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The Global Farms Race: Land Grabs, Agricultural Investment, and the Scramble for Food Security A primer on the book’s major themes The Global Farms Race.

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Presentation on theme: "The Global Farms Race: Land Grabs, Agricultural Investment, and the Scramble for Food Security A primer on the book’s major themes The Global Farms Race."— Presentation transcript:

1 The Global Farms Race: Land Grabs, Agricultural Investment, and the Scramble for Food Security A primer on the book’s major themes The Global Farms Race is a new Island Press volume edited by Michael Kugelman and Susan L. Levenstein

2 What is the “Land Grab” Phenomenon? “A new phase of the world food crisis” —former IFPRI director *2008: Rising food prices, food riots, and food export bans *Global food crisis exacerbates existing food insecurity fueled by farmland-displacing urbanization, water shortages, and wheat-destroying disease RESULT: Food-importing nations (and profit-seeking private corporations) begin acquiring farmland overseas. They cultivate the land themselves, and export the harvests back home. *Historical precedent exists, but today the scale is much larger and the focus is on core staples, not cash crops

3 The Growing Scale of the Global Farms Race 2009: 15-20 million hectares subject to negotiations or transactions in recent years (IFPRI) 2011: 80 million hectares subject to negotiation since 2001 (ILC); 60 million hectares’ worth of deals announced in 2009 alone (WB) 2012: 230 million hectares sold or leased since 2001—the size of Western Europe (Oxfam)

4 The 100,000-Hectares-and-Above Club: The Largest Land Deals 2011: Mozambique offers concession to Brazil to farm 6 million hectares 2009: Madagascar grants 1.3 million hectares to Daewoo corporation 2011: Indonesia provides 1.2 million hectares to Binladen Group 2008: Philippines signs MOU with Asian firms granting 1.2. million hectares 2009: South Korea completes deal to farm 700,000 hectares in Sudan 2008-2011: American, Indian, Chinese, and Libyan investors have each completed deals of at least 100,000 hectares for farmland in Africa and Latin America [Most common individual plot size in developing world: less than 2 hectares]

5 Key Players Involved Main Targets of Investment are: Africa (especially sub-Saharan Africa), Southeast Asia, Latin America (especially Brazil), Central/Eastern Europe, Former Soviet Union region The developed world too: Australia and New Zealand

6 Key Players Involved On the investor side: *Capital-rich, food-importing nations (Mostly from the Gulf and China; also Japan and South Korea) *Private sector, especially agribusiness (from above countries and from the West; includes financial corporations eg Goldman Sachs and universities eg Harvard) *Not a strictly North-South affair: North Africa is investing in sub-Saharan Africa; Southeast Asian nations are investing in each other’s soils; and various nations targeting Oceania

7 Motivations for Investing Nations and Firms *Food security A way to secure food supplies that avoids dependence on volatile commodities markets *Energy security A key aspect of the biofuels acquisition craze 40 percent of land involved in overseas farmland acquisitions to be set aside for biofuels production (ILC) *Profits Farmland seen as hedge against inflation and portfolio diversifier $14 billion in private capital committed to farmland as of early 2012 (IIED)

8 Motivations for Nations Hosting Investments *Potential for agricultural growth A hope that foreign capital will bring in better agricultural technology, increase local employment, and improve farm yields *Potential for infrastructure Many foreign investors promise to build new roads, bridges, and ports *Money Many governments hosting investments are corrupt and undemocratic, and simply seek to line pockets with revenue

9 The Risks—Part I *Promises of benefits to local communities (new technologies, greater employment, higher farm yields) are not materializing *Power asymmetries (wealthy and influential foreign investors, investment-supporting host governments, and impoverished local communities) increase likelihood of inequitable outcomes. Already, research has uncovered:  Displacement of local communities  Smallholders’ access to sources of water, food, and medicine cut off (“unowned” or “unfarmed” land is still often used by local communities to meet everyday needs)

10 The Risks—Part II *Environmental destruction Farming projects entail use of highly polluting technologies, and raise concerns about deforestation *Conflict Uneasy mix of land, poverty, and foreign intrusion (already cases of armed resistance to land acquisitions in Africa) *Food market crisis Excessive non-market food production may portend shocks for global market supply and consequent price rises

11 Regional Case Studies: Africa Most popular regional target of investment 10 million hectares of acquisitions in four African countries alone in 2004-09 (Ethiopia, Liberia, Mozambique, Sudan) 2007-2010: Nearly 10 percent of landmass of present-day Sudan acquired by foreigners Many African nations ceding their farmland are dependent on World Food Program aid (Ethiopia, Sudan) Nearly half of world’s unfarmed land suitable for farming is in Africa (according to WB)

12 Regional Case Studies: Asia 2 nd most popular regional target Cambodia, Indonesia, Philippines of particular interest to investors Farmland investment in Asia is mostly intra-regional: Asian investors acquiring Asian land (a contrast to Africa, where much of outside investment originates outside the region)

13 Regional Case Studies: Latin America 3 rd most popular regional target Only sub-Saharan Africa contains more available cultivable land Investors attracted to its nutrient-rich soil, adequate water supplies, and livestock-producing capabilities Brazil: $421 million in FDI inflows into agriculture from 2005-2007—3 rd highest volume in world

14 Regional Case Studies: Central and Eastern Europe and Former Soviet Union Early 1990s: Foreigners rush to claim formerly state-owned farms—and this process continues today. Nutrient-rich surface soils of great interest to investors Ukraine, Kazakhstan, Russia particularly attractive Experts on this region: Large-scale land acquisitions here are not as controversial as elsewhere—because investments are long-standing, and opposition is neither well-organized nor visible

15 A Necessary Reality Check… *Implemented investments less than what media have reported; land controlled by foreigners a relatively small percentage of total land in nations hosting investments. Actual farming has commenced with only about 20 percent of announced deals (WB) *Pace of acquisitions slowed between 2008 and 2010 *Investors are notoriously cautious about acquiring farmland (concerns about sensitivities and perceptions of outside encroachment and neocolonialism); they may eventually seek to redirect their capital to other sectors

16 …But Still Major Reasons for Concern Original drivers for large-scale land acquisitions originating in 2008 remain present, and likely will be for long haul:  High commodity prices  Population growth  Dietary changes  Biofuels and food demand  Natural resource constraints  Precious state of arable land

17 Policy Questions 1. Land deals are a reality. How can they be made into win- wins for each side? Normative international approaches (eg implementation of “codes of conduct”) vs. stronger laws in host countries to govern foreign land investments. 2. Are there alternatives to large-scale land acquisitions? Options: Regional food reserves, contract farming, genetically engineered drought-resistant food crops 3. Large-scale land deals have the potential advantage of providing investment to the sagging global agricultural sector. What’s the way to deliver this needed investment?

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