From: wolda002@umn.edu
Date: Tue Aug 11 2009 - 20:44:40 EDT
Why Corporations, Emerging Powers and Petro-States Are Snapping Up Huge
Chunks of Farmland in the Developing World
By Scott Thill, AlterNet
Posted on August 11, 2009, Printed on August 11, 2009
http://www.alternet.org/story/141734/
Stop me if you think you've heard this one before:
Investment banks, sovereign wealth funds and other barely regulated
financial entities in search of fat paydays go on buying binges
structurally adjusted to maximize their earnings reports and employee
bonuses, while simultaneously screwing their business associates and
everyone else in the process. It's all done in near-total secrecy, and by
the time everyone finds out about it, they're already in the poorhouse.
That's more or less the playbook for the derivatives and credit-default
swaps gold rush that ruined the global economy, which cratered in 2007 and
has yet to recuperate.
The bubble money has now moved on from housing and turned to the
commodities markets, especially global food production. Given what that
money did to the housing market, things don't look good for local
communities whose land is being bought up by governments, sovereign wealth
and hedge funds, and other investors on the hunt for real value in a
hyperreal economy.
Entrenched and developing economic powers -- the U.K., China, South Korea,
India and more -- have launched land rushes to outsource production of
everything from staples like rice, wheat, corn and sugar to finance bubbles
like biofuels. That includes oil-wealthy Gulf States, which recently
feasted on commodities speculation that exploded oil prices in 2008.
The hard numbers are alarming: According to the Guardian, in the last six
months over 20 million hectares (around 50 million acres) of arable land,
mostly in Africa and Southeast Asia, have been sold or negotiated for sale
or lease. That's about half the size of all arable land in Europe, or the
size of entire U.S. states North Dakota or Oklahoma.
The aptly titled report, " 'Land Grabbing' by Foreign Investors in
Developing Countries," from the International Food Policy Research
Institute, which declined to be interviewed for this article, explains that
"details about the status of the deals, the size of land purchased or
leased, and the amount invested are often still murky."
It's no wonder: The economic valuation of land and water has increased in
concurrence with both price commodities and the ravages of climate change,
whose droughts, wildfires and other extreme environmental events are
quickly shrinking what's left of the planet's arable land and clean water.
That exponential process will only be intensified by the biofuels some of
these lands will be used to grow, which is a particularly shameless insult.
Rather than use the 2.8 million hectares China bought from the Congo -- or
the tens of thousands of hectares the U.K. bought from Ethiopia, Mozambique
and Tanzania, and so on -- to feed the hungry, those investor nations will
use them to grow food for our cars. What biofuels will do is make a few
outsider nations very rich at the expense of a great many locals who could
use the land to feed themselves.
But don't call it a land grab, cautioned Rodney Cooke, technical advisory
division director of the International Fund for Agricultural Development
(IFAD), who, along with the United Nations' Food and Agriculture
Organization (FAO), also declined to comment on this article, commissioned
a study from the International Institute for Environment and Development
(IIED) to analyze the disturbing trend. "I would avoid the blanket term
'land-grabbing,' " Cooke said. "Done the right way, these deals can bring
benefits for all parties and be a tool for development."
Keep dreaming, argued Patrick Woodall, research director for Food and Water
Watch.
"These investments are effectively land grabs for a number of reasons," he
told AlterNet by phone. "They're going to be used to grow crops for
exports. They're taking arable land out of the domestic food supply. Most
of these deals are totally secret, and there are no standards of access to
public information. We're also concerned about places with weak legal
systems, where farmers and pastoralists won't even know these lands are
being sold from beneath them. Some don't even have formal land-titling
systems, so this is going to push people off the land and take away their
access to food."
It already has, said the FAO's Trade and Market division representative
David Hallam, using the kind of maddening opacity made legendary by
economists and other hedging professionals.
"There are economic, political, social and ethical concerns surrounding
these investments. The record of foreign direct investment in agriculture
over the years does, unfortunately, suggest that many of those concerns are
well-founded. A review of the literature on the impacts of foreign direct
investment in agriculture leaves us with some unease, and at least not a
conviction that there are definitely positive effects to be had."
Of course, these diluted revelations didn't stop Hallam from blaming the
host countries for its investment partners' shock-doctrine policies. "Most
of the onus of actions to attract investment and to make sure it meets the
requirements of developing countries," he concluded in a speech to the
Woodrow Wilson Institute, "falls very much on the developing countries, on
the host countries rather than the investing countries. It's not so much to
say no to these investments perhaps, but rather to make sure that the
policy and legislative framework is in place to maximize the benefits and
minimize the risk."
"That's obviously misguided policy prescription," Woodall countered. "The
local leadership are usually not interested in cutting good deals for the
people who are actually living on the land, so these questions should be
dealt with openly. But that is just not always the case. There's no reason
to expect the investment houses that have brought down the global economy
to treat countries in the developing world fairly."
But all of this is prologue. This type of opportunist land-grabbing is not
new, nor has its recent escalation gone unnoticed by those with a healthy
sense of reality. Ever since the housing bubble popped under the weight of
political corruption, financial crime and environmental destabilization,
the smart money had its eye firmly on more earthbound commodities.
The serious questions worth asking arise after the ink has dried on its
secretive contracts: What happens when global warming really takes hold and
starving locals get tired of watching their homegrown food and fuel leave
their borders? Whose army will enforce these contracts, once they are
rendered moot by uprisings and internecine warfare?
The answer is: the same thing that's happening already, just on a much,
much larger scale.
"This is already causing a lot of political upheaval," Woodall said. "The
government of Madagascar fell recently because of public fury over of a
land deal with South Korea's Daewoo Logistics," which would have given the
investor over a million hectares, roughly half the size of Belgium, for
literally nothing. "China's deal with the Philippines also got scotched
because of resistance. The problem is that most people don't know these
deals exist."
"We are not against the idea of working with investors," Madagascar's new
president Andry Rajoelina explained, after being installed by the military
and a constitutional court months after violent protests chased his
predecessor, Marc Ravalomanana, out of Iavoloha Palace to an undisclosed
location. "But if we want to sell or rent out land, we have to change the
constitution, you have to consult the people."
Involving people, especially the poor, in deals that sell arable land from
underneath them just isn't in the investment playbook. After all, even the
$700 billion doled out by ex-U.S. Treasury Secretary and ex-Goldman Sachs
CEO Hank Paulson is practically impossible to track, on purpose. And that's
America handing out American money to American banks.
So what cutthroat land-grabber in his or her right mind, which is focused
like a laser on maximum profit by any means necessary, is going to clue in
a bunch of poor farmers, who already have little recourse, to food-rush
schemes designed to lock down production and pricing for richer countries
half a world away?
For its part, the FAO believes that some kind of binding global code of
conduct is a possible solution, but it admits that such a possibility is
closer to fantasy than reality.
"Its enforcement is likely to be problematic," the FAO said in a somewhat
laughable policy brief called 'From Land Grab to Win-Win.' "It might
nevertheless offer a framework to which national regulations could refer,
especially if parties realize that compliance with common standards is in
their mutual self interest."
But it never is, which is why these deals are made in the first place. To
be brutally honest, mutual interest is the opposite of what investor
countries are looking for, which is a one-sided interest arrangement in
which already-rich nations and investors, lost in a haze of wasteful
consumption and economic and political corruption, hopscotch the world in
search of naive hosts to feed upon. And whether it is rice or sugar cane or
palm oil or other fuels for their bloated bodies or cars, they are not
invested, literally, in the health and well-being of those hosts. They are
survivalists in the purest sense, and survivors just don't share when they
can hoard.
"Investors are looking at this as scarce land and water in a world of
increasing scarcity," Woodall argued, "which is one reason they are
pursuing it so actively. They're bringing the plantation mentality to the
21st century and driving people off their land. This is crazy stuff. If the
deals that people know about are as big as North Dakota, what does that say
about the deals they don't know about?"
Scott Thill runs the online mag Morphizm. His writing has appeared on
Salon, XLR8R, All Music Guide, Wired and others.
© 2009 Independent Media Institute. All rights reserved.