Gulf Times (Qatar) | 1 June 2010
By Dr Mahendra Shah / Doha
It is not only the Gulf countries that have been on a buying farmland spree in the developing countries. China, India, South Africa and South Korea, amongst others, have been equally active. In many of these cases it has been government finance, often channelled through publicly-funded companies that have been the forefront investors.
Additionally, there is also a plethora of recently established large investment equity funds in Europe and the US that are also scrambling to invest in developing country farmland, particularly in sub-Saharan Africa.
The world food demand is projected to increase more than two-fold in the next four decades. The challenges ahead to achieve food security for all and deliver the more than sixty year old Universal Right to Food are formidable. Today there are a billion people living everyday wit chronic hunger. Land degradation, rising water scarcities and declines in agricultural productivity are rampant in many parts of the world.
Unlike the efforts that mobilised the 1970s Green Revolution that resulted in more than doubling of the world food production, today there is a lack of public sector commitment to invest in agricultural research, essential for new and sustainable green-enhanced crop productivity - and a blue-efficient water use - revolution.
The private sector alone cannot be relied on to deliver the agricultural breakthrough essential for the needs and the “crops of the poor”. Climate change will further exacerbate world food security challenges in the 21st century and the failure of Copenhagen to make progress towards urgent world-wide carbon emission cuts is a recipe for world food disasters.
The world’s arable land and water resources are already limiting in areas that are increasingly food insecure and an innovative and holistic science-based approach is critical toward achieving sustainable agricultural development. Currently some 596mn and 910mn hectares are cultivated in developed and developing countries respectively. There is an additional cultivable land of about 290mn hectares in developed countries, with 38% in the Russian federation and Eastern Europe and 6% in Oceania, primarily Australia. There are also an additional 413mn hectares of cultivable land in South America and some 395mn hectares in sub Saharan Africa.
The Food and Agriculture Organisation of the United Nations has stressed that future food demand should be derived from productivity increase and land expansion should be limited if not avoided as bringing additional land under cultivation carries substantial risks of biodiversity loss, ecosystem degradation as well as the real risks of carbon emissions from land clearance.
Hence a sustainable development priority should in the first instance be to increase productivity on current cultivated land, especially in sub Saharan Africa and South America where yields are below 50% of potential high agricultural technology yields.
Most of world’s 1bn people suffering from chronic hunger are found in the developing countries which will also account for most of the increase in future world food demand. Agricultural investments are crucial to jump start development in these countries as well provide the foundation for employment and livelihoods for the rural poor.
The 2009 world food security summit in Rome and Official Development Assistance (ODA) community highlighted that international aid will not meet the investment requirements. Alternative innovative private and public sector investments that are socially, environmentally and economically responsible are essential to enable the poor countries to achieve sustainable and progressive development, particularly in food agriculture that can enable achievement of the Millennium Development Goals, the core subject of the forthcoming September 2010 UN General Assembly.
Whilst the Gulf Co-operation Council countries with an estimated total hydrocarbon wealth of some $ 35tn are amongst the worlds richest, they are also the most food deficit and water scarce countries. These countries can enhance their domestic production with investments in solar desalinisation, efficient drip irrigation and greenhouse hydroponics; they also will need to secure assured food supplies, particularly cereals such as wheat and rice for their food security through foreign agricultural investments.
The key consideration is whether the Gulf countries take the easy roadmap of investing in agriculture in the richer developed and transition countries or they take a more responsible world lead by investing and becoming a development partner in developing countries.
A Reuters report, “Gulf farmland search switches to richer countries” by Amena Bakr (Gulf Times, May 28), puts forward social and commercial arguments such as high “political risk” and substantial “infrastructure investments” of farmland in developing countries and stresses that Gulf countries are switching to searching for farmland in richer countries.
The commercially attractive argument is put forward on the basis that it will take an infrastructure investment of $1,500 to $2,000 per hectare in developing countries. Assuming a yield of, say, 5 tons per hectare, this means an investment of $300 to $400 per ton of produce. A recent scientific study presented at the April 2010 Annual Meeting of the World Bank quantified first estimates of transport costs based on current infrastructure from production areas to the nearest shipment port. For example, in the case of sub-Saharan Africa, of the current cultivated land area of some 197mn hectares about 45% is within a transport cost of less than $60 per ton of produce from the production area to the nearest shipping port.
With regard to the additional land of some 395mn hectares that can potentially be brought under cultivation in sub-Saharan Africa, about a third is within a transport cost to port of less than $60 per ton.
Bakr, in her May 28 Gulf Times report, refers to a freehold purchase cost of $2,000 per hectare in eastern Europe. In comparison, the land in sub-Saharan Africa farmland purchase values are much lower. The reason there has been an outcry against land purchase and leasing is the lack of transparency and legitimacy. Some media reports have highlighted land leasing deals at $1 per hectare per year, for example, in Mozambique and Ethiopia. No wonder this is viewed as unethical “land grab”. We tend to blame the governments of developing countries for such deals but there are two parties to such “underground” deals and both are ethically and morally responsible for the transaction.
Bakr, in her report, also raises investing in richer countries issues as being “ethically justifiable”, with less “political risk” and “legally more secure” in the self-interest of the Gulf countries. Whilst this is true in the short term, a case can be made for being ethical and globally responsible in contributing to development of poor but land-and-water-rich developing countries, in a world that is increasingly interdependent and where the wide disparity between the rich and the poor is not tenable in the long run.
The world needs an ethical, responsible and innovative approach to development partnerships between rich and poor nations. The Gulf countries have a real opportunity to secure not only their own food security but by investing in developing country agriculture can contribute to the larger goal of helping developing countries develop, particularly as development also leads to increased imports of hydrocarbon energy with which the Gulf region is blessed. Sustainable and progressive development for all countries is critical in the long term for our one Earth that cannot continue forever as two worlds of the rich and the poor.
For the Gulf countries, simply switching from critically-needed farmland investments in developing countries to the richer countries deserves rethinking as this might just be a unique opportunity to provide global leadership and partnership towards making a difference to the suffering of the world’s food-insecure and hungry and making real progress towards sustainable development.
And the bonus would be achieving and ensuring long-term food security of the Gulf countries as well.Dr Mahendra Shah is director of Programme, Qatar National Food Security Programme, Doha.