International Institute for Justice and Development


African Land ‘Grabs’ and the Growing International Food Crisis

Posted on May 17, 2016 | Tags: News

By: By Zareen Iqbal

If you’ve been job searching in the international development field recently, you’ve likely come across a plethora of somewhat cryptic vacancy announcements posted by the ‘International Finance Corporation’ or IFC, the private sector arm of the World Bank. The IFC claims that its objective is to ‘foster sustainable economic growth in developing countries,’ by financing private sector investment, mobilizing capital in the international financial markets and providing advisory services to businesses and governments. The expansion of the IFC’s work reflects a growing trend in private sector investment throughout the developing world, particularly in Africa, where private company interest in controlling and cultivating large areas of agricultural land has increased exponentially. The purchase of agricultural land by various international companies, including large hedge funds, has led to the disenfranchisement and displacement of hundreds of villages and thousands of small farmers and their families—who have been forced by their governments to relinquish their farmlands to these corporations and work these new industrial farms, in return for essentially nothing. In addition to the creation of a new kind of ‘serfdom’ within Africa, these large agricultural land grabs by private international corporations have elicited serious concern regarding the control of the world’s future food supply, for the control of global food markets by private profiteers and corrupt political officials is certain to create insecurity in the global food system, particularly for the poor.  

 

National Food Security within a Globalized World

A country’s ability to produce its own food is considered a strong measure of a nation’s food security. It is widely believed that if a nation is reliant upon other countries to meet its staple food demands, it is vulnerable to various external threats. Consider the effect of global monopolistic oil forces upon local oil prices. The monopolistic control of the world’s oil supply has often led to production and price manipulation (sometimes as a political tool)—exploited by speculators and oil companies, which reap huge profits while local populations’ livelihoods suffer. Since 2008, increases in global fuel prices have resulted in unsustainably high food prices, leading to the deterioration of millions of peoples’ livelihoods and subsequently widespread protests and riots, particularly across Africa.

The dependency on foreign countries for vital resources is increasingly viewed as a major risk to national security. The recognition of this fact, as well as the fact that global population numbers continue to rise, has prompted governments to enact policies, some of which harmful, to protect and expand agricultural resources to ensure national food security. For instance, in South Korea, government fears over food security have led to the implementation of import barriers and government subsidies, especially of rice, a staple food. The government’s intent is to increase domestic production of rice so that there will be sufficient stock. Although the government has succeeded in expanding domestic production and supply, because of heavy state production support and trade restrictions, the price of rice in South Korea is well above the international average. Similar agricultural policies implemented by the US government have also led to a heavily subsidized farming industry within the US, resulting in a huge tax burden for US citizens, agricultural overproduction, major barriers to trade, inflated land prices and a general lack of innovation.

Other countries have utilized other means to ensure adequate domestic food supply, particularly in wake of more frequent natural disasters and occurrences of drought. After wildfires ravaged huge agricultural tracts throughout Russia during an already low production season, the Russian government halted all wheat exports to ensure sufficient domestic stock; this led to further increases in global food prices, as Russia is the world’s fourth largest exporter of wheat. Other states have sought to expand control of overseas agricultural resources in order to meet national food demands: a practice that has increased, as states have come to realize the growing competition they face from agribusiness firms and hedge funds—especially in Africa, where governments are all too willing lease massive tracts of uncultivated land for minimal returns.  Although investment in land resources is not a new phenomenon, critics argue that such investments are no longer about seeking out a comparative advantage in global markets but rather about providing food and energy for wealthier countries by using the land and water resources of the world’s poorest populations.

 

 

The Foreign Pursuit of African Land

‘Land grabs’ as they have come to be called are occurring throughout the developing world, with increasing frequency and size; land leases have ranged anywhere from 10,000 to 500,000 hectares. The largest of these deals continue to occur in sub-Saharan Africa, where corrupt, illegitimate, and incompetent governments; weak land rights and the availability of undeveloped agricultural land is prevalent. It has been estimated that 18 out of the 33 to 40 countries leasing lands for foreign direct investment are in Sub-Saharan Africa, and two-thirds of the global land under lease for biofuel and food production are in Sub-Saharan Africa. Those countries with the most widespread investment in Africa are China, India, Saudi Arabia, as well as several other largely populated nations with insufficient or depleting agricultural land (UK, Bangladesh, South Korea and Qatar).

In what is probably one of the largest deals thus far, in 2010, India-based Karuturi Global, the world’s largest flower producer, secured the lease of a 1,200 square mile tract of land (the size of Rhode Island) in Ethiopia to enhance its flower production. In the area of Gambella, a Northern province close to the Sudan border, Karaturi (which also deals in produce) leased another large land tract that will begin producing palm oil, sugar and rice for export by next year. Gambella has provided investors 1.1 million hectares, nearly a quarter of its best farmland, and 896 companies have come to the region in the last three years. They range from major Indian agribusiness companies, who have acquired up to 300,000 hectares, to Saudi billionaire Al Amoudi, who is constructing a 20-mile canal to irrigate 10,000 hectares to grow rice, to Ethiopian businessmen, who have plots of less than 200 hectares.

Bangladesh’s government recently helped secure major land leases in Uganda, Tanzania and Gambia for two Bangladeshi agribusiness companies: the Nitol-Niloy Group and Bhati Bangla Agrotec. The deals would allow the companies to lease large currently uncultivated farmlands at a minimal cost, with the majority of produce exported back to Bangladesh to feed its growing population. Although Uganda’s Agricultural Ministry denied that any such land deal was in place, the Tanzanian government’s deal with Bhati Bangla Agrotec for now remains set to go ahead. Under the deal, Bhati Bangla will lease over 30,000 hectares of land, with 10% of the profit going to the Tanzanian government, and 60% of produce exported to Bangladesh. The deal also supposedly entails Bhati Bangla employing and training local Tanzanian farmers; however, it has been reported widely that Bhati Bangla, as well as other firms, will actually bring over Bangladeshi farmers to work the land. The firms will pay each farmer a monthly salary and provide free accommodation and food.

The effects of such massive cultivation are wide-ranging. Industrial agricultural production requires the clearing of hundreds of square miles of forest, which will likely do irreversible damage to the environment, wildlife, as well as to the populations of people that depend upon these local resources for survival. In addition, industrial agriculture tends to use large amounts of fresh water and depletes the soil of nutrients at unsustainable rates. This means that these massive areas of agricultural land will undergo serious degradation as a result of this industrial cultivation. Agricultural land degradation is already a major problem in many developed countries. The UN reports that over two-thirds of the world’s agricultural land already suffers degradation, which is another significant reason for agribusinesses’ and governments’ growing pursuit of overseas resources.

 

Livelihoods Threatened, Populations in Peril

“When I look around, everyone here [in the local community] is a potential criminal…” stated Peter DeClark, Emvest Matuba’s Farm Manager, when expressing the company’s position on local workers during an investor on-site tour. EmVest Asset Management is a South African-based investment firm that maintains investments in five developing countries—Zambia, Zimbabwe, Mozambique, Swaziland and South Africa—and recently acquired 2,000 hectares of farmland in Matuba, Mozambique for a period of 50 years. As part of the land deal, which required local villagers to relinquish a large part of their land, Emvest promised significant job creation and a general improvement in local livelihoods. In fact, the promise of increased employment, as well as infrastructure development, is a primary reason for African governments’ leasing of land.

In the case of EmVest, very little job creation in Matuba has been achieved. The local Matuba chief— when interviewed by The Oakland Institute, a non-profit which recently completed a comprehensive investigation into private sector development in Africa—stated that local villagers had been more able to feed their families when they were able to farm their own plots of land than when working for EmVest. As for infrastructure, though it boasts a strong relationship with the local community through the provision of medical facilities, schools and boreholes, EmVest has only built two boreholes for the villagers thus far, and this was only after the villagers complained that the company’s operations had cut off their cattle’s access to drinking water.

In Sierra Leone, local villagers who had agreed to lease land (believing they would be adequately compensated) to Swiss-based firm Addax, have also had their livelihoods diminished by agricultural operations. Their local MP Martin Bangura had promised that the deal would not affect the community’s rice-growing areas, referred to as the ‘bolilands.’ However, in late 2010, the bolilands were drained by Addax to begin sugarcane production. In addition, Addax had promised to employ thousands of local villagers on its farms; however only fifty locals have been given work, and at a mere $2.50/day. The international poverty line, established ironically by the World Bank, is $1.25 per person per day. That amount is the bare minimum needed for a person to survive, to live without suffering. At just $2.50/day, how can a farmer or laborer afford to feed his entire family? It is impossible; that amount barely covers the cost of two individuals’ daily food.

The way in which these land deals have been acquired have also been heavily criticized, as investigations have shown that some companies were able to obtain land rights by bribing local chiefs with something as small as a bottle of fine whiskey. In South Sudan, the US-based Nile Trading and Development (NTD) Company attained a lease through an agreement with the ‘Mukaya Payam Cooperative.’ However, Sudan’s Agency for Independent Media (AIM) revealed the cooperative to be fictitious, made up of a group of influential natives from Mukaya Payam and surrounding areas. AIM found that the local communities were mostly ignorant of the deal and the fact that their land had been traded away for a 40% profit share that would go directly to this so-called ‘cooperative’. Uneducated, illiterate and generally trusting of their local officials, many rural villagers have been easily exploited by their governments. Other companies have boasted how little they paid for the lease and how lands were practically being giving away by African governments desperate for foreign companies with the capacity to industrialize their countries’ agricultural industries.

One of the most serious consequences for many local populations, whose land has been leased out to foreign governments and companies, is forced displacement. Thousands of people across Africa have been given no choice but to move from their homes to make way for large farms. In Tanzania, a land deal with Agrisol Energy is forcing the removal of long-settled Burundian refugees from their land and well-established communities in Katumba and Mishamo. In 2008, the Tanzanian government had announced a plan to grant citizenship to the refugees in 2010. However, recent reports indicate that their citizenship has now become contingent upon their relocation to other areas. Interviews with former refugees revealed that their legal status and certificates of citizenship were being withheld until they relocated. In Gambella, Ethiopia, over 15,000 people have been forced to move from their homelands with the promise from their government of better social services. Although the government claims the move is voluntary and completely unrelated to the Karaturi land deal, a recent investigation by the UK’s Guardian uncovered evidence that villagers had no choice in the matter and that promises of better health and education services remain unfulfilled. Many villagers were too afraid to speak on camera, citing fears of government reprisal.

 

Conclusion

The world cannot sustain its growing population without increasing global food and water supplies and networks. The current total global trade in grain and grain equivalent is just 200 million tons and that amount is decreasing as exporting countries’ populations increase and must consume more of their own food products. Our need for food, fuel and water is insatiable; shortages of these commodities have already led to conflict, violent protests and riots and the destruction of livelihoods. The solution for many developed and wealthier developing countries is to seek out greater resources beyond their own shores, oftentimes, rather ironically, in countries that cannot afford to produce sufficient food to feed their own populations (Ethiopia, Uganda, Kenya, etc). The availability of large farmlands and the potential for industrialized agriculture across Africa is undisputed. However, it is deeply concerning that African governments have outsourced significant control of these lands, with very small returns for local populations, as the majority of the agriculture and biofuel produced will be exported.

The World Bank (and the IFC), instead of protecting the livelihoods of the most vulnerable, is acting more like a broker for large international agribusinesses and corrupt governments, working to reform African land laws and fiscal regimes to make them more attractive to foreign investment. This leaves the world’s humanitarian community, major NGOs, foundations and some governments, scrambling to empower poor farmers through the formation of more powerful cooperatives, the development of market access roads, the protection of land rights and the provision of capital and inputs. Unfortunately, these efforts cannot come quick enough, and now the same actors—the speculators, bankers and unregulated investors—who all had a hand in inflating food prices and almost destroying the global economy, have managed to consolidate their control of global food production and land to profit from the very crises they provoked. 

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References

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