Scramble for land: a continent up for sale

This is the first of two linked posts, by Steve Drury. The second one is HERE.

The global land grab now in progress is being touted by international agencies as the way to improve food security for people in the least developed countries. But the reality is that small farmers are being forced from the land, opportunities to raise small-farm productivity are being squandered, and class divisions deepened. The World Bank, through its private sector arm the International Financial Corporation, encourages private investment in poor countries. It urges governments to “enable” business, by allowing e.g. unrestricted repatriation of produce and profits; freedom from taxation; and minimal land prices or costs of long-term leases. In many cases, host governments “oil the wheels” by chipping away at inhabitants’ land-tenure rights: in practice few farmers at the limits of subsistence have any documented rights.

The rhetoric from the Bank and other international organisations about land sales and leases is a festival of “win-win” homilies. [1] They may as well have quoted Margaret Thatcher, the UK prime minister who forced through neo-conservative economic policies: “There is no alternative.” The International Fund for Agricultural Development, a UN agency, considers that when deals “take into account interests of both parties”, they “help increase agricultural production in developing countries, provide jobs, boost export, and bring in new technologies to improve farm efficiency”. In practice, some deals mean produce and profit flowing freely away from “beneficiary” countries.

The farmer-oriented International Federation of Agricultural Producers, on the other hand, warns of a risk of “second-generation colonialism”.

That “development” has become a cynical con is increasingly clear to people throughout sub-Saharan Africa and South East Asia from their own experience. “Development” in one form or other – from the notorious Unilever Groundnut Scheme of the 1950s[2] to the present territorial frenzy – has always centred on export of produce, and investment of capital to generate profit at rates higher than those where the capital was created.

Half the area of western Europe

According to the Land Matrix, the largest public database on the trade in land, since 2000 more than 58 million hectares of land (580,000 square kilometres) – about half the area of western Europe – has been traded world-wide. Of this, 42% is in Africa, with Ethiopia (4.8 million hectares), Sudan (4 million), Madagascar (3.8 million) and Mozambique (2.3 million) being in the world top ten target countries.

The top ten investor/speculator countries globally, in downward order, are: the USA, Malaysia, UK, India, South Korea, China, United Arab Emirates, Saudi Arabia, Australia and South Africa.

Inflation in world food prices since 2002 has spurred land grabs in particular by Saudi Arabia, the UAE and Qatar – arid desert countries that permanently depend on food imports – in Kenya, Sudan and Pakistan.[3] China, Japan and South Korea, for similar reasons, are big players in land in Mozambique, Madagascar, Sudan,  Tanzania, Mongolia, Indonesia, Argentina … and Zimbabwe. (So much for president Robert Mugabe’s “land-to-the-tiller” policy.)

South Sudan, having gained independence in 2009 from Omar El Bashir’s regime in Khartoum, immediately leased 12,000 square kilometres to US investment fund Jarch Capital. Jarch’s CEO Philippe Heilberg looks to the break-up of existing African states for further speculation: “If you bet right on the shifting of sovereignty, then you are on the ground floor . . . I am constantly looking at the map and looking if there is any value”, he told US media.

But the speculators are not only targeting developing countries. The price of British farmland will rise higher than any other class of real estate in Europe over the next four years, according to Oxford Economics and the research arm of property consultant Savills. UK farmland is projected for a 37% rise in values by 2016, outdoing gold, oil, ten-year British government bonds and homes in London’s most exclusive neighbourhoods. Part of the attraction is higher levels of tax relief for UK farm owners, and part is that markets for crops such as wheat and oilseed are short in supply and high in demand.  The former Soviet Union is targeted too, with British and Swedish interests acquiring 600,000 hectares in Russia and Ukraine.

The crops

Some of the land traded is likely to stay fallow, awaiting a rise in its monetary value, but most land grabbers also aim at fast and fat profits from crops likely to command rising prices. One crop likely to be planted on grabbed land in Africa is jatropha,  a group of shrubby species in the Euphorbia family (spurges). Many of these are generally regarded as toxic weeds, as they spread like wildfire, even in semi-desert soils. The economic attraction is that the seeds of one species (Jatropha curcas, native to Central America) yield oil that is near-ideal for bio-diesel production, especially as several crops are produced each year. The cake that remains after oil extraction, suitably detoxified, is a high-protein animal feed; another by-product from conversion to diesel is glycerol, an ingredient in soaps. Jatropha also has several medicinal and other industrial uses.

Much of the research into growing and processing jatropha has been in India,  whose commercial class are among the biggest land speculators in other countries. In the same way as oil-palm is the crop of choice for industrial farming in cleared tropical rain forest, cereals and corn for the prairies, and soya and cotton for the seasonal savannah of the tropics, jatropha opens up the planet’s semi-arid lands for investment and speculation.

Crops of all kinds once exclusively fed people directly, yet during the first decade of the twenty-first century only 60% of world agricultural produce was directly eaten, while 35% fed intensively reared livestock (30 kg of grain provides 1 kg of beef) and 5% was feedstock for the manufacture of biofuels such as ethanol and biodiesel. That last category is growing fast: biofuels now account for 30% of the total global growth in use of food grains.

The global markets

The background to the unprecedented burst of trading in land is the surge in the prices of “soft” commodities including foodstuffs, which overtook their “hard” equivalents (e.g. metals) on the commodity market floors in 2007.

Commodification of food has driven subsistence farmers into greater poverty during gluts, and forced prices beyond the reach of both the urban and rural poor as yields fall. Famine now has a doubly sharp edge to it, as we have seen repeatedly for 40 years in the Horn of Africa. Vast amounts of easily-stored food grains are stockpiled in major producing countries such as the USA during gluts. When famine strikes grain is dumped on the victims as “food aid”, yielding profit for the hoarders … while the sheer volume drives down local prices in the poor countries that need relief, often for years. This forces small local farmers deeper into poverty. 

“Corning” (or nowadays “soya-ing”) meat and producing biofuels from maize and sugar cane – rationalised as a green solution to global warming – are subject to the same market laws, and further drive the poor and dispossessed into famine. Soya beans are a cheaply produced, highly nutritious vegetable, rich in protein, calories and oils, but the demand for cattle feed maintains its high market price above affordable levels for many in poor countries. While demand grows for biofuels as a “green alternative”, markets demand that the world’s 800 million motorists who want to maintain their mobility will compete for grain and oilseeds with its 2 billion poorest people.

The market laws of capital work efficiently, not only against those at the margin of survival in the poorest countries, but also to pauperise the less unfortunate. Global crises drive down wages, while increasing the costs of sustaining a decent life. In the two years between April 2009 and April 2011 the global market price index of all unprocessed agricultural commodities doubled. Between October 2007 and April 2008 the world price index for rice increased threefold. (See an essential internet information source on prices here.)

The markets for major foodstuffs are a punter’s paradise, now more so than those of metal and hydrocarbon commodities. Food is clearly more essential to people’s survival than diesel, gold, coal or nickel, and so capital will likely increase its focus on agricultural speculation … in the cold jargon of the market, food is demand-inelastic (i.e. demand for food stays much the same irrespective of price). In fact, should a world industrial depression kick in, “cornering” foodstuffs may well become the main game for the wide-boys who control the market floors.  Incidentally, gold is the only historically traded commodity that has maintained a steady trend this century – relentlessly upwards to 6 times its 2000 price – but is being rapidly overtaken by agricultural produce and farmland.

Added to a market focus on foodstuffs would be more speculation in fertiliser and agrochemicals. When most world-market food commodities peaked in 2007-2008, the world prices of potassium chloride and rock phosphate more than quadrupled; these prices fell rapidly with food prices, and then rose again in 2009-2011. Typically, fertiliser commodity prices lag some months behind those of staple grains.

A stock tipster’s item in Forbes magazine in early 2008 – when exchange-traded funds linked to agribusiness and fertiliser markets were rocketing, and other markets were crashing – was highlighted by Tony Weis, a socialist commentator on the global food economy: “In case you’ve missed the fun, these are boom times for farmers, and for companies that sell them the inputs they need to grow crops like corn, wheat and soybeans…”. The “fun” resulted in food riots in 22 countries.

Land and water

The landgrab in much of Africa, and other regions where people’s food security is limited by low or seasonal rainfall, is also speculation in water, either flowing across the surface or beneath the land. (See reports by GRAIN here.) Dams and large-capacity pumped wells aimed at hydropower and irrigation divert surface- and groundwater from small farmers. In the case of large dams, such as the huge Gibe 3 dam on Ethiopia’s Omo River,  local people are displaced from the flooded land. The seemingly never-ending agony of drought in the Horn of Africa takes one of its greatest tolls through the death of livestock, the only saleable assets for many destitute rural people.

The growth of industrial farming, mostly dependent on irrigation, has seen withdrawal of freshwater from rivers and underground reach the staggering annual level of 4000 cubic kilometres, almost twice the volume of Africa’s largest lake, Victoria. From the US Midwest to the plains of northern India, supplies of groundwater are shrinking to the extent that the mass that has been withdrawn affects gravity measurements from space. 

Africa, in particular, has patchy underground water reserves and they are prone to rapid depletion if over-pumped. Irrigation is taking more water from below the surface than rainfall is adding to the underground aquifers (rocks sufficiently porous and permeable to store groundwater). The entire basin of the River Nile is a focus for land speculation with almost 10 million hectares “up for grabs”. Similar intensive irrigation for cash crops in the former USSR has left the Aral Sea a salt-encrusted toxic desert, because almost all the river flow towards it is now diverted to vast tracts of cotton farming from which the water simply evaporates.

The victims

The swine-like rush for land in Africa is likened to the Enclosures of common lands in Europe that began in the Middle Ages, in a new book by science writer Fred Pearce.  He rightly focuses on social consequences, such as those visited on the Luo people of Kenya who live near the great Yala swamp on the shore of Lake Victoria. The Luo at first welcomed Calvin Burgess, a US evangelical who made his millions from running private prisons and invested heavily in their home lands. But they now find themselves cut off from the swamps where they made a living from weaving papyrus baskets and running cattle on the permanent wet grazing land. Burgess, doing “God’s work” in what he considered to be a worthless malarial wasteland, employed Louisiana engineers to drain the swamp, and now grows rice for export. There is some work on Burgess’s Dominion Farm; a few women are employed to weed. As the farm manager explained to Pearce, the women are cheaper than pesticides.

Land speculators are this year looking at a 600 million hectare west-to-east swathe of Africa known as Guinea savannah. Half a billion subsistence farmers in the region are caught between two fires, from the land-grabbers and their “own” exploitative governments.

As well as the sub-Saharan Sahel zone stretching from Guinea to Ethiopia, there are similar lightly wooded plains in the tropics south of the Equator, covering much Angola, Zambia, Malawi, Tanzania and Mozambique. The UN’s Food and Agriculture Organisation (FAO) claims that the Guinea savannah has the potential to turn 25 African nations into global players in bulk commodity production. The only comparable transformation of untouched land to farming is the Cerrado of eastern Brazil, similar to Guinea savannah, which is now dominated by huge estate farms similar to the nineteenth century fazendas that led to intensification of slave labour. The Cerrado is dominated by capital intensive high-tech farming for exportable commodities and biofuels. A recent World Bank report on the Guinea savannah acknowledges that the focus should be on smallholder farming, if development is to be equitable and social conflict avoided. 

The subsistence farmers and herders of these savannahs are among the world’s poorest people. And yet using little more than their labour, wits and pre-Roman technology, but communal pooling of resources, they manage average yields of 1.5 tonnes of vegetable products per hectare. If they were to introduce low-cost soil improvement technologies from composting agricultural waste, human- and animal manure, plus some fertiliser, they could soon reach the 5 tonnes per hectare averaged by small holders in Asia: this would make them not only self-sufficient, but able to afford better education, health and means of communication to urban areas to sell their surplus.

The use of human labour to improve the land and lives of small farmers and their families, rather than to create profit, is not popular with governments of Guinea savannah countries. It is hardly likely that it would bring in much cash to the coffers of the corrupt ruling class. Besides, economically independent, healthy people whose efforts and surpluses would create free time for them to organise, educate and agitate are a political force to be reckoned with. Not surprising, then, that “leaders” of the poorest countries, such as Meles Zenawi of Ethiopia, Salva Kiir Mayardit of South Sudan and many others, offer land for investment either by sale or lease. 

For  a total of US$200 per week (about the rent on a small flat in a British city), the Indian company Karuturi Global is leasing 2500 square kilometres of southwest Ethiopia to grow and export palm oil, sugar, rice and other foods. Another 30,000 square kilometres are up for grabs – in a country whose people depend on 700,000 tonnes of imported food aid every year. This is not scrubland, but among the most fertile land in the world with deep volcanic soils with substantial annual rainfall. Ominously, a local government official in the area was quoted last year as saying that 15,000 people would be “relocated”, to give them “better access to water, schools and transport. [But] it is a coincidence that the investors are coming at the same time … We are not relocating people to give land to the investors. The problem is there is no infrastructure where they have lived. It’s all voluntary.” 

Ethiopia has a track record – from the days of Mengistu Haile Mariam’s Derg regime through to the present government of the Ethiopian People’s Revolutionary Democratic Front – of such “villagising”. In reality this is forced resettlement both to free the best land for large-scale farming and to build a conveniently destitute labour force. In neighbouring Eritrea, the People’s Front for Democracy and Justice (PFDJ) government does things differently.  In 1994 it put all land under state control, allocated huge tracts to the army and created a system of indefinite military conscription. Eritrean “National Service” is a thinly veiled form of slave labour for everyone over 16 and under 40, to engineer “super-farms” and then to  work them. The militarisation of agriculture deprives communities of young people better able to till than those remaining, especially given that the older male population was decimated by the wars of 1961-91 and 1998-2000, that left a high proportion disabled. So productivity of small farmers is on a downward spiral.

Control, even partial, over food supplies gives the PFDJ, and similarly minded African governments, greater power over the rest of society. The PFDJ is now in a position to rake in hard currency by Eritrean land sales. Opposition to state expropriation of land has been silenced by imprisonment and, reportedly, torture. Unsurprisingly, Eritrea with a population of about 6 million has proportionately the second highest number of asylum seekers of any country. And despite the appalling quality of life in refugee camps, many of the tens of thousands of Eritreans who sought refuge in neighbouring Sudan during Eritrea’s tragic 1961-91 struggle for independence from Ethiopia do not yet feel able to return to their land.

A second post, on resistance to “land grabbing” and policies for agriculture, is HERE.

For much more information about land speculation and other agricultural issues, see the Oakland Institute.

[1] See here.

[2] See here.

[3] Shephard Daniel and Anuradha Mittal, The Great Land Grab (The Oakland Institute, 2009).

[4] Wikipedia entry here.

[5] Even the railway line between Mumbai and Delhi is planted with jatropha and the trains themselves run on 15-20% biodiesel.

[6] For earlier People & Nature commentary on food prices, see here.

[7] Tony Weis, “The accelerating biophysical contradictions of industrial capitalist agriculture”, Journal of Agrarian Change, v. 10, pp. 315–341. See also Tony Weis, The Global Food Economy: The Battle for the Future of Farming (London and New York: Zed Books, 2007)

[8] See here.

[9] See here. NASA’s GRACE satellites measured a loss of more than 100 cubic kilometres of groundwater from beneath India’s fertile Gangetic plains between 2002 and 2008, due to abstraction for irrigation: twice the volume of India’s largest lake. Water levels in wells there are falling by a metre or more every year.

[10] Fred Pearce, The Landgrabbers: The New Fight Over Who Owns the Earth (Eden Project Books 2012). See also Fred Pearce, “Stealing the Earth”, New Scientist 23 June 2012, pp. 28-29

[11] See FAO web site.

[12] Guardian story here (includes informative video). After an increase in 2010, annual lease rates per hectare in Ethiopia now fall as low at 4 Birr (22 US cents) for un-irrigated land with a top rate of 158 Birr (US$ 8.8) in irrigation schemes, with no charge for water. In the Oromia Region areas greater than 100 hectares under perennial crops such as coffee or sugarcane are free of lease for the first 4 years.

[13] See here.

3 Responses to Scramble for land: a continent up for sale

  1. […] This is the second of two linked posts, by Steve Drury. The first one is HERE. […]

  2. […] With demand for foodstuffs increasing, the diversion of land into biofuels and a quickening pace of climate crises – such as the recent heatwaves and droughts in Russia, and the south-western USA, and Europe’s cold, wet summer of 2012 – speculation in food commodities, and the land on which they are grown, is bound to increase. (See previous article here.) […]

  3. […] agencies – of encouraging rich-world investors to grab land in poor Asian and African countries. See a feature article by Steve Drury here. Details of the Herakles project are exposed in an Oakland Institute […]

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