Hedge funds create volatility in global food supply with land grabs across Africa

Oakland Institute | 8 June 2011

MEDIA CONTACTS:
Liam O’Donoghue, [email protected], (415) 901-0111
Brad Tucker, [email protected], (212) 584-5000

Financial backers – including U.S universities and pension funds – are lured by high returns and turn a blind eye to theft of land, displacement of people

Oakland, CA – Hedge funds and other foreign speculators are increasing price volatility and supply insecurity in the global food system, according to a series of investigative reports released today by the Oakland Institute. The reports are based on the actual materials from these land deals and include investigation of investors, purchase contracts, business plans and maps never released before now.

The “Understanding Land Investment Deals in Africa” reports also reveal that these largely unregulated land purchases are resulting in virtually none of the promised benefits for native populations, but instead are forcing millions of small farmers off ancestral lands and small, local food farms in order to make room for export commodities, including biofuels and cut flowers.

“The same financial firms that drove us into a global recession by inflating the real estate bubble through risky financial maneuvers are now doing the same with the world’s food supply,” said Anuradha Mittal, executive director of the Oakland Institute. “In Africa this is resulting in the displacement of small farmers, environmental devastation, water loss and further political instability such as the food riots that preceded the Tunisian and Egyptian revolutions.”

Mittal added that for people living in developed countries, the conversion of African small farms and forests into a natural-asset-based, high-return investment strategy can drive up food prices and increase the risks of climate change.

“The research exposed investors who said it’s easy to make a land deal – that they could usually get what they want in exchange for giving a poor, tribal chief a bottle of Johnny Walker,” Mittal said. “When these investors promise progress and jobs to local chiefs, it sounds great – but they don’t deliver, which means no progress and relocating people from their homes.”

New reports and materials on these deals examine on-the-ground implications in several African nations including Ethiopia, Mali, Sierra Leone, Mozambique, Tanzania and South Sudan – and expose contracts that connect land grabs back to institutional investors in these nations and others. In addition to publicly sharing – for the first time -- the paperwork behind these deals, the reports demonstrate how common land grabs are and how quickly this phenomenon is taking place. Investors in these deals include not only alternative investment firms like Emergent Asset Management – that works to attract speculators, but also universities including Harvard, Spellman and Vanderbilt.

Contracts also reveal a bonanza of incentives for speculators ranging from unlimited water rights to tax waivers.

“No one should believe that these investors are there to feed starving Africans, create jobs or improve food security, Obang Metho of Solidarity Movement for New Ethiopia said. “These land grab agreements – many of which could be in place for 99 years – do not mean progress for local people and will not lead to food in their stomachs. These deals lead only to dollars in the pockets of corrupt leaders and foreign investors.”

In 2009 alone nearly 60 million hectares – an area the size of France – was purchased or leased in these land grabs. Most of these deals are characterized by a lack of transparency, despite the profound implications posed by the consolidation of control over global food markets and agricultural resources by financial firms.

“We have seen cases of speculators taking over agricultural land while small farmers, viewed as “squatters” are forcibly removed with no compensation,” said Frederic Mousseau, policy director at the Oakland Institute. “This is creating insecurity in the global food system that could be a much bigger threat to global security than terrorism. More than one billion people around the world are living with hunger. The majority of the world’s poor still depend on small farms for their livelihoods, and speculators are taking these away while promising progress that never happens.”

These reports, as well as briefs on other aspects of land grabs, are available at http://media.oaklandinstitute.org.

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The Oakland Institute is an independent policy think tank whose mission is to increase public participation and promote fair debate on critical social, economic, and environmental issues (www.oaklandinstitute.org).


Publications Overview

 
May 25, 2011
Read more about the Oakland Institute's ground-breaking research, which reveals previously unpublished details about land grabs across Africa.
Large scale investments in land in Africa, as exposed by the Oakland Institute, are resulting in food insecurity, the displacement of small farmers, conflict, environmental devastation, water loss, and the further impoverishment and political instability of African nations.
May 24, 2011
Based on field research conducted between October 2010 and January 2011, this report provides new and important information on the social, political and economic implications of current land investments in Sierra Leone.   
May 24, 2011
  For decades, Ethiopia has been known to the outside world as a country of famine, food shortages, endemic hunger, and chronic dependency on foreign aid. Despite receiving billions of dollars in aid, Ethiopians remain among the poorest in the world. Our research shows that at least 3,619,509 ha of land have been transferred to investors, although the actual number may be higher.   
May 24, 2011
  This report identifies and examines cases of large-scale land acquisitions in Mali. The report provides background on the institutional and political context of the country, the current macroeconomic situation, the state of food and agriculture, and the current investment climate. Additionally, it documents detailed information regarding four land investment deals currently being carried out in Mali.  
June 8, 2011
Financial backers – including U.S universities and pension funds – are lured by high returns and turn a blind eye to theft of land, displacement of people.
May 24, 2011
  Saudi Star Agriculture Development Plc, owned by Saudi-Ethiopian billionaire Mohammed Al-Amoudi, acquired 10,000 hectares of land along the Alwero River in the Gambella region of Ethiopia.  
May 24, 2011
  Emergent Asset Management (Emergent), a private limited liability company based in the UK and minority owned by Toronto Dominion Bank, claims to be managing the largest agricultural fund in Africa. Using private equity to invest in industrial agriculture in sub-Saharan Africa, Emergent is however, a prime example of the troublesome rise in speculative funds that are investing in African agricultural land.   
May 24, 2011
  EmVest Asset Management is a joint venture between Emergent Asset Management and Grainvest, a subsidiary of the RussellStone Group. Based out of Pretoria, South Africa, EmVest operates the African Land Fund (ALF) and lists social responsibility as a guiding tenet of its investment strategy, citing a desire to bring “economic uplift to communities through commercially viable, first world practices.”  
May 24, 2011
  Quifel International Holdings (QIH) is the Lisbon-based personal holding of businessman Eng. Miguel Pais do Amaral, a Portuguese aristocrat,businessman and former majority owner of the Media Capital Group.  
 
 
May 24, 2011
  The largest land deal in South Sudan to date was negotiated between a Dallas, Texas-based firm, Nile Trading and Development Inc. (NTD) and Mukaya Payam Cooperative in March 2008. The 49-year land lease of 600,000 hectares (with a possibility of 400,000 additional hectares) for 75,000 Sudanese Pounds (equivalent to approximately USD 25,000), allows NTD full rights to exploit all natural resources in the leased land.  
May 24, 2011
  The Malibya project established by the Libyan Africa Investment Portfolio secures 100,000 hectares of fertile land for Libya within the borders of Mali. The land, located in the Office du Niger, comes free of charge for 50 years. Libya intends to build the necessary agro-industrial infrastructure (e.g. canals and roads) in order to cultivate rice and cattle in the region.  
May 24, 2011
Iowa-based Summit Group and Global Agriculture Fund of the Pharos Financial Group, in partnership with AgriSol Energy LLC and the College of Agriculture and Life Sciences at Iowa State University, are developing a large agriculture enterprise in Tanzania. The site encompasses three “abandoned refugee camps”– Lugufu in Kigoma province (25,000 ha), Katumba (80,317 ha), and Mishamo (219,800 ha), both in Rukwa province.  
May 24, 2011
  Addax Bioenergy Sierra Leone Limited is the company behind the most developed land deal in Sierra Leone to date. “Renewable energy” subsidiary of Addax & Oryx Group, a Swiss-based energy corporation,2 Addax has leased 20,000 hectares for 50 years in the Bombali district to grow sugarcane to produce ethanol for export to Europe and electricity from the by-products to be sold in Sierra Leone.  
URL to Article: https://farmlandgrab.org/post/view/18738

Source: Oakland Institute 
http://media.oaklandinstitute.org/hedge-funds-create-volatility-global-food-supply-land-grabs-across-africa

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