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Earthly powers

Land acquisitions by multinational corporations are on the increase, but what effects do these lucrative deals have on local populations and global supply chains and should they be more closely monitored? By Emma Holmqvist


Old-style colonialism may have withered on the vine after the British and French wound down their respective empires in the 1950’s and 60’s, but colonialism itself – aided and abetted by globalisation – never truly went away. Nowadays, there’s an updated template with Africa once again finding itself in the firing line.

It’s called ‘land grabbing’, or, as some would prefer to describe it, “investing in a smaller country to help it sustain growth.” Whatever description one chooses to use, large-scale acquisitions and the leasing of land in developing countries by outside parties has continued apace in recent years.

The game changer was the world food price crisis of 2007-2008, which resulted in an influx of companies from strong economies that saw the advantage and necessity of buying up foreign (often African) land as a means of boosting their own food production. From a socioeconomic standpoint it’s not difficult to see why the siren call of the so-called ‘land grab’ has gained resonance. This is largely because global food production, according to some estimates, will need to increase 70 percent by 2050 in order to feed the expected nine billion mouths on the planet at that time.

With the cultivation of under-utilised land seen as one solution to the problem it should come as no great surprise that agricultural businesses from food-importing countries have flooded into regions such as Africa to set up farms in a desperate bid to increase their supplies and protect themselves from price volatility in an era of possible climate change.

Who is the typical land grabber?
While transactions can take place between domestic outfits and governments of the target country, foreign investors fit the most common profile. Clients may vary, and would-be land buyers can be anything from transnational companies and governmental bodies, such as sovereign wealth funds, through to individuals and universities. Also active have been private equity funds and pension funds.

But in a major report published in January 2012, the International Land Coalition (ILC), found more evidence of harm than good for developing countries. The ‘Global Commercial Pressures on Land Research Project’ – incorporating a total of 27 case studies, thematic studies and regional overviews – included the latest data from the extensive and ongoing Land Matrix project.

Begun as a collaborative effort by a number of organisations back in 2009, the Land Matrix project monitors large-scale land transactions and (for purposes of the ILC report ) covers land deals from 2000-2010. Those deals, amounting to 203 million hectares of land in total, equate to a vast area that is comparable to the size of North West Europe.

The ILC meanwhile is a global alliance of civil society and intergovernmental organisations working together to promote secure and equitable access to (and control over) land for the rural poor. Since its founding in 1995, it has grown to encompass 81 organisations in 40 countries. These include the UN and Bretton-Woods institutions, multilateral organisations, producer and farmer organisations, research institutes, trade unions, NGOs and community-based organisations.

Of the publicly reported deals in the ILC study, 948 land acquisitions totalling 134m hectares (or 66 percent of the global total) are located in Africa, of which 34m hectares have been cross-referenced.

“Cross-referenced” data refer to deals referenced from multiple sources – the cross referencing process involving an assessment of the reliability of the source of the information, triangulation with other information sources – and, if necessary, confirming the numbers with in-country partners in the networks of the Land Matrix partners.

By contrast 43m hectares were sold in Asia (29m hectares cross referenced); while in Latin America 19m hectares were offloaded (6m hectares cross-referenced). The remainder (5.4m hectares reported, 1.6m hectares cross-referenced) were in other regions, notably Eastern Europe and Oceania.

The report notes that this pattern of distribution may reflect the strong media interest in African deals, as much as real-world differences in the volumes of transactions. For example, some food-importing African countries such as Ethiopia that are or were major recipients of food aid have attracted extensive media reporting, while anecdotal evidence suggests there has also been strong acquisitive interest in Australia, New Zealand, and North America.

The report cautions that acquisitions in OECD countries are generally not reflected in the data, as private transactions between one commercial user and another that do not involve a conversion of tenure system or away from smallholder production, are not included in the Land Matrix project.

Crucially, though, the high levels of interest in acquiring land in Africa, for example, appear to be driven by a perception that large tracts of land can be acquired from governments with little or no payment – and for good reason – with most of the world’s rural poor having historically lived with insecure tenure over resources. While traditionally there have been few significant threats regarding continued access to such resources, lack of legal entitlement to them has become increasingly problematical. This has occurred as outside governments and commercial organisations increasingly look for alternative methods of getting food to their own people.

Consequently, rural land users now face the realistic prospect of dispossession in many cases. As the report states, when the term “land grabbing” is used, it follows a formula agreed by ILC members in the Tirana Declaration of May 2011, in which it was defined as acquisitions or concessions that are one or more of the » following: (i) In violation of human rights, particularly the equal rights of women; (ii) not based on free, prior and informed consent of the affected land-users; (iii) not based on a thorough assessment, or are in disregard of social, economic and environmental impacts, including the way they are gendered; (iv) not based on transparent contracts that specify clear and binding commitments about activities, employment and benefits sharing and; (v) not based on effective democratic planning, independent oversight and meaningful participation.

Africa at the core of the land grab
With Africa at the centre of the land grabbing sphere a significant chunk of deals have unsurprisingly already been struck – with Ethiopia, Sudan, Tanzania, Zambia and Sierra Leone featuring prominently.

The Ethiopian government has freely courted foreign investment and its offer has been embraced by a number of countries, including China, Saudi Arabia and India. Dramatic stories surrounding land lease in the country have circulated in the media for some time. In 2010, The BBC reported that the government of Meles Zenawi was pioneering the lease of three million hectares of land; an area the size of Belgium. One local man, speaking on condition of anonymity told BBC reporters at the time: “You cannot speak freely about the land issue now.”

Against this backdrop the Saudis have indicated they are hoping to produce as much as one million tonnes of rice per year, most of which will be used for the domestic market.

Indeed, a deal struck by Sheikh Mohammed al-Amoudi, one of the world’s 50 richest men, attracted particular attention. He is set to invest $2.5bn by 2020 developing a rice-farming project in Ethiopia via his food company, Saudi Star Agricultural Development plc.

To realise his ambitious plan, al-Amoudi has leased 10,000 hectares (24,711 acres) in the country’s western region of Gambella. The contract runs for 60 years at a cost of 158 birr ($9.42) per hectare annually. He is reportedly looking to rent an additional 290,000 hectares from the government.

“There is lots of land in Ethiopia, especially in the lowland areas,” said Haile Assegide, CEO of Saudi Star, in a recent Bloomberg interview.  “So, if you develop this lowland area and help make Ethiopia self-sufficient in food, I see no real problem.”

Abera Deressa, the government minister who in part orchestrated the agricultural development policy opening up land leasing, says foreign investors have been brought in to boost agricultural output by as much as 40 percent. Deressa has however stressed that the rural situation in some parts of Ethiopia has to be updated.

“Pastoralists have enough land for their cattle,” he told the BBC. “But at the end of the day we are not really appreciating pastoralists remaining as they are. We have to improve their livelihood by creating job opportunities.  “Pastoralism, as it is, isn’t sustainable. We want to change the environment.” The goal, according to Deressa, is for investors to bring skills and infrastructure to some of the most neglected regions, as well as helping create thousands of jobs for the rural population.

Long-term risks
While there are benefits to the cultivation of crops on foreign land by international units, critics argue the drawbacks far outweigh any advantages. Local farmers, they stress, lose out as they rent their land at cheap rates to foreign investors. The loss is greater still when taking into consideration that a large percentage of people still rely on food aid.
One of the land grabbing sphere’s most ardent critics is the Oakland Institute. The organisation has published a report based on its findings concerning land deals in Ethiopia, Tanzania, South Sudan, Sierra Leone, Mali and Mozambique. It has warned that hedge funds and other foreign firms have acquired worryingly large swathes of African land, often without offering official contracts. It added that some firms obtained land after deals struck with gullible tribal leaders or corrupt government officials.

“The research exposed investors who said it is easy to make a deal – that they could usually get what they wanted in exchange for giving a poor tribal chief a bottle of Johnnie Walker”, said Anuradha Mittal, executive director of the Oakland Institute in an interview.

“When these investors promise progress and jobs to local chiefs it sounds great, but they don’t deliver,” he added.

Allowing commercial operators to consolidate their hold over global food markets, as well as using land for other export commodities, including biofuels, is creating insecurity in the global food system that could potentially be a much bigger threat than terrorism. Meanwhile, Ethiopia’s Agriculture Ministry announced last year that it plans to relocate 45,000 households – amounting to three quarters of the population of Gambella – by mid-2013.

Posing a further threat, according to environmentalists, is that many of the farms established by foreign investors infringe on Ethiopia’s protected game reserves. In Gambella, for instance, most farms are being ear-marked for rice and sugar production, two of the most water-intensive crops around. And likely to impact local wildlife.

World Bank takes the brickbats
In a 2010 report the World Bank found that of 463 projects covering at least 46.6m hectares it monitored between October 2008 and June 2009; 21 percent of these projects were defined as being ‘in operation’ more than half under ‘initial development’ and nearly 70 percent having been ‘approved’.

Critics were quick to charge that the bank’s data was incomplete as it monitored projects in only 14 countries (as opposed to an original proposed 30) and that it was downplaying the level of commercial activity being undertaken.

Others, such as the Oakland Institute, have consistently argued that the Foreign Investment Advisory Service and the Remove Administrative Barriers to Investment programme, both projects of the International Finance Corporation (IFC), the Bank’s private sector arm, have “been working – often behind the scenes – to ensure that African countries reform their land laws and fiscal regimes to make them attractive to foreign investors.”

The Bank swiftly rebuffed these charges saying the IFC had consistently recommended governments implement systematic land regularisation programmes that recognise all forms of tenure, formal and customary, including those of pastoralists, or others with weak formal rights.
A spokesman added that the bank’s concern is that large-scale agricultural investment “does not disadvantage smallholder farmers who depend on the land for their livelihoods.”

Writing for Al Jazeera in June 2011, Joan Baxter, a research fellow at the Oakland Institute, noted that investment promotion agencies acting on behalf of governments were developing and advertising a veritable ‘smorgasbord of incentives not just to attract foreign investment in farmland but also to ensure maximum profits to investors.’

Baxter added these included extremely generous tax holidays for 10 or even 30 years, zero percent duty on imports, and easy access to very large tracts of land, sometimes over 100,000 hectares. “Investors may pay just a couple of dollars per hectare per year for the land, and in Mali, sometimes no land rent at all,” she said.

Also noting that the Sierra Leone Investment and Export Promotion Agency was openly boasting about the extremely low labour rates and flexible labour laws in the country, as well as privileges it accords investors, such as 100 percent foreign ownership in all sectors and full repatriation of profits, dividends and royalties, Baxter said that such giveaways: “cast doubt on claims by African governments, and others trying to defend the land deals, that this kind of “agricultural investment” will solve unemployment, generate revenue for cash-strapped governments, reduce the dependence on aid, and bring economic development.”

One example was a $400 million deal in 2010 between Sierra Leone and Addax Bioenergy of Switzerland – the country’s biggest ever agricultural investment – to produce sugar for bioethanol. In a briefing note the Oakland Institute noted that Martin Bangura, the Member of Parliament (MP) for the area and member of the ruling party, described himself as the “bridge” between his people and the company.  He promised community members that their rice-growing areas, known as the Bolilands would not be used by Addax and urged people to accept the project. Community members subsequently reported to Oakland Institute that they had trusted their MP only to be misled – the bolilands having been drained in late 2010 to begin sugarcane cultivation

Change in the air
While land grabbing has been a worrying general trend, a comforting shift may be imminent. Following findings that some investors have not utililised leased land appropriately, the Ministry of Agriculture in Ethiopia, at the very least, has said it will re-evaluate the current status of land for investment purposes before allowing any further contacts to be signed.

Additional pressure is being applied by the UN’s Food and Agriculture Organization (FAO), which recently confirmed a new set of UN-backed global guidelines on responsible land use had won international consensus – an achievement reached after three years of debate.

The welcome news will see land grabbing regulations tighten while it will also increase food security. In addition, the package will be pushing for equal rights for women in securing title to land, as well as creating transparent record-keeping systems accessible to the rural poor and protecting traditional land rights.

Prior to the guidelines being officially recognised, a voluntary code of conduct was put into place reflecting concerns that powerful economies such as China and the Gulf Arab states had bought up too much land in Africa and Asia.

The code has been set-up to give investors and developers alike clear guidelines on best practices, while at the sane time  providing civil society land rights groups with benchmarks they can use in their work on behalf of rural communities. The voluntary guidelines will play an important part in answering the challenge of ending hunger and assuring the food security of every child, woman and man in an economically, socially and environmentally sustainable way, according to FAO Director. General Jose Graziano da Silva. However, with much still be gained from land acquisitions,  only time will tell if these measures can instigate a lasting and meaningful legacy.

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