Land grabs becoming more popular

Farmland Forecast | 24 June 2009

A land grab is when an outside government or company attains the rights to farmland in a foreign country, usually for food security solutions. Many of these land grabs involve human rights issues, because the land transactions are to the advantage of the land acquiring country and to the demise of the agricultural growth of the acquired country.  When a country is in need of funding, they are vulnerable to selling their most valuable resource, land. Activists have lobbied for a type of code of conduct to be accepted globally for these land grabs to insure fairness for both parties involved.

Many countries have been involved in land grabs over the past few years including: China, Kuwait, United Arab Emirates, Laos, South Korea, Cambodia, and most Sub-Saharan countries. Many land transactions occur without a paper trail, therefore making regulation even more challenging.

Some countries are almost forced to land grab because of rising import costs of food. In the last five years, Gulf countrys’ import prices of food rose from $8 billion to $20 billion. Because of rising import costs of food, over 6.1 million acres have been “grabbed” in just five sub-Saharan African countries alone, according to the Food and Agriculture Organization..

Is there any upside to land grabs?

According to the International Food Policy Research Institute, such investments can yield benefits for the rural poor by creating many farm and off-farm jobs. The IFPRI believes that these transactions need to have a code of conduct. If such a code was accepted by all countries, then the transactions could be beneficial for both parties; food security solved and jobs created.

In Mozambique, they are advertising a surplus of land available for lease. The government strongly feels that foreign investors or companies will benefit their rural economies by creating agro-industrial employment in areas stricken by poverty.  That is not always the case. China claims that more than 10,000 Chinese “settlers” move in to the new area.

A code of conduct would ideally prevent public outrages in sold regions. In Madagascar, Daewoo of Korea agreed to farm over 3.2 million acres of farmland, over half of Madagascar’s farmland. The citizens of Madagascar were so outraged that finally, the president was overthrown, and the new president, Andry Rajoelina, eventually claimed that the Daewoo deal was against the Madagascar Constitution so it became void. In that case, the public was aware of the deal and were able to get their voices heard.

In Cambodia there are many protests to try to stop foreign investors from grabbing land. In one instance, government officials responded to protests, stating the land was state owned and could be sold or leased at the government’s discretion. In that situation, a code of conduct would provide guidelines for the public to appeal to the government officials.

Land grab effects

Land grabs without stick guidelines call human rights into question. Although each deal must be treated as a separate respective case, a code of conduct would ensure that general rules of fairness are followed. Without this code, the effects are that some deals look like they benefit the selling country and some benefit the buying country. What is consistent is that farmland is being grabbed by people who are concerned about the supply of farmland globally. Many countries have simply run out of farmland in their home country and in order to feed their citizens, they must grow food in other countries.

We have said it over and over, farmland supply is decreasing and the demand is increasing because of a few primary factors including: growing populations, emerging social classes, decreased supply, investment potential, and now land grabbing.

Reports have come out recently claiming that farmland prices are idling right now, but are going to rise soon and continue to rise for a very long time because of these factors. Right now is the perfect time to invest in farmland because the price is currently the lowest it will be. As long time investor and financial commentator Jim Rogers said, “I’m convinced that farmland is going to be one of the best investments of our time.”
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Source: Farmland Forecast