Via Craccum, a report on global land acquisitions:
“…In June this year Africa’s youngest president finally agreed to hold elections. Democracy, it appears, is returning to Madagascar after 35-year-old Andry Rajoelina assumed power in a coup d’état in March 2009 with the assistance of the national army. However the African Union remains cautious and Madagascar has been isolated as a poor investment destination. The reason for this is clear: unlike other recent coups in Honduras and Haiti that have legitimated the infiltration of foreign capital, Rajoelina, Mayor of the nation’s capital Antananarivo, was motivated by a call for national liberation from the autocratic regime of former-President Marc Ravalomanana.
Indeed, the call couldn’t have been much clearer. Just months before in November 2008, Ravalomanana’s administration and South Korean conglomerate Daewoo Logistics announced the agreement of a 99-year lease of 3.2 million acres of Madagascar’s farmland (approximately 40% of the nation’s total landmass) for corn and palm oil cultivation. The produce was intended for offshore consumption, and profits from the operation would be quickly whisked back home. The day after assuming power the former DJ Rajoelina cancelled the deal.
While Madagascar has abandoned its contract (along with Mozambique, and both at the cost of their foreign aid), it has been the exception that proves the rule. Throughout much of the developing world where huge areas of agricultural land remains relatively unproductive, land can be bought for as little as a few US dollars per hectare. This is no exaggeration – many host governments are so interested in attracting investment they are willing put up much of the initial investment. One reporter described being offered land at $2.91 a hectare with a return of 15-20 percent. Investors are truly lapping it up. The combination of growing global hunger in both developing and developed countries and huge accumulations of capital by financial firms in wake of the global financial crisis has led to a tsunami of large-scale farmland acquisitions from both corporations and governments.
Agriculture has always been the cutting edge of the colonial endeavour, and the post-colonial era has been no different. Since the 1950s, industrial agriculture’s march through the developing world has produced huge profits for a handful of agrochemical input and seed companies. Now, due to the striking profits to be gained from targeting unmechanized farmland the speculative value of land has skyrocketed, making it more difficult for those in the global South to access land for food cultivation and causing food prices to rise. More than mere investment, this is wholesale purchase on an unprecedented scale, a true recolonisation. And, at every step of the way assistance has been provided from the World Bank, the world’s principle development agency.
Broadly speaking, industrial agriculture replaces human input in food production with fossil fuels. Its massive efficiency is outweighed by the fact that most of those consumers who should benefit from it lack the capital to purchase its rewards. Intensifying conflict, diminished net food security, increasing unemployment, soil deterioration from the use of fossil fuel-based fertilizers and pesticides (not to mention a significant contribution to global climate change and peak oil), the depletion of local waterways, loss of biodiversity and growing urbanization are regular consequences of industrial agriculture’s spread; as if the current dire state of class relations embedded in the global food system weren’t already bad enough, the global land-grab scenario promises to exacerbate them, taking production out of the hands of the hungry and produce out of their mouths.
In this vein, expectations were high on 26 April 2010 at the World Bank’s annual global land conference in Washington DC, anticipating the long-awaited release of its report on global land-grabbing, The Global Land Rush: Can it yield sustainable and equitable benefits? The Bank failed to deliver their Report, instead treating the audience to a facile PowerPoint summary of the Bank’s principles for “socially responsible” land-grabbing. The British investor rag The Financial Times has managed to obtain a leaked copy of the Bank’s draft, publishing their conclusions on 29 July 2010. The FT quotes:
“Investor interest is focused on countries with weak land governance,” the draft said. Although deals promised jobs and infrastructure, “investors failed to follow through on their investments plans, in some cases after inflicting serious damage on the local resource base”.
In addition, “the level of formal payments required was low”, making speculation a key motive for purchases. “Payments for land are often waived … and large investors often pay lower taxes than smallholders … or none at all.”
The FT concludes:
The draft highlighted a few successes in land acquisition – mostly in Latin America and also in Tanzania – but the overall picture it gave was one of exploitation, warning that investors either lacked the necessary expertise to cultivate land or were more interested in speculative gains than in using land productively.
The report is now slated for a mid-August release. Heretical former World Bank economist (and author of the comprehensive study of the global food economy Stuffed and Starved) Raj Patel puts the Bank’s failure to deliver down to the gargantuan struggle involved with massaging the facts into an acceptable set of conclusions. Given the nature of the their audience, this is unsurprising, and the report’s concept note from February 2009 says it all as the Bank aims to,
“…provide guidance to Bank clients (in government and the private sector) and partners who may be faced with or interested in large scale land acquisitions so as to enable them to maximize the long-term benefits from such investments.”
The Report has already been heavily pared-down after researchers experienced pronounced non-cooperation from governments and corporations alike. Rather than the proposed in-depth study of the acquisition process in 30 countries, the Bank is expected to publish a study based on 389 projects in 80 countries collated from available information. The Report will mostly cover food crops (37%) and biofuels (35%). Land-rich Africa is the prime target, principally Sudan, Ghana and Madagascar, however Asia and the Pacific (Indonesia and the Philippines), Latin America (Brazil, Argentina and Paraguay) and Eastern Europe are all being eyed by states and private sector entities alike. The factors enticing capital are land availability, low mechanization (where productivity gains can be quickly gained) and weak land governance. The Report’s overwhelming conclusion is the failure of these acquisitions to provide benefits to local communities – environmental impact assessments are rarely carried out and inhabitants are routinely ejected without consultation or compensation.The October 2008 Report Seized! The 2008 land grab for food and financial security from the organisation GRAIN sheds further light on the issue, situating it amidst global food and financial crises, where axes of food security and profit converge. For countries (notably Asian and Gulf states), land acquisition is a long-term strategy to feed their populations, and often to the detriment of starving host populations. These governments demonstrate a clear loss of faith in global food markets, after waves of vertical integration within agricultural industries have concentrated power into just a handful of mega-corporations. Despite its remarkable self-sufficiency in food, China has invested widely to mitigate the loss of its agricultural land and water to its growing industrial base. Food now ranks alongside energy and mineral resources in Chinese national importance. Gulf states badly affected by the world food crisis of ‘07-‘09 due to their lack of arable land and irrigation have followed a similar strategy. The Gulf Cooperation Council has purchased large tracts of land in other Islamic countries, principally Sudan and Pakistan, providing loans and hydrocarbon reserves. Japan, South Korea and India have also joined the game, with diplomats surveying the globe for opportunities. While many Third World governments welcome the influx of capital, “…behind the rhetoric of win-win deals the real aim of these contracts is not agricultural development, much less rural development, but simply agribusiness development. Perhaps only when that is understood do the contradictions underlying this land grab momentum make sense.”
For finance and food industries, land acquisitions are a way to capitalise on high food prices and low land prices. While Japanese and Arab food industries have rode shotgun with national investment, an army of investment houses, private equity funds and hedge funds, with the help of the World Bank, have been buying up massive tracts of farmland. Land prices are now rising as the speculative bubble expands, making land ownership and subsistence farming increasingly impossible for the poor. Many countries, such as Kazakhstan and China, have altered land ownership laws to facilitate the transfers, undermining existing cultural relationships with the land in favour of relationship mediated by capital. Some notable large purchases included the transfer of 400,000 ha in Sudan to US-based Jarch Capital and 300,000 ha in Ukrainian farmland to Russian Rennaissance Capital. Other firms involved include recently bailed out giants Goldman Sachs and Morgan Stanley, as well as the NY-based money kings BlackRock Inc (BP’s largest shareholder). The GRAIN Report argues that, “…foreign private corporations [are] getting new forms of control over farmland to produce food not for the local communities but for someone else. Did someone say colonialism was a thing of the past?”
The scale of these arrangements is vast and their cultural impact should not be underestimated. The relationship embedded within food production is among human’s most fundamental expressions, constituting the root of all human cultural systems. 2008 sketched in graphic detail the nature of this relationship, when the food crisis entered its peak at the same time as the largest wheat crop ever in mankind’s history. Capital-intensive agriculture’s efficiency relies on large tracts of land and heavy energy inputs, demanding the alignment of land, capital and energy. Increasingly, financial instrumentation is required to ensure they come together at the same time. The agricultural model promoted by financial entities is one of maximizing growth, both in terms of food production and high short-term profit, and the World Bank has played a key role in ensuring this growth is achieved.
A 2010 report from the Oakland Institute analyses the role of World Bank agencies in promoting land grabs in the developing world. Through its International Financial Corporation (IFC), land-grabbing is facilitated by the provision access to finance, improved business environments, corporate advice regarding business capability and environmental and social sustainability. It also provides advice on improving infrastructure and basic services. Through its Foreign Investment Advisory Service (FIAS) the Bank addresses regulatory simplification and investment generation. Both agencies intend to encourage and facilitate direct investment, limiting the input of local communities into how the land should be harvested.
The report concludes:
“Technical Assistance and Advisory Services only serve to promote IFC and FIAS’s own agendas through the restructuring of laws and policies to fit an exceedingly investor-friendly approach to economic development. In the end, this is highly beneficial to the First World investors and perhaps to the governments of host countries, but local populations will suffer. FDI is not a magic bullet for development and certainly does not solve the imminent problems of poverty, hunger, and need for land reform. By promoting investor access to land instead of prioritizing these basic human rights, IFC fails in its mission.”
Given this damning summation, it is little wonder the Bank continues to delay the release of the Report. Land grabbing is fast becoming a central issue to the global South, as more and more farmers are losing access to their land and access to food. The World Bank is clearly uninterested in promoting Third World development, a contention evidenced by the Bank’s historical behaviour, especially after the 1970s when it began its destructive “structural adjustment” regime. Their involvement in facilitating the land grab intensifies the servitude of the global south, rendering certain developed countries “food secure” while agricultural and finance firms rich in the process. As always, the words of Henry David Thoreau remain prescient:
“If I knew for a certainly that a man was coming to my house with the conscious design of doing me good, I should run for my life … for fear that I should get some of his good done to me…”
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