Cargill says land grabs are ‘bad idea,’ reduce market liquidity

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Bloomberg | 18 March 2013

By Rudy Ruitenberg

Land grabs are a “bad idea” because they reduce trade volume in agricultural commodity markets, said Ruth Rawling, Cargill Inc.’s vice-president of corporate affairs for Europe, Middle East and Africa.

“We’re against land grabbing because it takes productive land and all the resources on it out of the market,” Rawling said at a commodity conference in Geneva. “It reduces the size of the market, from our perspective that is a bad idea.”

A global rush to buy farmland triggered by the 2007-2008 jump in food prices continued in recent years, with international investors focusing on the poorest countries with weak land-rights security for deals, according to an April 2012 report by the Land Matrix research group.

Many land deals are aimed at supplying a single market, reducing the ability of trade to compensate for production shortfalls in one region with surpluses in another, according to Rawling, who called land grabs “a failure of policy.”

“One of the problems in land grab is we’ve seen actors wanting to have access to large amounts of land for their own purposes,” Rawling said in an interview at the meeting, organized by the United Nations Conference on Trade and Development. “You’re reducing the liquidity of the market. The more you carve up the market, the more you introduce rigidity.”

“It introduces a rigidity which isn’t helpful,” Rawling said. “In agriculture you have weather problems, and the great strength of the market being as broad as possible is that weather problems in one area can be resolved by surplus production somewhere else.”

To contact the reporter on this story: Rudy Ruitenberg in Paris at [email protected]

To contact the editor responsible for this story: Claudia Carpenter at [email protected]
Original source: Bloomberg
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