Nairobi, Kenya and New Delhi, India – More than a century ago Mark Twain encouraged people to, “Buy land, they’re not making it anymore.”
Today, nations, companies and financiers are taking his advice and investing in huge tracts of land in what critics call a neo-colonial “Scramble for Africa” led by Gulf states and Indian companies.
Seventy percent of the global farmland expansion is happening in one of the hungriest parts of the world, sub-Saharan Africa, according to a new World Bank study. The expansion in countries like Ethiopia, Mozambique and Sudan, is driven by foreign states and corporations.
The big leap came after the food price rises of 2007 and 2008, which sparked riots in capital cities around the world when staples like rice, wheat and sugar became unaffordable almost overnight. Global farmland expanded by nearly 10 million acres in 2008 and by 111 million acres the following year, according to the World Bank.
High food prices continue to worry the United Nations Food and Agriculture Organization, which last month convened a special meeting in Rome to explore ways of stabilizing the jittery market.
Natural disasters have been at least partly to blame for the most recent price hikes. A drought and wildfires in Russia this summer caused Moscow to ban exports of wheat, while flooding in Pakistan and China have also dented global food production.
Last month, riots over food prices erupted in Mozambique — a possible taste of things to come.
On the face of it more farming appears to be a good thing: more land under agricultural cultivation in Africa surely means more food production for the continent’s rapidly growing and hungry population. The reality, however, is very different, according to Henk Hobbelink, an agronomist and co-founder of the research and advocacy organization GRAIN.
“These big investment projects are being set up to produce food or biofuels for the export market and they use industrial agriculture,” Hobbelink told GlobalPost. “So we are talking uniform crops, pesticides, big amounts of water.
“This is not the way to produce food, especially in Africa, because it’s high risk, it’s polluting, it’s destroying biodiversity. It offers more problems than solutions,” said Hobbelink.
Ethiopia – a country more than any other associated with famine since the 1984 images of the rake-thin starving were beamed into living rooms around the world – has signed over 2.9 million acres of land to mostly foreign investors in recent years and hopes to lease 7.4 million by 2013.
“Shouldn’t they first be worrying about their own population?” asks Hobbelink.
Ethiopia is not alone: Liberia has leased or sold 3.9 million acres, Mozambique 6.6 million and Sudan 9.8 million according to World Bank figures for 2004 through 2008.
The deals, government officials argue, bring cash into treasuries and help achieve the dream of an industrialized agricultural economy. Officials say the leased land is unused, a claim some dispute.
“Territory is being handed over to foreign countries without consulting the indigenous populations,” said Nyikaw Ochalla, an exiled activist with the Anyaa Survival Organization, which fights for the rights of the people of Gambela, a fertile region in the far west of Ethiopia.
“The food production is not for local consumption but export,” he told GlobalPost from London where he has lived since 1999. “The local population will be left destitute on their own land.”
Typical of the kinds of deals that worry Ochalla is one that saw Addis Ababa sign over 740,000 acres of land to Karuturi Global, India’s largest exporter of roses, to grow cereals and vegetables.
Ethiopia’s government owns all the land in the country and offered Karuturi a six-year rent holiday, after which the company will pay just over $2.50 per acre.
Indian firms have been driven to invest in land in Africa because of the difficulties of acquiring large acreage in India, the prospect of cheap labor and economic incentives from the Indian government, said Anand Seth, deputy director general of the Federation of Indian Export Organizations.
A duty-free tariff preference scheme, for example, means that Ethiopian farm produce entering the Indian market is taxed less. “If somebody invests in North India, he may not get those tax benefits,” Seth said.
Karuturi is just one of some 80 companies the Indian government has helped invest in agricultural land in Ethiopia. Others include Ruchi Soya which has leased 61,000 acres to grow soya beans, maize and lentils, and Shapoorji Pallonji & Co. leasing 123,000 acres to grow oil seeds and biofuels.
Karuturi boss Sai Ramakrishna Karuturi has argued that fears of “neo-colonialism” raised by activists such as Ochalla are misplaced.
It is not just community organizers and activists who are concerned by this emerging trend. In its report the World Bank notes, “investor interest is focused on countries with weak governance,” encouraging the perception that foreign companies and unscrupulous African leaders are striking deals that do not benefit citizens.
There is perhaps no clearer example of the danger these deals can pose if done badly than Madagascar, where South Korea’s Daewoo Logistics attempted to lease 3 million acres for 99 years, roughly half the island nation’s arable land, to grow corn and palm oil for export. Dismay at the 2008 deal helped spark a revolt that overthrew the government in Antananarivo.
Deals with foreign companies seeking to grow food for export in Africa are high-profile but Hobbelink warns that other, quieter arrangements are just as worrying.
“There is a bigger trend where the finance industry has become interested in land,” he said.
“It is a commodity which you can speculate on, selling for a higher price in five or 10 years time,” he said. Hobbelink warns that with the amount of arable land finite the combined pressure of climate change and dwindling water resources means it is a trend that will not go away.