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The 'Great Land Rush' is here to stay as capital seeks stable assets

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Bolivian women indigenous Aymara people walk on the highway near the Illampu mountain range in Achacachi, province of Omasuyos, 87 kms North of La Paz, July 18, 2004. (Photo: REUTERS/Eliana Aponte)
Place | 28 October 2016

The 'Great Land Rush' is here to stay as capital seeks stable assets

by Chris Arsenault

It kicked into gear when commodity prices hit record highs and food riots swept the developing world in 2007-08, and today the phenomenon known as the "great land rush" is cementing itself, according to data released this month by the global research group Land Matrix.

Large-scale land investment deals now cover an area larger than the U.K. and Slovenia combined, and 70 percent of the agreements have entered the production phase, Land Matrix reported, meaning the trend has continued despite a massive drop in food and fuel prices.

Covering two percent of the world's agricultural land, more than 1,000 territorial transfer deals signed since 2000 have become a fact of life for governments, investors and campaigners, transforming the geopolitical landscape.

"Land being acquired in poor countries is a general trend of globalization," Kerstin Nolte, a researcher with the German Institute of Global and Area Studies who studies land deal, told me.

Problems associated with some of the deals - local communities being forced off the land, speculation and secretive contracting - will likely intensify in the coming years, Nolte said.

With food prices comparatively low and importing nations lacking some of the urgency they faced in 2008 to secure supplies, some observers are surprised the deals are continuing, albeit at a slower pace than eight years ago.

Low interest rates, loose monetary policy in much of the developed world and interest rates on wealthy government debt hovering near zero means there is a massive pool of global capital seeking returns and sometimes wary traditional investments.

With few other options, investors are seeking stable long-term returns, scouting for land deals from Cambodia to Cameron.

Some analysts believe this trend is positive.

Land investment deals can boost global food production for a growing population by bringing capital and agricultural skills into poor countries, creating jobs for local people along the way, supporters say.

Critics contend the deals often displace local residents while widening inequality. And negotiations for the deals often lack transparency.

News of more deals starting break ground is leading land rights campaigners to double down on their call to better enshrine formal property rights to more of the world's 2 billion people who currently don't have them, according to the charity Oxfam.

Large-land deals are a symptom of a larger problem, according to campaigners. Huge swaths of the world's territory isn't officially owned by anyone, Oxfam said.

These territories, and the people who depend on them, are particularly vulnerable to abuses from powerful interests like land speculators, campaigners say. Without a title, residents often can't prove their right to live on the land, even if they have done so for generations.

"When we speak about property rights, what we mean is the absence of the tragedy of the commons," Hernando de Soto, the Peruvian economist and godfather of modern property rights thinking, told me.

"The notion that the majority of the world does not have such rights is catching on."

This sentiment doesn't mean all of the world's land has to be owned by individuals to be bought and sold on the market, campaigners say.

Indigenous groups and traditional farmers should have their ancestral lands formally recogized so they can be legally protected for future generations.

Lands formally titled to indigenous group have far better records for environmental preservation than other territories, according to a study released this month by the Washington D.C.-based World Resources Institute. And these benefits are usually reduced when unrecognized traditional teritory is signed away in land investment deal.

One of the main criticisms of large-scale land deals is that they often take place in secret with little consultation with locals, leading to displacement, corruption and other abuses, according to the campaign group Global Witness.

Some governments say they are trying to respond to these problems.

The Democratic Republic of Congo (DRC), home to some of the world's largest land investments, announced this month that it will start making all contracts for the deals public in a bid to boost transparency.

John Ulimwengu, an advisor to the DRC's agriculture ministry, told me that making the contracts of land deals public will help one of Africa's largest countries limit corruption while ensuring "that agricultural development aligns with basic community rights."

The fact that states are changing legislation to respond to large-scale territory deals means that - for better or worse - these agreements have become part of the global investment landscape.

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