African land rush by firms ‘may put lives of millions at risk’

Business Day | 10 December 2013
Zhann Meyer, Head of Africa Agribusiness at Nedbank (left). (Photo: Agbiz eNewsletter)

African land rush by firms ‘may put lives of millions at risk’

by Shannon Sherry

AGRICULTURE is at a crossroads in Africa — including South Africa — with decisions taken by governments on a spate of investments in the sector having potentially serious repercussions on millions of lives for decades to come, a leading banker has warned.

Nedbank Capital head of Africa business Zhann Meyer referred to a number of recent acquisitions in the sector, concluding that "the livelihoods, ways of life and culture of millions of Africans are at risk".

Speaking at a media briefing on Monday, Mr Meyer said African agriculture was "at the forefront of a land rush".

"Large commercial farming corporates will control large tracts of land, labour and agricultural policies. Banks, governments and development finance institutions have collective responsibility to ensure that policy and legislation is angled towards inclusive sustainable development (that benefits local people)."

Mr Meyer singled out a number of deals and negotiations taking place in the agriculture sector, including: Grindrod acquiring 20% stakes in Senwes and NWK; Co-operatives Griekwaland Wes Ko-operatief (GWK) and Oos Vrystaat Kaap (OVK) in merger talks; Fund manager Phatisa’s African Agriculture Fund acquiring Malawi’s Farming and Engineering Services; and AgriGroupe buying Afgri for R2,4bn, with a "clear Africa strategy".

"I don’t think these deals are necessarily bad, but a lot will depend on the way they are handled," Mr Meyer said. "We have to ensure that local needs are met first, that there is food security and jobs created for local people, that the potential displacement of rural people is properly managed, and that there is access to land and training for local people.

"We have to look after our people first. It would not be right if food is simply exported to countries that cannot grow their own crops before the needs of local people are met."

He said although "developed agricultural land" in SA is expensive and therefore not that attractive to investors, land in other parts of Africa is "virtually free" — sometimes going for $20/ha.

Africa was still largely rural, with vast numbers of people earning a living from the land and "this will not change soon".

Mr Meyer said Africa had become attractive due to being home to 60% of global uncultivated arable land and was seen as the new frontier for agriculture as the world population headed for 9.6-billion by 2050. "More than 60% of large-scale agricultural land deals in developing countries in the last decade has taken place in Africa, involving more than 56-million hectares."

Investors such as multinational seed giant DuPont Pioneer, which earlier this year bought 80% of South African seed company Pannar, have always maintained that although local farming jobs would be lost as African agriculture is modernised and mechanised, the process would create opportunities in related sectors. It would also substantially increase the incomes and wealth of African smallholder farmers, they say.

Other parties have protested against some of the deals in the agriculture sector.

The African Farmers Association of South Africa last month protested against the sale of Afgri to AgriGroupe, but shareholders subsequently approved the sale.

Mr Meyer said food security in Africa requires policies that enable "sustainable and stable" agriculture and "transparent and enforceable legal land ownership legislation with title deeds centrally registered and undisputed".

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