Interest in agricultural land has been rising at a global level, with some of the key players involved in large land-acquisitions abroad being government-backed operators.
Recent years have witnessed growing interest in agricultural land as an economic asset, a trend fuelled by various factors such as a sharp increase in international food prices, speculation about future demand for food as well as the appeal of agricultural land as an inflation hedge in times of global financial turmoil. Large-scale land acquisition is most visible in African countries, where governments have been leasing large areas of land. What is often referred to as the new global land rush is a phenomenon not limited solely to the private sector, but applying to government-backed operators as well.
In 2011, the World Bank published a report on the land deals documented over the period between 2008 and 2009. As noted by the BBC in a recent article, the World Bank report findings indicate that the land deals for the quoted period were for nearly 60 million hectares worldwide, or roughly the size of a country like Ukraine, with two-thirds of the acquired land located in Africa.
Another 2011 report focusing on large-scale land acquisitions published by the High Level Panel of Experts on Food Security and Nutrition (HLPE) of the Committee on World Food Security (CFS), points out that among the new international players in large-scale land acquisitions have been governments as well as some companies of the Gulf States, China, Libya, India and South Korea.
The HLPE report, entitled “Land tenure and international investments in agriculture”, quotes some of the key drivers for governments investing in agricultural land abroad, the most important one being maintaining national food security. The HLPE report notes the example of Saudi Arabia where the progressive depletion of non-renewable fossil water necessitates the outsourcing of wheat production. According to the report, the King Abdullah Agricultural Initiative is co-investing in foreign land to grow the food needed by Saudi Arabia. Libya on the other hand has been leasing land in Ukraine and Mali with the purpose of producing food for its own population.
!m(/uploads/story/76/thumbs/pic1_inline.png)When it comes to large-scale acquisitions of agricultural land abroad, China is among the examples quoted most often. As noted in the HLPE report, the Chinese government has been supporting investment by Chinese companies in various countries such as Brazil, Argentina, and the Democratic Republic of Congo so as to ensure supplies of different agricultural products as well as rubber and timber. In the beginning of 2012, the Australian Financial Review (AFR) reported that Australia’s agricultural land has not escaped China’s attention either. According to the AFR, at the end of 2011, a Chinese delegation, including representatives from China’s Ministry of Commerce met with representatives of the Australian Trade Commission, corporate advisors and industry heads to discuss opportunities in rural Australia covering more than 100,000 hectares of prime land.
And yet, the picture of countries investing in agricultural land abroad is not necessarily Asia-centric. In April 2012, the International Institute for Environment and Development (IIED) published a paper, entitled “The global land rush: what the evidence reveals about scale and geography”, which also sheds some light on the land rush phenomenon and the key players involved in it. According to the IIED paper, despite the public attention focus on China and Gulf countries as major land acquirers, evidence suggests that Europe and North America are also key participants when it comes to the acquisition of agricultural land abroad. The IIED paper quotes a CIFOR study on Africa indicating that among the world’s top four investor countries are the United States, the United Kingdom and Norway.In addition, Europe and North America accounted for 40 and 13 percent respectively of all the acquired land. In the case of Western countries, however, the main motive for investment in agricultural land abroad seems to be the growing biofuel demand. The EU for instance has a target to increase the share of biofuels used in transport fuel to 10 percent by 2020, which in turn increases the demand for biofuel feedstock. The HLPE report points out that the US biofuel policy on the other hand has led to pressures on land elsewhere since it involves subsidies to domestic maize production for conversion to ethanol.
When looking at the effects of the large-scale acquisitions of agricultural land, some consider it a form of neo-colonialism, whereas others see it as a potential route to promoting sustainability in the world’s poorest regions. While international agricultural investments are often perceived as a threat to the rights of local population, they can also generate jobs, improve local infrastructure and provide social services. In any case, the global land rush is a phenomenon which is likely to intensify in the future and for that reason requires well-thought regulatory framework. The UN Food and Agriculture Organisation (FAO) for instance is promoting voluntary guidelines on land tenure, whereas FAO’s CFS is expected to come up with principles for responsible agricultural investments.