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Land deals in Africa and Asia

Land grabbing on forth world countries sounds like a good solution to the food supply problem in third world countries. If land grabber can put the lands for better use, they are more entitle to the lands than the locals. It is not neo-colonialist, it’s the survival of the fitness.

Cornering foreign fields
May 21st 2009
From The Economist print edition
The Chinese and Arabs are buying poor countries’ farms on a colossal scale. Be wary of the results

OVER the past two years, as much as 20m hectares of farmland—an area as big as France’s sprawling farmland and worth $20 billion-30 billion—has been quietly handed over to capital-exporting countries such as Saudi Arabia, Kuwait and China. They buy or lease millions of acres, grow staple crops or biofuels on it, and ship them home. The countries doing the selling are some of the world’s poorest and least stable ones: Sudan, Ethiopia, Congo, Pakistan. Usually, when foreigners show up in these places, it is with aid, pity and lectures (or, in one instance, arrest warrants for war crimes). It must make a nice change to find their farms, so often sources of failure and famine, objects of commercial interest instead.

Yet while governments celebrate these investments, the rest of the world might reasonably ask why, if the deals are so good, one of the biggest of them helped cause the overthrow of the government that signed it—the one in Madagascar. Will this new scramble for Africa and Asia really reduce malnutrition, as its supporters say? Or are critics right that these are “land grabs”, “neocolonialist” rip-offs, different from 19th-century colonialism only because they involve different land-grabbers and enrich different local elites?

Protectionism or efficiency?

It would be graceless to write off in advance foreign investment in some of the most miserable places on earth. The potential benefits of new seeds, drip-feed irrigation and farm credit are vast. Most other things seem to have failed African agriculture—domestic investment, foreign aid, international loans—so it is worth trying something new. Bear in mind, too, that worldwide economic efficiency will rise if (as is happening) Saudi Arabia abandons mind-bogglingly expensive wheat farms in the desert and buys up land in east Africa.

Yet these advantages cannot quell a nagging unease. For a start, most deals are shrouded in mystery—rarely a good sign, especially in countries riddled with corruption. One politician in Cambodia complains that a contract to lease thousands of acres of rice contains fewer details than you would find in a house-rental agreement. Secrecy makes it impossible to know whether farms are really getting more efficient or whether the deals are done mainly to line politicians’ pockets.

Next, most of these deals are government-to-government. This raises awkward questions. Foreign investment helps countries not only by applying new technology but also by reorganising the way people work and by keeping an eye on costs. Few governments do this well, corrupt ones least of all. One of the biggest problems of large-scale commercial farming in poor countries is that well-connected farmers find it more profitable to seek special favours than to farm. These deals may exacerbate that problem. Worse, the impetus for many of them has not been profit-seeking by those who want to turn around failing farms. Rather, it has been alarm at rising food prices and export bans. Protectionism, not efficiency, has been the driving force. It would be better to liberalise food markets and boost trade than encourage further land grabs.

Third, there are serious doubts about whether countries acquiring land are paying the true cost of it. Host governments usually claim the farmland they offer is vacant, state-owned property. That is often untrue. It may well support smallholders who have farmed it for generations. They have no title, only customary rights. Deals that push them off their land or override customary rights cannot be justified. International bodies, such as the African Union, are drawing up codes of conduct to limit such abuses. They are sorely needed.

Even then, land deals will never help the poor as much as freer trade and stronger property rights. But if the deals eventually raised yields, spread technology and created jobs, that would at least be some cause for celebration. At the moment too many seem designed to benefit local elites more than local farmers; they use foreign labour and export most of their production, harming local food markets. Until they show otherwise, a dose of scepticism should be mixed with the premature hopes the land deals have engendered.

2 comments to Land deals in Africa and Asia

  • there are much better way to do this than govt to govt deals, which are prone to abuse and doesn’t necessarily drive the most efficient outcomes. for example, first world countries don’t actually need to cut deals at govt level. the likes of tesco and carrefour effectively does the work for them. they are much better at sourcing stuff, running logistics and negotiating commercial terms than government ever will.

  • You got the logic reversed, it’s not about efficiency, it’s about feasibility. This kind of deals only works at government to government level. Only the government of the African country have the power to force out local people, so they can lend the land out to foreigners. Only a foreign government that is more powerful than the African government can keep it in check. Tesco or Carriefour alone (without the backup of its government) would just ripped off alive by the African government.

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