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Global land rush expected to calm as "perfect storm" passes
Published: 13 Mar 2017
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Ears of wheat in a field of the Solgonskoye farming company in Talniki, Russia, August 28, 2016. REUTERS/Ilya Naymushin/File Photo
Reuters | 13 March 2017

Global land rush expected to calm as "perfect storm" passes
 
By Chris Arsenault
 
RIO DE JANEIRO, March 10 (Thomson Reuters Foundation) - The talk show host Oprah Winfrey once urged her audience to buy land because "God not making anymore" but the rise in global land deals is likely to subside over the coming years, a senior agricultural analyst said.
 
The beginning of the 21st century brought a new wave of corporate farming to the world's fields as lower transportation costs and abundant capital sent investors searching for new land to buy, the U.S.-based consulting firm Bain & Company said.
 
But the conditions that fuelled the global land rush and often violent conflicts over territory are changing, said Fernando Martins, an agricultural analyst at Bain & Company.
 
Food price spikes in 2007-2008 that sent investors scrambling for land to purchase created a "perfect storm" that is unlikely to be repeated in the near future, he said.
 
"Those price spikes were necessary to have private parties and governments invest more in (food) production," Martins told the Thomson Reuters Foundation.
 
Demand for territory by hedge funds, sovereign wealth investors and pension funds has forced residents off their land in parts of Africa, Southeast Asia and other regions, according to rights groups.
 
More than 1,500 large-scale land deals have been signed since the beginning of the century, Oxfam said last year, with many covering areas populated by communities who don't have formal title deeds to the territory.
 
Competing claims due to insecure land tenure for vast swathes of territory often lead to conflicts between investors and local residents that can turn violent.
 
A rapid increase in Chinese demand for protein, poor harvests in the United States and export bottlenecks in Brazil all added to the mix to fuel land conflicts, Martins said.
 
The proliferation of major land deals is unlikely to continue if interest rates in the developed world rise as they are expected to, Martins said.
 
"The price of land is inversely correlated with interest rates. The lower the interest rates, the higher the price of land," he said.
 
"There will be ebbs and flows (in the number of land conflicts globally) but they will be sort of stable."
 
Since 2000, more than 26 million hectares, an area larger than the U.K., changed hands in global land deals, most of which saw wealthy investors buying territory in poor countries, according to the tracking group Land Matrix.
Source: Reuters



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