Financial Times | 24 May 2009
By Javier Blas in London
African countries are giving away vast tracts of farmland to other countries and investors almost for free, with the only benefits consisting of vague promises of jobs and infrastructure, according to a report published on Monday.
“Most of the land deals documented by this study involved no or minimal land fees,” it says. Although the deals promise jobs and infrastructure development, it warns that “these commitments tend to lack teeth” on the contracts.
The report – “Land Grab or development opportunity?” – is written jointly by two UN bodies – the Food and Agriculture Organisation and the International Fund for Agricultural Development – and the International Institute for Environment and Development, a London-based think-tank.
It is the first major study of the so-called “farmland grab” trend, in which rich countries such as Saudi Arabia or South Korea invest in overseas land to boost their food security. The investors plan to export all, or a large share of, the crops back to feed their own populations.
The trend gained notoriety after an attempt by South Korea’s Daewoo Logistics to secure a large chunk of land in Madagascar, which contributed to the collapse of the African country’s government.
Some critics, including Jacques Diouf, head of the FAO, warn against “neo-colonialism” but others say the investments can boost economic growth in Africa.
The report, seen by the Financial Times, concludes that “virtually all the [farmland] contracts” were “strikingly short and simple compared to the economic reality of the transaction”. Key concerns such as “strengthening the mechanisms to monitor or enforce compliance with investor commitments” on jobs or infrastructure, “maximising government revenues”, or “balancing food security concerns . . . are dealt with by vague provisions if at all”, it says.
The report, which studied cases in Ethiopia, Ghana, Mali, Madagascar and Sudan, uncovered farmland investment in the past five years totalling about 2.5m hectares – equal to about half the arable land of the UK.
Other estimates, including one from Peter Brabeck, chairman of Nestlé, put total farmland investments in Africa, Latin America and Asia above 15m hectares, about half the size of Italy.
Also raised in the report was the risk that poor people will lose access to farmland and water.
“Land allocations on the scale documented in this study do have the potential to result in loss of land for large numbers of people,” the report states. “Long-term land leases – for 50 or even 99 years – are unsustainable,” it adds.
Lorenzo Cotula, one of the report’s authors, says new research indicates that farmland deals could be “structured much better”. In particular, it proposes giving host countries more resources to negotiate the deals.“As pressure grows, the deals will start to be done in a different way,” he adds.