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Agriculture in Malawi.

Land grabbing is the contentious issue of large-scale land acquisitions; the buying or leasing of large pieces of land in developing countries, by domestic and transnational companies, governments, and individuals. While used broadly throughout history, land grabbing as used today primarily refers to large-scale land acquisitions following the 2007-2008 world food price crisis. By prompting food security fears within the developed world and newfound economic opportunities for agricultural investors and speculators, the food price crisis caused a dramatic spike in large-scale agricultural investments, primarily foreign, in the Global South for the purposes of food and biofuels production. Initially hailed by investors and some developing countries as a new pathway towards agricultural development, land grabbing has recently been criticized by a number of civil society, governmental, and multinational actors for the various negative impacts that it has had on local communities.

Food Price Crisis

The food price crisis arose in early 2006 as a result of a number of factors that combined to dramatically boost food prices worldwide. Between 2006 and 2008 average world prices for rice rose by 217%, wheat by 136%, corn by 125% and soybeans by 107%.

The food price crisis had a major impact on both the developed and developing world, particularly with regards to the poor and the food-insecure. The most direct impact of the food price crisis towards land grabbing was its effect on the developed world and its perception of agriculture and agricultural land in the Global South. These perceptions shifted in two ways: food-insecure countries, especially in the Gulf, realized the necessity of securing food-producing land under their control, while agribusinesses and speculative investors realized an opportunity to gain large profits from the rising food and biofuel prices.

For Saudi Arabia, Kuwait, Bahrain, and other Gulf states, their failures at developing a domestic agricultural sector meant that the food price crisis was especially perilous . Saudi Arabia had abandoned its attempts to produce food due to a lack of water resources, and since then has become a very significant player in the current land grab . One of its major investment initiatives was the "King Abdullah Initiative for Saudi Agricultural Investment Abroad," which supports Saudi investment overseas to increase food security at home .

For investors and large agricultural companies, the food price crisis marked the unveiling of an unprecedented opportunity to reap vast profits off of agricultural development, agricultural marketing, and supply chain integration. Skyrocketing food prices drew attention to the growing inequity between food supply and increasing demand, and hinted towards the possibility of longer-term price increases. Agricultural companies saw a need to vertically integrate to insulate themselves from price shocks. Meanwhile, investors began to view agriculture as a profitable speculative investment over the long run.

As a result of these factors, the food price crisis had a shocking and unprecedented effect upon land grabbing worldwide. As various actors scrambled to respond to the sudden rise in food prices, global expansion of agricultural land skyrocketed from an average of under 4 million hectares (ha) annually to 46 million ha in under one year from 2008 to 2009 . Of such expansions of land, over 70% of land acquired has been centered in Africa, with most in Sub-Saharan Africa .

Current Situation and Details

The most comprehensive estimate of the scope of land grabbing, published in September 2010 by the World Bank, showed that over 46 million ha in large scale farmland acquisitions or negotiations were announced between October 2008 and August 2009 alone, with two-thirds of demanded land concentrated in Sub-Saharan Africa . It is important to note that of the World Bank’s 464 examined acquisitions, only 203 included land area in their reports, implying that the actual total land covered could more than double the World Bank’s reported 46 million ha. The most recent estimate of the scale, based on evidence presented in April 2011 at an international conference convened by the Land Deal Politics Initiative, estimated the area of land deals at over 80 million ha .

Of these land grabs, the median size is 40,000 ha, with one-quarter over 200,000 ha and one-quarter under 10,000 ha . 37% of projects deal with food crops, 21% with cash crops, and 21% with biofuels . This points to the vast diversity of investors and projects involved with land grabbing: the land sizes, crop types, and investors involved vary wildly among land grabs. Of these projects, 30% were still in an exploratory stage, with 70% approved but in varying stages of development. 18% had not started yet, 30% were in initial development stages, and 21% had started actual farming . The strikingly low proportion of projects that had actually initiated farming signifies both a trend towards agricultural speculation, overestimation of capacity and ability of investors, and the difficulties inherent in large-scale agricultural production in the developing world.

Land grabbing most often takes the form of long-term leases, as opposed to outright purchases, of land. These leases range between spans of 25 and 99 years, in some cases . Such leases are usually undertaken between national or district governments and investors. Because the majority of land in Africa is categorized as “non-private land” as a result of government policies on public land ownership and a lack of active land titling, governments own or control most of the land that ends up in land grabs . Purchases are much less common than leases due to a number of countries’ constitutional bans on outright sales of land to foreign companies.

The methods surrounding the negotiation, approval, and follow-up of contracts between investors and governments have attracted significant criticism for their opacity and complexity. The negotiation and approval processes have been closed in most cases, with little public disclosure both during and after the finalization of a deal. The approval process, in particular, can be cumbersome: it varies from approval by a simple district-level office to approval by multiple national-level government offices, and is very subjective and discretionary . In Ethiopia, companies must first obtain an investment license from the central government, identify appropriate land on the district level and negotiate with local leaders, then develop a contract with the regional investment office. Afterwards, the government will undertake a project feasibility study and capital verification process, and finally a lease agreement will be signed and land will be transferred to the investor . Meanwhile, in Tanzania, even though the Tanzania Investment Centre facilitates investments, an investor must obtain approval from the TIC, the Ministry of Agriculture, the Ministry of Lands and Housing Development, and the Ministry of Environment, among which communication is oftentimes intermittent .

Target Countries

The target locations of most land grabs lie in the Global South, with 70% of land grabs concentrated in Sub-Saharan Africa (WB). Other primary areas of note are in Southeast Asia and Latin America.

One common thread among governments has been the theme of development: target governments tout the benefits of agricultural development, job creation, cash crop production, and infrastructure provision as drivers towards economic development and eventually modernization. Many companies have promised to build irrigation, roads, and in some cases hospitals and schools in order to carry out their investment projects. In return for a below-market-rate $10/ha annual payment for land, Saudi Star promised "to bring clinics, schools, better roads and electricity supplies to Gambella” . Governments also count new job creation as a significant feature of land acquisitions.

The issue of agricultural development is also a significant driving factor, within the larger umbrella of development, in target governments' acceptance of land grabbing. The Ethiopian government's acceptance of cash crop-based land acquisitions reflects its belief that switching to cash crop production would be even more beneficial for food security than having local farmers produce crops by themselves . Implicit in the characterization of African agriculture as "underdeveloped" is the rejection of local communities' traditional methods of harvesting as an inadequate form of food production.

On a smaller scale, some land grabs can also be traced to a personal stake in the project, or possibly due to corruption or rent-seeking. Given the ad hoc, decentralized, and unorganized approval processes across countries for such land grabs, the potential for lapses in governance and openings for corruption are extremely high. In many countries, the World Bank has noted that investors are often better off learning how to navigate the bureaucracies and potentially pay off corrupt officers of governments rather than developing viable, sustainable business plans .

Drivers and Types of Land Grabbing

Investors can be generally broken down into three types of investors: agribusinesses, governments, and speculative investors. Governments and companies in Gulf States have been very prominent along with East Asian companies. Many European and American-owned investment vehicles and agricultural producers have initiated investments as well. These actors have been motivated by a number of factors, including cheap land, potential for improving agricultural production, and rising food and biofuel prices. Building on these motivations, investments can be broken down into three main categories: food, biofuel, and speculative investment. Forestry also contributes to a significant amount of large-scale land acquisition, but is not directly related to land grabbing as understood today.

Food

Food-driven investments, which comprise roughly 37% of land grab investments worldwide, are undertaken primarily by two sets of actors: agribusinesses trying to expand their holdings and react to market incentives, and government-backed investments, especially from the Gulf states, as a result of fears surrounding national food security .

Agricultural sector companies most often view land grabs as an opportunity to leverage their significant monetary resources and market access to take advantage of underutilized land, diversify their holdings, and vertically integrate their production systems. The World Bank identifies three areas in which multinational companies can leverage economies of scale: access to cheap international rather than domestic financial markets, risk-reducing diversification of holdings, and greater ability to address infrastructural roadblocks . In the past few decades, multinationals have shied away from direct involvement in relatively-unprofitable primary production, instead focusing on inputs and processing and distribution . When the food price crisis hit, risk was transferred from primary production to the price-sensitive processing and distribution fields, and returns became concentrated in primary production. This has incentivized agribusinesses to vertically integrate in order to reduce supplier risk that has been heightened by the ongoing food price volatility . These companies hold mixed attitudes towards food imports and exports: while some concentrate on food exports, others claim to focus on domestic markets first.

While company-originated investments have originated from a wide range of countries, government-backed investments have originated primarily from the food-insecure Gulf States. Examples of such government-backed investments include the government of Qatar’s attempt to secure land in the Tana River Delta and the Saudi government's King Abdullah Initiative . Additionally, sovereign wealth funds acting as the investments arms of governments have initiated a number of land grabs in Sub-Saharan Africa. Since the population of the Gulf states is set to double from 30 million in 2000 to 60 million in 2030, their reliance on food imports is set to increase from the current level of 60% of consumption . The Director General of the Arab Organisation for Agricultural Development echoed the sentiment of many Gulf leaders in proclaiming, “the whole Arab World needs of cereal, sugar, fodder and other essential foodstuffs could be met by Sudan alone” .

Biofuels

Biofuel production, currently comprising 21% of total land grab investments, has played a significant, if at times unclear, role in both directly and indirectly influencing land grabbing. The use and popularity of biofuels has grown over the past decade, corresponding with rising oil prices and increased environmental awareness. The total area under biofuel crops more than doubled between 2004 and 2008, expanding to 36 million ha by 2008 . This rise in popularity culminated in EU Directive 2009/28EC in April 2009, which set 10% mandatory targets for renewable energy use, primarily biofuels, out of the total consumption of fuel for transport, by 2020 . Taken as a whole, the rise in biofuels popularity, while perhaps beneficial for the environment, sparked a chain reaction by making biofuels production a more attractive than food production and drawing land away from food to biofuel production.

The effect of the rise in popularity in biofuels was two-fold: first, demand for land for biofuel production became a primary driver in the land grab in Sub-Saharan Africa; second, demand for biofuels production crowded out supply of traditional food crops worldwide. By crowding out food crops and forcing conversion of existing food-producing land to biofuels, biofuels production had a direct impact on the food supply/demand balance and consequently the food price crisis. One researcher from the IFPRI estimated that biofuels had accounted for 30 percent of the increase in weighted average grain prices .

Agricultural Speculation

Some agricultural sector companies and private investors have targeted their investments towards agricultural speculation. It is probable that many companies have leased or purchased land on wholly speculative terms: of the World Bank’s identified land grabs, 48% of projects had been approved but either had not started or were in initial development stages . This has led the World Bank to conclude that many investors may have had speculative investing, rather than serious agricultural production, in mind.

Controversially, many hedge funds and private equity funds have engaged in speculative investments on land and food. These entities, such as BlackRock and Emergent Asset Management Ltd., are either investing in land as a part of a larger agricultural-based fund or in land on its own as a stand-alone investment . The latter investment strategy is most clearly seen in investments by Jarch Capital in South Sudan. Philippe Heilberg, chairman of Jarch Capital, has taken to investing in South Sudan because of his focus on land in conflict regions or weak states . While few – if any – other investors emulate Mr. Heilberg’s conflict-centric investment strategy, all share a common focus on undervalued land, much of which is concentrated in Sub-Saharan Africa.

Criticism

Land grabbing has been criticized by civil society and multinational actors for a number of reasons, breaking down into two general categories. On a local level, land grabbing is criticized for the process of land grab consultation, negotiation, and impact on local populations. More broadly, land grabbing is criticized for its net impact on the environment, domestic and international food security, and its resemblance to neocolonialism.

Land Insecurity

One of the major issues contributing to and affected by land grabbing is land tenure: in a 2003 study, the World Bank estimated that only between 2 and 10 percent of total land in Africa is formally tenured . Much of the lack of private ownership is due to government ownership of land as a function of national policy, and also because of complicated procedures for registration of land and a perception by communities that customary systems are sufficient . World Bank researchers have found that there existed a strong negative statistical link between land tenure recognition and prospective land acquisitions, with a smaller yet still significant relationship for implemented projects as well . They concluded that “lower recognition of land rights increased a country’s attractiveness for land acquisition,” implying that companies have actively sought out areas with low land recognition rights for investment .

Local Consultation and Compensation

While commonly required by law in many host countries, the consultation process between investors and local populations have been criticized for not adequately informing communities of their rights, negotiating powers, and entitlements within the land grabbing process.

Consultations have been found extremely problematic due to the fact that they oftentimes reach just village chiefs but neglect common villagers and disenfranchised groups. World Bank researchers noted that “a key finding from case studies is that communities were rarely aware of their rights and, even in cases where they were, lacked the ability to interact with investors or to explore ways to use their land more productively” . When consultations were even conducted, they often did not produce written agreements and were found to be superficial, glossing over environmental and social issues . In Ghana and elsewhere, chiefs often negotiated directly with investors without the input from other villagers, taking it upon themselves to sell common land or village land on their own . Moreover, investors often had obtained approval for their projects before beginning consultations, and lacked any contractual obligation to carry out promises made to villagers .

There also exists a knowledge gap between investors and local populations regarding the land acquisition process, the legal enforceability of promises made by investors, and other issues. The inability of villagers to see and study the laws and regulations around land grabs severely deteriorates communities’ agency in consultations. In the case that consultations do occur with communities, it is important to note that some take place in spans lasting only two to three months, casting doubt on whether such short time frames can be considered as adequate consultation for such large, wide-reaching, and impactful events . Given that many communities do not previously have much information on hand around land grabs, investors, fair prices of land, and other issues, this time period is especially short for local actors who may need a significant amount of time to learn more about land grabbing.

An additional concern with consultations is that women and under-represented populations are often left outside looking in during the consultation process. Large-scale projects in Mozambique rarely included women in consultations and never presented official reports and documents for authorization by women . This holds true even in the case that women are the primary workers on the land that is to be leased out to companies . Meanwhile, pastoralists and internally displaced people were oftentimes intentionally excluded from negotiations, as investors tried to delegitimize their claims on land . This led to a lack of awareness on the part of these vulnerable groups until lease agreements have already been signed to transfer land. This oversight in consultations further disenfranchises previously overlooked communities and worsens power inequities within local villages.

Displacement

Another criticism of land grabbing is the potential for large-scale displacement and of local peoples without adequate compensation, in either land or money. These displacements often result in resettlement in marginal lands, loss of livelihoods especially in the case of pastoralists, gender-specific erosion of social networks. Villagers were most often compensated as according to national guidelines for loss of land, loss of improvements over time on the land, and sometimes future harvests . However, compensation guidelines vary significantly between countries and depending on the types of projects undertaken. One study by the IIED concluded that guidelines for compensation given to displaced villagers in Ethiopia and Ghana was insufficient to restore livelihoods lost through dislocation .

There also exist a number of issues with the process of actually relocating locals to other areas where land is less fertile. In the process of relocation, often changed or lost are historical methods of farming, existing social ties, sources of income, and livelihoods. This holds drastic impacts especially in the case of women, who rely greatly upon such informal relationships .

Employment

When not displaced, the conversion of local farmers into laborers also holds numerous negative consequences for local populations. The large bulk of land grab deals are based on the eventual formation of plantation-style farming, whereupon the investing company will own the land and employ locals as laborers in large-scale agricultural plots. The number of jobs theoretically created through land grabs varies greatly dependent on commodity type and style of farming planned . In spite of this volatility, guarantees of job creation are rarely, if ever, addressed in contracts. This fact, combined with the intrinsic incentives towards mechanization in plantation-style production, can lead to much lower employment than originally planned for. When employed, locals are often paid little: in investments by Karuturi Global in Ethiopia, workers are paid on average under $2 a day, with a minimum wage of 8 birr, or $0.48, per day, both of which are under the World Bank poverty limit of $2 per day .

Government Negotiations

In addition to the lack of coordination between ministries, there exists a wide knowledge gap between government-level offices and investors, leading to a rushed and superficial investment review. Many government agencies initially overwhelmed by the deluge of investment proposals failed to properly screen out non-viable proposals . Due to the knowledge gaps between government agencies and investors, “in most countries it is implicitly presumed that investors will have the right incentive and be the best qualified to assess economic viability,” leading to a lack of reporting requirements or monitoring arrangements, key information on land uses and value of the investment, and checks on economic viability . The Sudanese government has been noted as having paid minimal attention to existing land rights, and neglecting to conduct any economic analysis on potential projects . In addition, many countries, including Cambodia, Congo, Sudan, and Ghana, have neglected to catalog and file even general geographical descriptions of land allocation boundaries .

One addition to many contracts between governments and investors is a Stabilisation Clause, which insulates investors from the effect of changed governmental regulations. Such clauses severely restrict the government’s ability to change any regulations that would have a negative economic impact on the investment . While advantageous for businesses, these stabilization clauses would severely hinder the ability of governments to address possible social and/or environmental concerns that become apparent after the beginning of the project.

Environmental and Ecological Impact

Land grabbing has also been criticized for its implicit endorsement of large-scale industrial agriculture, which relies heavily on fertilizers, machinery and inputs, over smallholder agriculture. As foreign investors begin to develop the land, they will for the most part start a shift towards such large-scale agriculture to improve upon existing “unproductive” agricultural methods. The threat of the conversion of much of Africa’s land to such large-scale agriculture has provoked a severe pushback from many civil society organizations such as GRAIN, La Via Campesina, and other proponents of small-scale sustainable agriculture .

Foreign investors, through large scale agriculture, claim to be able to increase the effectiveness of under-utilized resources of land, labor, and water, while further providing additional market connections, large-scale infrastructure development, and provision of seeds, fertilizers, and technology. Proposed increases in production quantity, as touted both by investors and hosts, are exemplified by Ethiopia’s Abera Deressa, who claims that “foreign investors should help boost agricultural output by as much as 40%” throughout Ethiopia . However, large scale mechanized agricultural production often entails the use of fertilizers and intensive farming techniques that have been criticized by numerous civil society actors as extremely ecologically detrimental and environmentally harmful over the long run . Over time, such intensive farming threatens to degrade the quality of topsoil and damage local waterways and ecosystems. As such, civil society actors have widely accused land grabbing of promoting “not agricultural development, much less rural development, but simply agribusiness development” . This trend towards large-scale agriculture that overrides local knowledge and sustainable local farming runs directly counter to the recent IAASTD report, backed by the FAO, UNDP, World Bank, and others, that in order to increase food security over the long term, sustainable peasant agriculture must be encouraged and supported .

Domestic and International Food Security

The most direct impact of land grabbing on food security comes from its impact on local villagers who are either dislocated elsewhere, or effectively co-opted into working under the new investors as laborers in the field. For those dislocated elsewhere, the disruption to traditional methods of farming can be severe: as land grabs often target the most fertile areas of land, villagers can struggle to adapt to less-fertile fields. Moreover, villagers will suffer a loss in indigenous knowledge about microclimates, sustainable farming techniques, and crop viability that can take years if not decades to replace.

On a larger scale, one major concern regarding land acquisitions is that, as of 2009, only 37% of land acquisitions were targeted for production of food crops, with the rest spread between cash crop and biofuel production, among other uses . In the case of Ethiopia, the government has in fact actively pushed for investment in cash crops such as soybean, palm oil, and biofuels, reasoning that “if we get money we can buy food anywhere,” as stated by Abera Deressa, the government minister in charge of agricultural development policy . Due to such low levels of actual food crop production, with a focus instead on cash crop and biofuel production, land grabs may actually detract from, rather than contribute to, worldwide food supplies and food security.

Neocolonialism

Land grabbing has been criticized by many civil society actors and individuals as a new realization of neocolonialism, signifying a renewed economic imperialism of developed over developing nations . Critics have pointed to the acquisitions of large tracts of land for economic profit, with little perceived benefit for local populations or target nations as a whole, as a renewal of the economically exploitative practices of the colonial period.

Information Issues

In a joint research project between the FAO, IIED, and IFAD, Cotula et al. found that the majority of host countries lacked basic data on the size, nature, and location of land acquisitions through land registries or other public sources, and that “researchers needed to make multiple contacts…to access even superficial and incomplete information” . The World Bank’s own lack of land size information on over half of the reported land grabs that it researched points to the difficulties inherent in gaining access to and researching individual land acquisitions .

Notable Cases

In Madagascar, the anger among the population about land sales led to violent protests. The South Korean corporation Daewoo was in the process of negotiations with the Malagasy government for the purchase of 1.3 million hectares, half of all agricultural land, to produce corn and palm oil. This investment, while one of many pursued in Madagascar, attracted considerable attention in Madagascar and led to protests against the government . While some civil society actors claim that the Daewoo investment led to the fall of the Malagasy government, these claims are unsubstantiated.

In South Sudan, numerous large scale land acquisitions have taken place in spite of the country's unresolved political and security situation at the time. One of the most prominent, involving a former AIG partner named Philippe Heilberg, garnered attention in Rolling Stone for his provocative pursuit of land in conflict-ridden regions. Heilberg, who is planning to invest in 800,000 ha of land in partnership with many of South Sudan's top generals and civilian officials, attracted criticism with his remarks (regarding Africa and land grabbing) that "the whole place is like one big mafia -- and I'm like a mafia head" .

See also

• Agribusiness
• Agriculture
• Biofuel
• Economic development
• Food security
• Food sovereignty
• Industrial agriculture
• Land rights
• Land titling
• Sustainable agriculture
• 2007-2007 world food price crisis