From: wolda002@umn.edu
Date: Tue Jun 02 2009 - 02:59:35 EDT
Outsourcing Agriculture
Corn prices are high
If land is being unused or under-utilized in poor regions across Africa and
Southeast Asia, outsourcing to capital-rich and land-poor nations could
help prevent another global food crisis, but it must be fair and
productive, Adam Wolfe writes for ISN Security Watch.
By Adam Wolfe for ISN Security Watch
>From Mexico to Pakistan, citizens took to the streets last summer to
protest what they saw as their government's inability to do anything about
skyrocketing food prices. In Burkina Faso, rioters shut down main streets
in three cities and burned government buildings; police used teargas to
turn back about 10,000 protesters in Bangladesh; and a series of deadly
riots forced out the Haitian prime minister.
Shaken, governments in the Middle East and Asia moved quickly to ensure
empty stomachs could not threaten their control. The cure, however, looks
nearly as bad as the disease.
Middle Eastern and Asian governments have been buying up underproductive
farmland across Africa and Southeast Asia to grow crops that will be
exported back to the home country. The International Food Policy Research
Institute (IFPRI) estimates that as much as 20 million hectares, twice the
cropland area of Germany, will be leased under such agreements in 2009.
The deals are not for the faint of heart. One of the reasons the land is
underproductive, and thus an appealing target for these governments, is
that it is largely in politically unstable countries. Sudan and Pakistan
top the list, but even where there is political stability, selling
potentially productive farmland to foreigners can prove disruptive. South
Korea's Daewoo arrangement to lease 1.3 million acres in Madagascar helped
to spark a coup in March; the new government quickly canceled the deal.
Still, the world's growing population and taste for meat will require more
productive farming. If land is being unused or under-utilized in poor
regions across Africa and Southeast Asia, money from capital-rich and
land-poor nations could help prevent another global food crisis.
International organizations around the world are now trying to find a way
to do this that is both fair and productive. The right policy mix might be
able to bring down food prices and pull some of the world's poorest out of
poverty.
Food outsourcing
With its reliance on food imports, the Middle East is one of the most
vulnerable to increases in food prices. Growing populations and diminishing
water resources have led governments like Saudi Arabia to give up growing
crops domestically. Last year, the Saudi government abandoned a 30-year
self-sufficiency program that grew wheat in the desert at exorbitant costs
and created the Saudi Company for Agricultural Investment and Animal
Production to fund $800 million in agriculture projects abroad. Another
Saudi company with close ties to the government, the Saudi Binladin Group,
is investing $4.3 billion in Indonesia for 500,000 hectares of farmland.
Across the Middle East a similar pattern has emerged. According to IFPRI,
the United Arab Emirates has leased 375,000 hectares in northern Sudan,
325,000 hectares in Pakistan and 5,000 in Ethiopia. The government is
reportedly also negotiating with Senegal and Uzbekistan for similar deals.
Kuwait provided a $546 million loan to Cambodia in exchange for a lease to
a large area of rice lands. Qatar leased 100,000 hectares in the
Philippines, and the Qatar Investment Authority set up a joint fund for
agriculture in Vietnam.
Questions about food security are also motivating Asian countries to pursue
similar land-lease deals. Besides the doomed Madagascar deal, IFPRI reports
that South Korean companies have arranged to lease 690,000 hectares in
Sudan,and up to 140,000 hectares may be leased from Russia. India has
invested $4 billion in Ethiopian agriculture.
However, these deals lock up huge tracts of prime farmland in countries
where famine is still all too common. This tends to be controversial in the
host country. For example, a Qatari deal to lease 40,000 hectares in Kenya
is being protested by the Eastern Africa Farmers Federation Union. Although
Qatar plans to build a port that could provide 30,000 new construction
jobs, critics say Kenya would benefit more if Qatar just bought the produce
from Kenyan farmers. This though is exactly what the countries are trying
to avoid: They fear the market price of produce will spike again and so are
searching for ways to ensure their supply.
The head of the UN Food and Agriculture Organization, Jacques Diouf, warned
in an interview with The Guardian that the land deals could create a form
of “neocolonialism,” with poor countries producing food for the rich at
the expense of their own citizens. African governments “have not been in
a reasonable negotiating position,” African Union Agriculture
Commissioner Rhoda Peace Tumusiime argued in an interview with Reuters.
Addressing the controversy, China's agriculture minister felt the need to
tell the Financial Times that China would not rely on agriculture
outsourcing for its food security, and it would invest domestically to
increase production. Still, China has $800 million invested in agriculture
in Mozambique and has requested two million hectares in Zambia, according
to IFPRI.
Another reason the deals have proved controversial is that they are often
negotiated government to government, with little or no input from the
people living on (and often farming) the land. Land rights in Africa can be
tremendously complex, yet most of these deals assume the central government
can sell the rights to a foreign government without addressing the informal
claims of the local population.
"This lack of transparency limits the involvement of civil society in
negotiating and implementing deals and the ability of local stakeholders to
respond to new challenges and opportunities," IFPRI said in a recent
report.
"The culture of secrecy that surrounds agricultural land deals raises
concerns about government conduct in relation to issues of public interest.
The lack of transparency undermines government accountability, and
increases the opportunities for corruption and other inappropriate acts,"
the International Institute for Sustainable Development argued in a report
on water rights in these deals.
Addressing the controversy
In order to address this controversy, many international organizations are
attempting to draft guidelines. The goal is to preserve the benefits of
greater productivity that often comes with the deals, but ensure that the
local population shares in the bounty.
The African Union has drafted guidelines to help African governments
negotiate future deals. The guidelines stress the benefits of improved
infrastructure and taxes, but also suggest that 'multiplier' industries,
like processing plants, be set up in the host country. The guidelines will
be presented at the AU summit in July for ratification. The Food and
Agriculture Organization, the UN Conference on Trade and Development and
the World Bank are also working on similar guidelines, though none have
been published yet.
Agriculture outsourcing was a major issue when the G8 agriculture ministers
met in April. They released a statement calling for increased “public and
private investment in sustainable agriculture,” but also warning that
“attention should be given to the leasing and purchase of agricultural
land in developing countries, to ensure that local and traditional land use
is respected.” Japan plans to propose an initiative at the G8 meeting in
July that would lay out guidelines to prevent “farmland grabbing.”
If these organizations can help poorer countries better negotiate future
deals, perhaps another food crisis can be avoided by all countries, and not
just the capital-rich ones.
Adam Wolfe is a freelance writer based in New York. His blog is On
Political Risk.
Publisher
Logo International Relations and Security Network (ISN)
International Relations and Security Network (ISN)
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