), told AlertNet.

"I suspect people use the term 'land grab' to characterise the ones that are thought of as not contributing to the local agricultural economy in a direct and specific way. But if done in the right way with enough transparency and with enough local engagement, it can be the engine of agricultural change and transformation that will help move lots of people out of poverty."

Fears about the planet’s ability to feed a projected 9 billion people by 2050 have driven much of the recent demand for land. But it’s a target the world can meet without a frenzied spending spree, as long as there’s greater investment in local farmers, many experts say.


With land such a sensitive issue and projects often shrouded in secrecy, reliable data is hard to come by.

According to the Land Matrix project monitoring large-scale land transactions, land deals being considered or negotiated between 2000 and 2010 amounted to 203 million hectares - about eight times the size of Britain.

Out of 71 million hectares in deals that Land Matrix was able to get good information on, 22 percent was for mining, tourism, industry and forestry. Of the remaining 78 percent for agricultural production, three-quarters was for biofuels.

Separate World Bank figures show that worldwide, 56 million hectares of farmland were leased or sold in 2008-2009 alone, with more than 70 percent of the demand for land in Africa.

Although specific numbers vary, all evidence points to a large-scale phenomenon that is unlikely to disappear, Lorenzo Cotula of the International Institute for Environment and Development said.

"In the medium- to long-term, the interest in land is likely to stay because fundamental drivers like global population growth, changing consumption patterns and urbanization are expected to push up food and agricultural commodity prices," Cotula told AlertNet.

"There is also an expectation that land values will tend to increase, particularly in places like Africa where it is very cheap."

Ethiopia alone has allocated some 3.6 million hectares of land for firms seeking to invest in agriculture.

And across the border, foreign investors sought or acquired about 2.64 million hectares of land in southern Sudan from 2007 to 2010 for agriculture, biofuel and forestry projects, Norwegian People's Aid says.

The modern-day rush for farmland in sub-Saharan Africa, Asia and Latin America accelerated after the 2007-2008 food price crisis triggered a flurry of export bans and restrictions by major food producers like Brazil, China, India and Argentina - keen to protect their own populations.

It left food importing nations like Saudi Arabia, South Korea and the United Arab Emirates particularly vulnerable. They realised they could no longer rely on the world market to meet their food needs.

Since then, Arab Spring uprisings in the Middle East and North Africa and bread riots in other regions - caused by record high food prices - have reminded governments of the cost of failing to guarantee domestic food security.


For the likes of water-poor Saudi Arabia, acquiring farmland abroad is doubly attractive.

In 2008, Saudi Arabia was forced to abandon its goal of being self-sufficient in wheat partly to preserve water. Agriculture absorbs 85-90 percent of water in a country that receives rainfall of only around 100 mm (4 inches) a year and relies on underground aquifers -- an ancient resource some experts say is drying out.

By acquiring land to grow crops for domestic consumption, Saudi is also often acquiring the water on that land.

But inking a deal is only the first step in what can be a problematic process.

"It's interesting because it's not easy to start a big modern agricultural operation in a country that has virtually no support systems," Lester Brown, president of the U.S.-based Earth Policy Institute, said in a telephone interview.

"Roads always come up. You need a lot of things, mechanical repair system, spare parts, storage facilities for fertiliser, equipment machinery sheds, access if you're going to irrigate to either a grid or place to store diesel oil for diesel pumps."

Dilapidated infrastructure is not the only risk. The potential for conflict is perhaps a greater one. In 2008, a lease by South Korea's Daewoo Logistics company for 1 million hectares of land in Madagascar - an area the size of Qatar - triggered protests that led to President Marc Ravalomanana's downfall.

Still, the risks have yet to deter many foreign investors, according to Anna Locke, who heads the agricultural development and policy programme of Britain's Overseas Development Institute (ODI) think tank.

"It's not that acquiring land is going to be a perfect solution but it may be better than the alternative of relying on increasingly volatile markets," she said.

Locke worked as an advisor to Mozambique's ministry of agriculture from 2002 to 2009. She said foreign governments that had approached the southern African country - through their sovereign wealth funds - for land to grow rice and other crops were in it for the long run.

"They're not thinking about whether this is going to work in five years. They're thinking about whether this is going to work in 10, 20, 40 years." 


Although media reports have tended to conjure up the image of a neocolonial foreign stampede for land, acquisitions recorded by official inventories are dominated by local individuals or companies, the World Bank says. It also notes that national businesses may act as fronts for foreigners.

"Most of the land allocated to big scale production in Africa is for local guys," said ODI researcher Steve Wiggins. "Some may have talked the language of progress, modernisation, investment and so on, but their real motives are sometimes very simple - land accumulation, land speculation."

Others changing the food ownership landscape are corporates, pension funds and wealthy individuals seeking to diversify from riskier investments in the wake of the financial crisis.

"The assumption is that farmland - fertile farmland with water - is increasingly scarce in the future and as a commodity it makes economic sense to invest in it," said Henk Hobbelink, coordinator of GRAIN, a group supporting small farmers.

"But we say this is not the way to feed the world. This is a way to produce a commodity for the international market for those who can pay - certainly not the poorest people in the poorest countries."

The sheer pace, scale and in many instances - outcry - over the land rush has caused some host governments to pause for thought.

Mozambique imposed a six to eight month moratorium on large-scale land deals in 2008 after overwhelming interest was shown in land, primarily for biofuel and plantation forestry. Later that year, it introduced a set of investment guidelines.

"Before the wave of interest in land, most developing countries felt they needed to have an open door policy to get in as much investment as possible," Locke said. "I think a lot of countries have revised their position and are looking at how to get better deals from investments. They've realised they've got a little bit more bargaining power."

Aid recipient Ethiopia, too, is revising how it's doing business.

Data on the Ministry of Agriculture website showed annual land rental rates for foreign firms ranging from $12.8 per hectare to just $1.15. In one small step towards a fairer deal, an Ethiopian government official told Reuters last month the country planned to charge more on commercial farm leases.


A fairer deal is also the concern for small-scale farmers who account for the bulk of agricultural production in many poor countries.

U.N.-backed global guidelines on responsible land use offer some hope. Due to be ratified later in May, the voluntary code of conduct promotes equal rights for women in securing title to land, the creation of transparent record-keeping systems accessible to the rural poor and the protection of traditional land rights - among other things.

Some experts say the most sensible approach would be to abandon large-scale acquisitions altogether in favour of working with small-scale farmers.

"The political risks are so much lower, the cost will be lower and you'll get the job done better because you'll have the farming done by people who already know how to farm in local conditions. All you're going to do is provide them with the inputs up front on a contract against buying the harvest at the end of the season and that's a far, far better way to go," said ODI's Wiggins.

He is convinced that in a decade most of the big sovereign wealth fund deals - for land for food production - will have been replaced by projects a lot less grandiose in design.

For GRAIN's Hobbelink, the only sustainable food system is one based on small-scale farmers.

"It has to be based and orientated towards local markets," Hobbelink said. "It has to be based on more natural and ecological forms of agriculture. There's a lot of potential to increase the productivity and the production of local forms of agriculture simply by enhancing other technologies."


FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.