Since the food price

spike of 2008, big land

deals in Africa and
Asia have produced
headlines but little else,
writes Rob Bailey

38 the world today | february & march | 2012

hectares more than half the total are in

Africa, the region with the biggest yield
gaps, biggest climate challenges, most extreme food insecurity, and most pressing
need for investment. Second is Asia, also
with many countries vulnerable to looming
climate and food security crunches.
But the good news stops here. On the
ground, things look less promising. Deals
are often murky and mired in corruption.
Rather than receiving jobs and opportunities, poor people are too often being
displaced, or having their access to land,
water or other natural resources diminished. These are not the conclusions of a
handful of anti-globalisation campaign
groups; they have been documented by
multilateral organisations, research institutes and international NGOs. As well as
threatening the food security of local populations, it seems that many deals offer little, if anything, to global food security.
Research from the World Bank has estimated 80 per cent of reported deals remain
undeveloped. Equally worrying is the finding that, where agricultural development
is the stated objective, it is rarely for food
production: the ILC research suggested 40
per cent of deals are for biofuel production,
compared to 25 per cent for food crops.
Speculative Motives
So what is going on? On the demand side
of the equation, there are different types of
investor with different motives. Some private investors are responding to demand
for land created by policy initiatives in
home countries for example biofuel targets or carbon offset schemes. Others
are genuinely seeking new opportunities
to develop agricultural production. Some
governments, alarmed at the political instability that food price spikes can trigger,
are investing overseas to lock-in production and reduce reliance on international
markets (though the ILCs research suggests that the media have focused disproportionately on state-backed investments
from the Gulf and China, where in fact
much of the investment is private, and often local). The profit motive looms large,
and there are very significant returns
to be made. Indeed, the lack of development on the land acquired points to speculative motives: many investors are probably simply betting on land price rises
rather than engaging in the risky and difficult business of growing food and developing infrastructure; others are acquiring
land speculatively in the hope of gaining
access to mineral resources, with farming
a mere sideline.
On the supply side, many governments

trevor snapp/bloomberg via getty images

Who will
feed the
extra
2 billion?

The international price spikes of 2008 and

2011, and the political, economic and social
disruptions which followed, have thrown
into sharp relief the challenges faced by the
global food system. The previous decades
of low and stable food prices are gone. Production now struggles to keep pace with
rising demand. By 2050, demand will have
increased somewhere in the region of 70 to
100 per cent and the global population will
have exceeded 9 billion people. The Food
and Agriculture Organisation of the United Nations estimates that meeting this demand will require a 50 per cent increase in
investments in developing country agriculture an extra $70 billion a year.
It is certainly right to raise investment in
the developing world. By 2050, the world
will have more than 2 billion more mouths
to feed, with much of this growth concentrated in the poorest and most food insecure countries. It also makes sense from a
global perspective: yields in many poor
countries are a fraction of what can be
achieved with access to the right technologies, practices and infrastructure. Investing
to close this yield gap will not only improve
national food security in poor countries,
but will also diversify food production.
Global food security is already heavily
dependent upon production in a number
of key regions, not least North and South
America, the worlds major export centres.
Without changes in farming, as climate
change becomes more and more pronounced, the production burden is likely
to fall increasingly on temperate regions
in particular in North America and Europe, where in the medium term at least,
climate change impacts will be less severe,
possibly even benign. Building productive,
adaptive and resilient agricultural sectors
in developing countries, those on the frontlines of climate change, is fundamental to
future food security.
Against this background, the current
investment surge into developing country
agriculture looks like just what is needed.
Recent research from the International
Land Coalition (ILC) an initiative supported by a number of international NGOs,
research institutes and multilateral organisations has identified 203 million
hectares of land deals reported as approved
between 2000 and 2010, an area equivalent
to eight times the size of the United
Kingdom. Much of this seems to have
occurred in the past few years, following
the 2008 food price crisis which made
agriculture suddenly appear and attractive
investment.
It looks like investment is flowing to the
right destinations. A total of 134 million

A farm worker handles grain in a large-scale wheat farm in Timau, Kenya

are eager to attract investment, hoping it
will create jobs, deliver infrastructure and
enhance food security. But in countries
with weak institutions, archaic land laws
and arcane investment processes, the spur
for these deals is too often corruption, resource-capture and rent-seeking.
Conflict Risks
Recent history shows that speculative investors, weak institutions and poor transparency generate risk. If land accumulates
to powerful companies and elites to the
exclusion of local communities, the chance
of conflict will grow. This poses clear risks
for investors, yet few seem to be taking it
seriously, as deals continue to take place
with poor transparency, little if any community consultation and empty promises
of jobs. In some cases, investors may well
be exacerbating conflict risks in the name
of risk management. Evidence suggests
that some are demanding primary user
rights over water as part of deals, enhancing their private water security, but placing
them on a collision course with local communities and farmers who depend on the
water for their livelihoods.
Where investment is taking place in

the context of pre-existing social and political fault lines or distributional politics,
conflict risk is also high. Recent research
for Chatham House finds that land deals
in Ethiopia are focused on marginalised
areas, home to large pastoralist populations and numerous separatist movements.
This appears to be part of a broader government strategy of political and economic integration, but one likely to exacerbate
existing tensions in these areas.
Governments clearly face risks themselves. Narratives are emerging in various
countries of neo-colonialism and a new
scramble for Africa as populations become increasingly disgruntled. In other
countries, active civil society movements
are developing in opposition to land-grabbing. In the most extreme cases public
anger can pose an existential threat to an
unpopular government: that of Madagascar fell in 2009 after national indignation
at a large concession granted to the South
Korean Daewoo Corporation.
More likely outcomes of public anger are
populist policies and U-turns, such as nationalisation, which hold further political
risks for investors. Governments in Brazil
and Argentina are examining legislation to

limit the ability of foreign investors to purchase farmland, while the government of
Tanzania was forced into calling a freeze on
its national biofuel strategy following protests from national civil society organizations and academia. Future food crises will
test governments further. Is it feasible for
governments, faced with rioting populations, to allow the export of locally grown
food to investors home countries?
To sum up, investment in land creates
winners and losers whether real or perceived, and can play into existing social and
political tensions. This raises the risk of
conflict, particularly where investments do
not deliver clear benefits or appear tainted
by corruption. Responsible investment can
reduce (though not eliminate) these risks:
ensuring transparency, consulting with
local communities, creating jobs and livelihood opportunities, developing infrastructure, conserving natural resources and so
on. Precisely the kind of investment needed if we are to meet the global food security challenge. l
Rob Bailey is Senior Research Fellow,
Energy, Environment and Development
Programme, at Chatham House
the world today | february & march 2012 | 39