Foreign Investors Snap Up African Farmland
30 July, 2009 | By Horand Knaup and Juliane von Mittelstaedt
Every crisis has its winners. A group of them is sitting in the
Stuyvesant Room at the Marriott Hotel in New York. The conference
room, where the shades are drawn and the lights are dimmed, is filled
with men from Iowa, Sao Paulo and Sydney -- corn farmers, big
landowners and fund managers. Each of them has paid $1,995 (€1,395)
to attend Global AgInvesting 2009, the first investors' conference on the
emerging worldwide market in farmland.
A man from the Organization for Economic Cooperation and
Development (OECD) gives the first presentation. Colorful graphs travel
up and down his PowerPoint charts. Some are headed downward as the
year 2050 approaches. They represent the farmland that is disappearing
as a result of climate change, soil desolation, urbanization and the
shortage of water. The other lines, which point sharply upward,
represent demand for meat and biofuel, food prices and population
growth. There is a growing gap between these two sets of lines. It
represents hunger.
According to most prognoses, there could be 9.1 billion people living on
earth in 2050, about two billion more than today. In the coming 20
years alone, worldwide demand for food is expected to rise by 50
percent. "These are pessimistic prospects," says the OECD man. He
looks serious and even a little sad, as he describes the future of the
world.
But for the audience in the Stuyvesant Room, mostly men and a handful
of women, all of this is good news and the mood is buoyant. How
could it be any different? After all, hunger is their business. The
combination of more people and less land makes food a safe
investment, with annual returns of 20 to 30 percent, rare in the current
economic climate.
These are not Wall Street experts, nor are they people who shoot
money across the continents like billiard balls. On the contrary, these
are extremely conservative investors who buy or lease land to grow
wheat or raise cattle. But land is scarce and expensive in Europe and the
United States. Solving the problem means developing new land, which
is only available in Africa, Asia and South America. This combination of
factors has triggered a high-stakes game of real-life Monopoly, in which
investment funds, banks and governments are engaged in a race for
access to the world's arable land.
'The Final Frontier for Finding Alpha'
Susan Payne, a red-haired British woman, is the CEO of the largest land
fund in southern Africa, which currently includes 150,000 hectares
(370,000 acres), mainly in South Africa, Zambia and Mozambique.
Payne hopes to raise half a billion euros from investors. She talks about
fighting hunger, but the headings on her PowerPoint slides, embellished
with photos of soybean fields at sunset, tell a different story. One such
heading refers to "Africa -- the last frontier for finding alpha." The word
alpha signifies an investment for which the return is greater than the
risk. Africa is alpha country.
That's because land, which is extremely fertile in some regions, is
inexpensive on the impoverished continent. Payne's land fund pays
$350-500 per hectare ($140-200 per acre) in Zambia, about a tenth the
price of land in Argentina or the United States. For a small farmer in
Africa, the average yield per hectare has remained unchanged in 40
years. With a little fertilizer and additional irrigation, yields could
quadruple -- and so could profits.
These are perfect conditions for investors. Susan Payne sees it that
way, and so do her investors. In fact, there has been so much demand
for this type of investment that Payne recently had to establish a new
sub-fund.
A great deal of capital is currently available. It is the second year of the
global economic crisis, and investors are seeking sound and safe
investments, which is why the audience in New York includes not only
hedge fund managers and agriculture industry executives, but also the
representatives of large pension funds and the chief financial officers of
five universities, including Harvard.
Thousands of investment funds, from small to large, have recently
begun applying the most basic formula in the world: Man must eat.
US investment management company BlackRock, for example, has
established a $200 million agriculture fund, and has earmarked $30
million for the acquisition of farmland. Renaissance Capital, a Russian
investment company, has acquired more than 100,000 hectares in
Ukraine. Deutsche Bank and Goldman Sachs have invested their money
in pig breeding operations and chicken farms in China, investments that
include the legal rights to farmland.
Food is becoming the new oil. Worldwide grain reserves dropped to a
historic low at the beginning of 2008, and the ensuing price explosion
marked a turning point, just as the oil crisis did in the 1970s. There
were bread riots around the world, and 25 countries, including some of
the biggest grain exporters, imposed restrictions on food exports.
Then came the second crisis of 2008, the economic crisis. Two fears --
the fear of hunger and the fear of uncertainty -- converged, triggering
what some are already calling a second generation of colonialism.
A Win-Win Situation?
What is different about this colonialism is that countries are readily
allowing themselves to be conquered. The Ethiopian prime minister said
that his government is "eager" to provide access to hundreds of
thousands of hectares of farmland. The Turkish agriculture minister
announced: "Choose and take what you want." In the midst of a war
against the Taliban, the Pakistani government staged a road show in
Dubai, seeking to entice sheikhs with tax breaks and exemptions from
labor laws.
All these efforts have two hopes in common. One is the hope of poor
nations to achieve the development and modernization of their ailing
agricultural sectors. The other is the world's hope that foreign investors
in Africa and Asia will be able to produce enough food for a planet soon
to be populated by 9.1 billion people; that they will bring along all the
things that poor countries have lacked until now, including technology,
capital and knowledge, modern seed and fertilizer; and that these
investors will be able to not only double crop yields but, in many parts
of Africa, increase them tenfold. Previous estimates had in fact forecast
a decline in production capacity by 3 to 4 percent in 2080, as compared
with the year 2000.
If the investors are successful, they could achieve what development
agencies have been unable to do in the past few decades: reduce the
hunger that now afflicts more people than ever, namely one billion
worldwide. In the best case scenario this could be a win-win situation
with profit for the investors and development for the poor.
It is not just bankers and speculators, but also governments that are
acquiring land in other countries, seeking to reduce their dependence on
the world market and imports. China is home to 20 percent of the
world's population, but it has only 9 percent of the world's arable land.
Japan is the world's largest corn importer, and South Korea is the
second-largest. The Persian Gulf States import 60 percent of their food,
while their natural water reserves are sufficient to support only another
30 years of agriculture.
Modern-Day Land Grab
But what happens in a globalized world when colonies arise once again?
What if, for example, Saudi Arabia acquires parts of Pakistan's Punjab
region or Russian investors buy up half of Ukraine? And what happens
when famine strikes these countries? Will the wealthy foreigners install
electric fences around their fields and will armed guards escort crop
shipments out of the country? Pakistan has already announced plans to
deploy 100,000 members of its security forces to protect foreign-
owned fields.
Because of the political sensitivity of the modern-day land grab, it is
often only the country's head of state who knows the details. In some
cases, however, provincial governors have already auctioned off land to
the highest bidder, as in the case of Laos and Cambodia, where even the
governments no longer know how much of their territory they still own.
No one is sure exactly how much land is at stake. The number cited by
the International Food Policy Research Institute (IFPRI) is 30 million
hectares, but this estimate is impossible to verify. Even United Nations
organizations has to resort to citing newspaper reports, while the World
Bank is trying to convince countries to pay closer attention to the fine
print on agreements.
Klaus Deininger, an economist specializing in land policy at the World
Bank, estimates that 10 to 30 percent of available arable land could be
up for grabs, although only a fraction of the potential number of lease
and sale agreements have been signed. "There was a huge jump in 2008,
when plans and applications in many countries more than doubled, in
some cases tripled." In Mozambique, says Deininger, foreign demand is
more than double the existing cultivated farmland, and the government
has already allocated four million hectares to investors, half of them
from abroad.
The most spectacular deals are not being made by private investors,
however, but by governments and the funds and conglomerates they
promote:
Saudi Arabia is one of the biggest and most aggressive buyers of land.
This spring, the king attended a ceremony where he took delivery of the
first export rice harvest, produced exclusively for the kingdom in
hunger-stricken Ethiopia. Saudi Arabia spends $800 million a year
promoting foreign companies that cultivate "strategic field crops" like
rice, wheat, barley and corn, which it then imports. Ironically, the
country was the world's sixth-largest wheat exporter in the 1990s. But
water is scarce and the desert nation aims to preserve its reserves.
Exporting food also means exporting water.
'The Investor Needs a Weak State'
Rich nations are exchanging money, oil and infrastructure for food,
water and animal feed. At first glance, this seems to present a solution
for many problems, says Jean-Philippe Audinet of the International
Fund for Agricultural Development (IFAD). In principle, he is pleased
about the agricultural investments, and says he fought for them for
years. "What was bad was the period when markets were being flooded
with cheap food products."
But many of the countries where land is being snapped up --
Kazakhstan and Pakistan, for example -- suffer from water shortages.
Sub-Saharan Africa has adequate natural water reserves, but the only
country in the region currently producing a food surplus is South
Africa. Most countries, on the other hand, are importers and, with
rapidly growing populations, will likely be even more dependent on food
imports in the future. Can such countries truly become important food
producers?
Audinet, the IFAD expert, knows the risks. "The way these agreements
are structured can harm the country and the farmers in the long term,
robbing them of their most important asset: land." Olivier De Schutter,
the UN Special Rapporteur on the right to food, warns: "Because the
countries in Africa are competing for investors, they are undercutting
each other." Some contracts, says De Schutter, are barely three pages
long -- for hundreds of thousands of hectares of land. These types of
agreements stipulate what products are to be cultivated, the location and
the purchase or lease price, but they include no environmental
standards. They also lack the necessary investment regulations and the
stipulation that jobs must be created, says De Schutter.
Some agree to build schools and pave roads, but even when investors
live up to their promises, the benefits to the host governments and local
farmers are often short-lived. In the long term, however, they must
suffer the consequences of over-fertilizing, deforestation, over-
consumption of water, reduction of ecological diversity and the loss of
local species. To boost harvests and achieve annual returns of 20
percent or more, the foreign large landowners must operate their farms
on an industrial scale. And when the soil becomes depleted after a few
years, many investors simply move on. Land is so cheap that they are
not forced to value sustainable farming practices.
Rejecting the Old Model
Because of these risks Audinet and De Schutter, like most experts,
favor contract farming instead of land acquisition. In other words, the
foreign investors provide the technology and capital, while the local
farmers own or lease the land and supply rice or wheat at fixed prices.
This is the classic, tried-and-tested model, but it is not what the new
investors want. They want control, ownership, high returns and, most
of all, security -- objectives rarely compatible with the interests of
thousands of small farmers.
Senegal has decided in favor of contract farming and against large-scale
land sales, but it happens to be a stable democracy. This cannot be said
of many of the countries where land acquisition is taking place.
"When food becomes scarce, the investor needs a weak state that does
not force him to abide by any rules," says Philippe Heilberg, an
American businessman. A state that permits grain exports despite
famines at home, that is consumed by corruption or deeply in debt,
ruled by a dictatorship, racked by civil war, or sends millions of
workers abroad and is dependent on these workers receiving visas and
jobs.
Heilberg has found such a nation: South Sudan, which is in fact a pre-
nation, autonomous but not independent. The 44-year-old American,
son of a coffee merchant and the founder of the investment firm Jarch
Capital, is now the largest land leaseholder in South Sudan, where he
leases 400,000 hectares of prime farmland in Mayom County.
The mere mention of the words South Sudan conjures up images of
civil war, refugees and famine, not of a place where one would
consider growing tomatoes. But Heilberg raves that his project will be
more beneficial to people than the UN, and that he will create jobs and
produce food. And he is adamant that Paulino Matip, from whom he
has leased the land for 50 years, not be referred to as a warlord, but as
a "former warlord" or "deputy army chief." Heilberg neglects to mention
that the rebels led by Matip are suspected of having committed war
crimes.
Instead of buying stocks, the former banker is now speculating on the
political future of South Sudan, which he insists will be an independent
country in 10 years, at which point land will be far more expensive than
it is today.
Land acquisition is already a step further along in western Kenya, home
to Erastas Dildo, 33, the kind of person the New York investors would
probably characterize as a risk factor: a small farmer who owns three
hectares of land. It is fertile land, where the corn turns bright green and
grows two meters (6.5 feet) tall, where the cattle are as fat as hippos
and the tomato plants bend under the weight of their tomatoes. The
nearby Yala River flows into Lake Victoria. There are three small brick
houses on the property. Erastas harvests his corn twice a year, and
vegetables and tomatoes grow year-round. One hectare produces
€3,600 worth of corn a year, a lot of money by Kenyan standards.
'They Drove Out 400 Families'
But things changed when Erastas was contacted by Dominion Farms, a
US agricultural producer that established a colony in the Yala delta,
where it has leased 3,600 hectares of land for 45 years, at the ludicrous
rate of €12,000 a year. Dominion, which plans to grow rice, vegetables
and corn on the land, wants to include Erastas Dildo's three hectares in
its venture.
The Dominion representatives offered to pay him about 10 cents per
square meter. Erastas turned them down, and now they are making life
difficult for the farmer. Their most effective weapon is a dam they have
built. When Erastas tried to harvest his corn last year, it was under
water. "They are playing with the water level to get rid of us," he says.
And when that doesn't work, says Erastas, Dominion sends in
bulldozers, thugs and sometimes even the police.
Under its contract, Dominion has agreed to renovate "at least one school
and one medical facility" in each of the two local districts. "They drove
out 400 families instead," says Gondi Olima of the organization Friends
of the Yala Swamp. According to Olima, at first the Dominion venture
created new jobs, as day laborers were hired to clear the site with
machetes, but then the company brought in more and more equipment.
"Now they have so many machines that workers are no longer needed,"
says Olima.
Dominion Farms denies the farmers' accusations and points out that it
has already built eight classrooms, donated gateposts and awarded
educational scholarships to 16 children, as well as providing beds and
electricity for a hospital ward.
Perhaps Erastas and his family will be forced to make way for the
development soon, as is already happening in many other places. The
World Bank estimates that only 2 to 10 percent of the land in Africa is
formally owned or leased, and most of that is in cities. A family may
have lived on or occupied a piece of land for decades, but it often has
no proof of ownership.
Hunt for Land Continues
Nevertheless, the land is almost never left unused. The poor, in
particular, live off the land, where they collect fruits, herbs or firewood
and graze their livestock. According to a joint study by several UN
organizations, land grabs are often justified by defining the land as
"fallow." As a result, according to the report, land grabs have the
potential to dispossess farmers on a large scale. In many countries,
there may be enough arable land available for everyone, but the quality
is not uniform -- and the investors want the best land. That, as it
happens, is the land where farmers usually live.
Because more than 50 percent of Africans are small farmers, large-scale
land acquisition could be disastrous for the population. Those who lose
their fields lose everything. The fact that the large investors can
substantially improve harvests with their modern agricultural technology
is of little use to Africans who, once they have lost their land and
livelihoods, cannot afford to buy the new farms' products.
The World Bank and others are now developing a code of conduct for
investors. A declaration of intent had been planned for the July G-8
summit in L'Aquila, Italy, but the heads of state in attendance could not
agree on binding standards.
And so the hunt for land continues. Dominion has secured another
3,200 hectares, and Philippe Heilberg is in the process of leasing an
additional 600,000 hectares in South Sudan. Back in New York, in the
Stuyvesant Room, one of the speakers is reciting numbers to illustrate
how fast the global population is growing: By 154 people per minute,
9,240 per hour or 221,760 per day. And each one of them wants to eat.
Translated from the German by Christopher Sultan
30 July, 2009 | By Horand Knaup and Juliane von Mittelstaedt
- Governments and
investment funds are
buying up farmland in
Africa and Asia to grow
food -- a profitable
business, with a growing
global population and
rapidly rising prices. The
high-stakes game of real-
life Monopoly is leading to
a modern colonialism to
which many poor countries
submit out of necessity.
Every crisis has its winners. A group of them is sitting in the
Stuyvesant Room at the Marriott Hotel in New York. The conference
room, where the shades are drawn and the lights are dimmed, is filled
with men from Iowa, Sao Paulo and Sydney -- corn farmers, big
landowners and fund managers. Each of them has paid $1,995 (€1,395)
to attend Global AgInvesting 2009, the first investors' conference on the
emerging worldwide market in farmland.
A man from the Organization for Economic Cooperation and
Development (OECD) gives the first presentation. Colorful graphs travel
up and down his PowerPoint charts. Some are headed downward as the
year 2050 approaches. They represent the farmland that is disappearing
as a result of climate change, soil desolation, urbanization and the
shortage of water. The other lines, which point sharply upward,
represent demand for meat and biofuel, food prices and population
growth. There is a growing gap between these two sets of lines. It
represents hunger.
According to most prognoses, there could be 9.1 billion people living on
earth in 2050, about two billion more than today. In the coming 20
years alone, worldwide demand for food is expected to rise by 50
percent. "These are pessimistic prospects," says the OECD man. He
looks serious and even a little sad, as he describes the future of the
world.
But for the audience in the Stuyvesant Room, mostly men and a handful
of women, all of this is good news and the mood is buoyant. How
could it be any different? After all, hunger is their business. The
combination of more people and less land makes food a safe
investment, with annual returns of 20 to 30 percent, rare in the current
economic climate.
These are not Wall Street experts, nor are they people who shoot
money across the continents like billiard balls. On the contrary, these
are extremely conservative investors who buy or lease land to grow
wheat or raise cattle. But land is scarce and expensive in Europe and the
United States. Solving the problem means developing new land, which
is only available in Africa, Asia and South America. This combination of
factors has triggered a high-stakes game of real-life Monopoly, in which
investment funds, banks and governments are engaged in a race for
access to the world's arable land.
'The Final Frontier for Finding Alpha'
Susan Payne, a red-haired British woman, is the CEO of the largest land
fund in southern Africa, which currently includes 150,000 hectares
(370,000 acres), mainly in South Africa, Zambia and Mozambique.
Payne hopes to raise half a billion euros from investors. She talks about
fighting hunger, but the headings on her PowerPoint slides, embellished
with photos of soybean fields at sunset, tell a different story. One such
heading refers to "Africa -- the last frontier for finding alpha." The word
alpha signifies an investment for which the return is greater than the
risk. Africa is alpha country.
That's because land, which is extremely fertile in some regions, is
inexpensive on the impoverished continent. Payne's land fund pays
$350-500 per hectare ($140-200 per acre) in Zambia, about a tenth the
price of land in Argentina or the United States. For a small farmer in
Africa, the average yield per hectare has remained unchanged in 40
years. With a little fertilizer and additional irrigation, yields could
quadruple -- and so could profits.
These are perfect conditions for investors. Susan Payne sees it that
way, and so do her investors. In fact, there has been so much demand
for this type of investment that Payne recently had to establish a new
sub-fund.
A great deal of capital is currently available. It is the second year of the
global economic crisis, and investors are seeking sound and safe
investments, which is why the audience in New York includes not only
hedge fund managers and agriculture industry executives, but also the
representatives of large pension funds and the chief financial officers of
five universities, including Harvard.
Thousands of investment funds, from small to large, have recently
begun applying the most basic formula in the world: Man must eat.
US investment management company BlackRock, for example, has
established a $200 million agriculture fund, and has earmarked $30
million for the acquisition of farmland. Renaissance Capital, a Russian
investment company, has acquired more than 100,000 hectares in
Ukraine. Deutsche Bank and Goldman Sachs have invested their money
in pig breeding operations and chicken farms in China, investments that
include the legal rights to farmland.
Food is becoming the new oil. Worldwide grain reserves dropped to a
historic low at the beginning of 2008, and the ensuing price explosion
marked a turning point, just as the oil crisis did in the 1970s. There
were bread riots around the world, and 25 countries, including some of
the biggest grain exporters, imposed restrictions on food exports.
Then came the second crisis of 2008, the economic crisis. Two fears --
the fear of hunger and the fear of uncertainty -- converged, triggering
what some are already calling a second generation of colonialism.
A Win-Win Situation?
What is different about this colonialism is that countries are readily
allowing themselves to be conquered. The Ethiopian prime minister said
that his government is "eager" to provide access to hundreds of
thousands of hectares of farmland. The Turkish agriculture minister
announced: "Choose and take what you want." In the midst of a war
against the Taliban, the Pakistani government staged a road show in
Dubai, seeking to entice sheikhs with tax breaks and exemptions from
labor laws.
All these efforts have two hopes in common. One is the hope of poor
nations to achieve the development and modernization of their ailing
agricultural sectors. The other is the world's hope that foreign investors
in Africa and Asia will be able to produce enough food for a planet soon
to be populated by 9.1 billion people; that they will bring along all the
things that poor countries have lacked until now, including technology,
capital and knowledge, modern seed and fertilizer; and that these
investors will be able to not only double crop yields but, in many parts
of Africa, increase them tenfold. Previous estimates had in fact forecast
a decline in production capacity by 3 to 4 percent in 2080, as compared
with the year 2000.
If the investors are successful, they could achieve what development
agencies have been unable to do in the past few decades: reduce the
hunger that now afflicts more people than ever, namely one billion
worldwide. In the best case scenario this could be a win-win situation
with profit for the investors and development for the poor.
It is not just bankers and speculators, but also governments that are
acquiring land in other countries, seeking to reduce their dependence on
the world market and imports. China is home to 20 percent of the
world's population, but it has only 9 percent of the world's arable land.
Japan is the world's largest corn importer, and South Korea is the
second-largest. The Persian Gulf States import 60 percent of their food,
while their natural water reserves are sufficient to support only another
30 years of agriculture.
Modern-Day Land Grab
But what happens in a globalized world when colonies arise once again?
What if, for example, Saudi Arabia acquires parts of Pakistan's Punjab
region or Russian investors buy up half of Ukraine? And what happens
when famine strikes these countries? Will the wealthy foreigners install
electric fences around their fields and will armed guards escort crop
shipments out of the country? Pakistan has already announced plans to
deploy 100,000 members of its security forces to protect foreign-
owned fields.
Because of the political sensitivity of the modern-day land grab, it is
often only the country's head of state who knows the details. In some
cases, however, provincial governors have already auctioned off land to
the highest bidder, as in the case of Laos and Cambodia, where even the
governments no longer know how much of their territory they still own.
No one is sure exactly how much land is at stake. The number cited by
the International Food Policy Research Institute (IFPRI) is 30 million
hectares, but this estimate is impossible to verify. Even United Nations
organizations has to resort to citing newspaper reports, while the World
Bank is trying to convince countries to pay closer attention to the fine
print on agreements.
Klaus Deininger, an economist specializing in land policy at the World
Bank, estimates that 10 to 30 percent of available arable land could be
up for grabs, although only a fraction of the potential number of lease
and sale agreements have been signed. "There was a huge jump in 2008,
when plans and applications in many countries more than doubled, in
some cases tripled." In Mozambique, says Deininger, foreign demand is
more than double the existing cultivated farmland, and the government
has already allocated four million hectares to investors, half of them
from abroad.
The most spectacular deals are not being made by private investors,
however, but by governments and the funds and conglomerates they
promote:
- The Sudanese government has leased 1.5 million hectares of
prime farmland to the Gulf States, Egypt and South Korea for 99
years. Paradoxically, Sudan is also the world's largest recipient
of foreign aid, with 5.6 million of its citizens dependent on food
deliveries. - Kuwait has leased 130,000 hectares of rice fields in Cambodia.
- Egypt plans to grow wheat and corn on 840,000 hectares in
Uganda. - The president of the Democratic Republic of Congo has offered
to lease 10 million hectares to the South Africans.
Saudi Arabia is one of the biggest and most aggressive buyers of land.
This spring, the king attended a ceremony where he took delivery of the
first export rice harvest, produced exclusively for the kingdom in
hunger-stricken Ethiopia. Saudi Arabia spends $800 million a year
promoting foreign companies that cultivate "strategic field crops" like
rice, wheat, barley and corn, which it then imports. Ironically, the
country was the world's sixth-largest wheat exporter in the 1990s. But
water is scarce and the desert nation aims to preserve its reserves.
Exporting food also means exporting water.
'The Investor Needs a Weak State'
Rich nations are exchanging money, oil and infrastructure for food,
water and animal feed. At first glance, this seems to present a solution
for many problems, says Jean-Philippe Audinet of the International
Fund for Agricultural Development (IFAD). In principle, he is pleased
about the agricultural investments, and says he fought for them for
years. "What was bad was the period when markets were being flooded
with cheap food products."
But many of the countries where land is being snapped up --
Kazakhstan and Pakistan, for example -- suffer from water shortages.
Sub-Saharan Africa has adequate natural water reserves, but the only
country in the region currently producing a food surplus is South
Africa. Most countries, on the other hand, are importers and, with
rapidly growing populations, will likely be even more dependent on food
imports in the future. Can such countries truly become important food
producers?
Audinet, the IFAD expert, knows the risks. "The way these agreements
are structured can harm the country and the farmers in the long term,
robbing them of their most important asset: land." Olivier De Schutter,
the UN Special Rapporteur on the right to food, warns: "Because the
countries in Africa are competing for investors, they are undercutting
each other." Some contracts, says De Schutter, are barely three pages
long -- for hundreds of thousands of hectares of land. These types of
agreements stipulate what products are to be cultivated, the location and
the purchase or lease price, but they include no environmental
standards. They also lack the necessary investment regulations and the
stipulation that jobs must be created, says De Schutter.
Some agree to build schools and pave roads, but even when investors
live up to their promises, the benefits to the host governments and local
farmers are often short-lived. In the long term, however, they must
suffer the consequences of over-fertilizing, deforestation, over-
consumption of water, reduction of ecological diversity and the loss of
local species. To boost harvests and achieve annual returns of 20
percent or more, the foreign large landowners must operate their farms
on an industrial scale. And when the soil becomes depleted after a few
years, many investors simply move on. Land is so cheap that they are
not forced to value sustainable farming practices.
Rejecting the Old Model
Because of these risks Audinet and De Schutter, like most experts,
favor contract farming instead of land acquisition. In other words, the
foreign investors provide the technology and capital, while the local
farmers own or lease the land and supply rice or wheat at fixed prices.
This is the classic, tried-and-tested model, but it is not what the new
investors want. They want control, ownership, high returns and, most
of all, security -- objectives rarely compatible with the interests of
thousands of small farmers.
Senegal has decided in favor of contract farming and against large-scale
land sales, but it happens to be a stable democracy. This cannot be said
of many of the countries where land acquisition is taking place.
"When food becomes scarce, the investor needs a weak state that does
not force him to abide by any rules," says Philippe Heilberg, an
American businessman. A state that permits grain exports despite
famines at home, that is consumed by corruption or deeply in debt,
ruled by a dictatorship, racked by civil war, or sends millions of
workers abroad and is dependent on these workers receiving visas and
jobs.
Heilberg has found such a nation: South Sudan, which is in fact a pre-
nation, autonomous but not independent. The 44-year-old American,
son of a coffee merchant and the founder of the investment firm Jarch
Capital, is now the largest land leaseholder in South Sudan, where he
leases 400,000 hectares of prime farmland in Mayom County.
The mere mention of the words South Sudan conjures up images of
civil war, refugees and famine, not of a place where one would
consider growing tomatoes. But Heilberg raves that his project will be
more beneficial to people than the UN, and that he will create jobs and
produce food. And he is adamant that Paulino Matip, from whom he
has leased the land for 50 years, not be referred to as a warlord, but as
a "former warlord" or "deputy army chief." Heilberg neglects to mention
that the rebels led by Matip are suspected of having committed war
crimes.
Instead of buying stocks, the former banker is now speculating on the
political future of South Sudan, which he insists will be an independent
country in 10 years, at which point land will be far more expensive than
it is today.
Land acquisition is already a step further along in western Kenya, home
to Erastas Dildo, 33, the kind of person the New York investors would
probably characterize as a risk factor: a small farmer who owns three
hectares of land. It is fertile land, where the corn turns bright green and
grows two meters (6.5 feet) tall, where the cattle are as fat as hippos
and the tomato plants bend under the weight of their tomatoes. The
nearby Yala River flows into Lake Victoria. There are three small brick
houses on the property. Erastas harvests his corn twice a year, and
vegetables and tomatoes grow year-round. One hectare produces
€3,600 worth of corn a year, a lot of money by Kenyan standards.
'They Drove Out 400 Families'
But things changed when Erastas was contacted by Dominion Farms, a
US agricultural producer that established a colony in the Yala delta,
where it has leased 3,600 hectares of land for 45 years, at the ludicrous
rate of €12,000 a year. Dominion, which plans to grow rice, vegetables
and corn on the land, wants to include Erastas Dildo's three hectares in
its venture.
The Dominion representatives offered to pay him about 10 cents per
square meter. Erastas turned them down, and now they are making life
difficult for the farmer. Their most effective weapon is a dam they have
built. When Erastas tried to harvest his corn last year, it was under
water. "They are playing with the water level to get rid of us," he says.
And when that doesn't work, says Erastas, Dominion sends in
bulldozers, thugs and sometimes even the police.
Under its contract, Dominion has agreed to renovate "at least one school
and one medical facility" in each of the two local districts. "They drove
out 400 families instead," says Gondi Olima of the organization Friends
of the Yala Swamp. According to Olima, at first the Dominion venture
created new jobs, as day laborers were hired to clear the site with
machetes, but then the company brought in more and more equipment.
"Now they have so many machines that workers are no longer needed,"
says Olima.
Dominion Farms denies the farmers' accusations and points out that it
has already built eight classrooms, donated gateposts and awarded
educational scholarships to 16 children, as well as providing beds and
electricity for a hospital ward.
Perhaps Erastas and his family will be forced to make way for the
development soon, as is already happening in many other places. The
World Bank estimates that only 2 to 10 percent of the land in Africa is
formally owned or leased, and most of that is in cities. A family may
have lived on or occupied a piece of land for decades, but it often has
no proof of ownership.
Hunt for Land Continues
Nevertheless, the land is almost never left unused. The poor, in
particular, live off the land, where they collect fruits, herbs or firewood
and graze their livestock. According to a joint study by several UN
organizations, land grabs are often justified by defining the land as
"fallow." As a result, according to the report, land grabs have the
potential to dispossess farmers on a large scale. In many countries,
there may be enough arable land available for everyone, but the quality
is not uniform -- and the investors want the best land. That, as it
happens, is the land where farmers usually live.
Because more than 50 percent of Africans are small farmers, large-scale
land acquisition could be disastrous for the population. Those who lose
their fields lose everything. The fact that the large investors can
substantially improve harvests with their modern agricultural technology
is of little use to Africans who, once they have lost their land and
livelihoods, cannot afford to buy the new farms' products.
The World Bank and others are now developing a code of conduct for
investors. A declaration of intent had been planned for the July G-8
summit in L'Aquila, Italy, but the heads of state in attendance could not
agree on binding standards.
And so the hunt for land continues. Dominion has secured another
3,200 hectares, and Philippe Heilberg is in the process of leasing an
additional 600,000 hectares in South Sudan. Back in New York, in the
Stuyvesant Room, one of the speakers is reciting numbers to illustrate
how fast the global population is growing: By 154 people per minute,
9,240 per hour or 221,760 per day. And each one of them wants to eat.
Translated from the German by Christopher Sultan
| All rights reserved. |
| Ethio Quest News Together We Can Make It! |
Obama Must Reverse Bush-Era
African Policy
2 April 2009 ( EQN ) -
The United States
Militarized its policy
towards Africa,
defended
unpopular and undemocratic regimes and undermined
United Nations peacekeeping missions on the
continent under the Bush administration, says the
Africa-centered More
African Policy
2 April 2009 ( EQN ) -
The United States
Militarized its policy
towards Africa,
defended
unpopular and undemocratic regimes and undermined
United Nations peacekeeping missions on the
continent under the Bush administration, says the
Africa-centered More
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