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Longer, analytical article.  Land-grabbing, a new form of sharecropping?

Summary & Comment: "Land-grabbing can rein in the global economic growth of the host nations since these projects are directed away from them (as products destined for export), and this reinforces their food dependence and gives no stimulus to local activity. In fact the privileged agro-industrial model is based on capital, monoculture, and technology, which creates little employment and excludes the local farmers. Faced with an agriculture which is far more productive than their own, if measures are not taken, the local farmers have no choice but to abandon their land and to work for the agricultural companies, often in very poor conditions." Some models of action exist, for example in Ecuador, and there is urgent need to extend them to other regions of the world. JK Translation by MD.

Author: Sarah Flament and Eric Guiot, Date Written: 1 August 2010
Primary Category: Food and Land Document Origin: SOS FAIM (Belgium)
Secondary Category: Economic Justice Source URL: http://www.sosfaim.be/index.php?
Key Words: Land, investors, peasants, hunger, crisis

African Charter Article #24: All peoples shall have the right to a general satisfactory environment favorable to their development. (Click for full text...)



Printable Version

Land-grabbing, a new form of sharecropping?

Introduction

The current food, agricultural, and financial crises have produced important reflections on the management of cultivatable land, both in North and South. Among the issues is the phenomenon of foreign investors’ acquisition of agricultural land, better known as “land grabbing,” which has been steadily increasing over the last forty years.

Though this is not a new phenomenon—-Chiquita Banana, for example, has been in Latin America since the beginning of the 20th century—-its current magnitude raises a serious question about the rural development of the host nations. Some, the most optimistic, say that “foreign agricultural investment” is necessary for the improvement of economic growth in Southern countries (World Bank, FAQ).  Others, on the other hand, have no hesitation in labelling the phenomenon “fiscal neocolonialism” (Committee for the Abolition of Third World Debt), arguing that this new form of territorial invasion must be controlled before it has a devastating effect on the local population and development of the countries involved. As a  general result, this wave of agricultural land acquisition on a grand scale will redesign  the geopolitical map of the world’s agricultural production and commercialization.

Causes

Different factors point to an explanation for this recent wave of financial land-grabbing. In the first place, the phenomenon can be related to a reevaluation of certain countries’ strategies for food security. Following the 2008 food crisis and the recent steep rise in prices for food produce, some countries, such as China and Saudi Arabia, want to make sure of a longterm food supply, independent of world food markets and price fluctuations.  This occurs particularly in countries which  cash in hand, but suffer from increasing shortages of land or water.
The strong demand for biofuels is anothrer explanation for such investment (Daewoo, Mitsubishi).  In response to climate change, the production of biofuels is often seen as one of the solutions. The politics of the North unfortunately forget the consequences they can have for the South.

Finally, with the financial crisis, some private investors are trying to diversify their sources of investment (Morgan Stanley, Goldman Sachs and Deutsche Bank). Looking for new speculative products, they see land as a new source of profit, given the weakness of land prices in some regions and the great potential. The principal investments come from American and European pension funds, from banks, venture-capital funds, and wealthy individuals.

The hosts and the investors

If the investors are most often from the private sector, governments also play an important role, whether directly or by supporting private investment. The principal acquisitors are China, the United Kingdom, Saudi Arabia, South Korea, the Gulf States, Libya, Egypt, and India.

In the host countries, the governments usually negotiate the sale of land. A study published in 2010 by the World Bank1 points out that Africa is the most cause for concern about these investments because half of the investment projects are found there, followed by Asia, Latin America, and Eastern Europe. According to Olivier de Schutter, Africa is particularly affected because it is seen as possessing vast liquid assets, with a good climate, and abundant workforce. The countries most affected by this land-grab are the Sudan, Ghana, Madagascar, Indonesia, the Philippines, Australia, Brazil, Argentina, and Paraguay. Note that the host governments are generally in favour of these offers of foreign investment, which, in the short term, mean a considerable influx of money and foreign currency.

A last point worth raising is the evidence collected by the World Bank of three factors which are directing the land-grabbers towards some countries rather than others:

  • the ease of obtaining local land, in other words signs of weak financial management;
  • the possibility of realizing large returns (financial liquidity);
  • the possibility of introducing machines for a rapid increase in productivity.

A phenomenon of immense proportions

Currently there are no detailed facts relating to the size, nature, and effects of this wave of land-grabbing. However, all researchers seem to agree that this phenomenon has been growing dramatically in the last two years. The World Bank’s study drew attention to the importance of this massive privatization measured in tens of millions of hectares. In addition, in a report published by the Oakland Institute, Daniel Shepard estimated that private investment controls more than 50 million hectares of agricultural land in Southern countries.

Some examples

Figures from some recent transactions illustrate the importance of this wave of financial acquisition, as well as the commercial stakes tied to these contracts.

  • Madagascar : 803000 hectares for $79.8m US.
  • Soudan : 471.660 hectares for $439.5m US.
  • 10 million hectares in the Congo bought by South Africa.
  • Ethiopia : the most important transactions to date concern India and Ethiopia, with the transfer of $4 billion US between the two countries. The Indians, who are currently facing a strong growth in demand for food for their people and animals are trying to ensure their food security by buying land in Ethiopia. While Ethiopia depends on food aid to feed its people, paradoxically it encourages these foreign investments by vast expropriation.
  • Mali:  In Mali, the government has given over huge areas of rice producing land (more than 100,000 hectares) to the Libyan company Malibya. These areas are destined for the production of rice, the raising of cattle, and processing. The project is presented as a national initiative destined to help local farmers to increase their agricultural production and achieve food self-sufficiency. In fact, it presents serious threats to the local farmers: expropriation with very little compensation, competition for the allocation of water, and threats to biodiversity. In addition the hybrid seeds which are used in the project are not available to the majority of local farmers since they demand intense mechanization, the use of chemical inputs, and new seed bought every year.In addition, this hybrid rice seed is bought from China and the planning put in the hands of a Chinese company, which raises doubts about the praiseworthy objective of assuring food security.

  •  Ecuador—the exception! Ecuador is an innovator in the struggle for land access.  Faced with the people’s fear of finding themselves expropriated from their land by foreign multinationals, the national government has recently taken constitutional measures. If the local farmers can prove that they have lived on their land for about 100 years, the law henceforth will allow local people to take the land back.  These measures willl not stop the buying back of land but will stop land expropriation as much as possible, particularly expropriation by oil companies which are profiting from loopholes in financial law. The new Constitution, which now recognizes the value of food producing land, gives good protection.

The consequences and the risks

Though the World Bank considers these investments as potentially beneficial to the host countries, the appropriations are often marked by the social changes of “financial neocolonialism.” “the perverse effects of the free world market” or, again, for the African continent, of a “second partition of Africa.” Even if these financial transactions are made between independent states, unlike those of the colonial period, there is a certain inevitability according to which foreign countries progressively obtain control of the resources and the agricultural production of the South. At the heart of this ideological conflict today are two opposing visions of the future: agro-industry or family agriculture, with the food sovereignty of Southern countries at stake.

The World Bank, the UN Food and Agriculture Organization, the UN Conference on Trade and Development, and the International Fund for Agricultural Development consider this foreign agricultural investment as a development opportunity for the countries of the South because it allows them to reduce their national deficit with agricultural investment, to stimulate national economic growth, and to encourage rural development by the creation of jobs and income, and acquisition of technology and infrastructure development. Nevertheless, the World Bank recognizes that the majority of projects do not benefit the local farmers, who are often driven off their land without either consultation or compensation.  Though the World Bank lists some risks and problems linked to the current wave of financial acquisition, it still tries to facilitate it.

According to a report published by the Oakland Institute, the World Bank goes so far as to encourage host governments to modifiy their financial laws to facilitate foreign agricultural investment. In addition, with the aim of making this land-grab “ socially acceptable,” the World Bank , the UN Food and Agriculture Organization, the UN Conference on Trade and Development, and the International Fund for Agricultural Development have set up a code of conduct to apply to all investors. But the code has no judicial authority; the World Bank counts on the investors’ good faith to make them observe it. It is difficult, utopian in fact, to believe it will be applied. Olivier de Schutter also points out that the contracts presently signed contain few obligations for the investors. In April 2010, La Via Campesina,  FIAN International, (Right to Food), the Land Research Action Network and GRAIN have published a common declaration denouncing the World Bank’s strategy and insisting it should not support land acquisition. About a hundred organizations and social groups, among them SOS-Hunger, have officially associated themselves with this declaration. Their central idea is that it is essential to sustain family agriculture and to protect local communities from land-grabbing on a grand scale.

It is true that foreign investors taking over control of the land presents major risks.  First of all, the threat of expropriation for the local farmers is very real. Though the acquisitors consider the land they want as empty and available, it usually “belongs” to the local people who find themselves progressively losing control of their means of subsistence. Profiting from vague national financial legislation which ignores traditional financial rights, the investors have no compunction about expropriating the local farmers and taking the most fertile and best positioned land. With no clear legal framework in these countries, where title deeds are rare, the local farmers are seldom  compensated. This massive expropriation can exacerbate social tension and political instability. In the long term it may lead to increased conflict over land in these countries which are often already riven with major internal conflicts over land access, as well as to even more uncontrolled migrations (national and international) and the appearance of agricultural refugees.

Finally, the land-grabbing can rein in the global economic growth of the host nations since these projects are directed away from them ( as products destined for export), and this reinforces their food dependence and gives no stimulus to local activity. In fact the privileged agro-industrial model is based on capital, monoculture, and technology, which creates little employment and excludes the local farmers. Faced with an agriculture which is far more productive than their own, if measures are not taken, the local farmers have no choice but to abandon their land and to work for the agricultural companies, often in very poor conditions.

So these forms of industrial production which function according to a rationale of short-term profitability will have devastating environmental effects: destruction of primary forests, loss of biodiversity, chemical pollution, contamination of cultivation by genetically modified organisms, exhaustion of water reserves. . .
All this leads us to think that this agro-industrial model, which counts on the availability of land in the host countries, is developing to the detriment of family agriculture and constitutes a threat to the food sovereignty of the countries concerned.

Conclusion

In the face of this phenomenon, support for sustainable local farming and the orientation of policies towards local communities so as to ensure food sovereignty is a priority. Land acquisition undermines the principle of nations’ self-determination and comes down to a violation of the UN Human Rights Committee Agreement on economic, social, and cultural rights as well as of the UN Declaration on the Rights of Indigenous Peoples. Foreign control of agricultural land belonging to local communities must be limited and controlled, since it is now and will produce numerous problems such as hunger, poverty, and migration. To prevent this, we must:

  • Reinforce the ability of states to negotiate;
  • Set up restraining regulations, rather than a code of conduct, so as to limit investors’ access to agricultural land in the context of strong demographic growth and growing pressure on fertile land;
  • Involve civil society and local farmers’ associations in the negotions;
  • Guarantee community land control by safeguarding local peoples’ existing financial rights to protect them from foreign investments.

 
Some models of action exist, for example in Ecuador, and there is urgent need to extend them to other regions of the world.

1-This study is based on 389 financial transactions taking place in 80 countries
2-Deficits which keep agricultural productivity at a very low level.
3-Through one of its  subsidiaries, la Société Financière Internationale4
4-This code of conduct is based on various ideas such as transparency, predictability, durability, and the involvement of the parties to it. As well as respect for the environment, Its central ideas are respect for the current users of the land through compensation, protection, and improvement of community  living conditions through the creation of employment and the setting up of social services.

{This essay was written by Sarah Flament and Eric Guiot, Volunteers for SOS FAIM (Belgium). For further information, see Défis Sud n°89 “No room in monopolized land for local farmers"}

Original article in French: http://www.sosfaim.be/pdf/publications/notes_synthese/accaparement-des-terres-ns5.pdf

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