Business Day (Lagos) | Monday, 01 June 2009
In the last edition of The Economist, the magazine reported a new and growing form of foreign agricultural investment. National governments of rich but limited land resources are now undertaking agriculture investment in foreign countries but the produce meant specifically and only for the home country.
For instance, the report mentioned that Saudi Arabia, earlier this year, received the first imported rice of its agriculture investment in Ethiopia. South Korea, the United Arab Emirates (UAE), and Egypt have made similar investments in Sudan, Africa’s largest country by size. China has joined, making its investments in Congo, just as Kuwait has the same type of arrangement with Zambia and Cambodia.
Though the details of these agriculture investments may differ, the core feature is that national governments are negotiating with national governments of some poor developing countries for hectares of land for agriculture use in exchange for some forms of benefits to the country.
These transactions constitute movement of capital from the rich country to the poor country for the purpose of food production accompanied by improvements in agriculture technology and seedling. The end result is an improvement in yields in places that these have been carried out so far, compared to the average in Africa. As the report rightly claimed, it is a case of “countries that export capital but import food are outsourcing farm production to countries that need capital but have land to spare”.
The practice has proved very contentious. Those that support the arrangement do so on the basis that it provides poor countries with new seeds, techniques and money for agriculture. Opponents call it “land grabs”, because the lands are insulated from host countries and argue that poor farmers are pushed off the lands they have farmed for generations.
This growing phenomena raises some serious fundamental issues about the future relationship between rich and poor countries. Though foreign agriculture investment is not new, they have been conducted much the same way as other investments, before now. The present form is initiated at the government level, introducing cross border political dimensions to agriculture investment. Because of the seriousness of food security, this measure will introduce or escalate political instability in the countries in question. Such arrangements give the most visible political interest, rather than solely commercial. Indeed, it is not surprising that, besides Zambia, many of the countries that have accepted such arrangements have some level of political instability. It is a roll call of potential time bombs waiting to explode and that include countries such as Sudan, Ethiopia, Congo, and the arrangement has already consumed a government in Madagascar.
It is disingenuous to see the growing type of foreign investment as another form of outsourcing. In its purest and natural form, outsourcing consists of the “shipment of jobs” abroad to areas that same services can be provided with lower costs, due mainly to improvement in technology. With outsourcing, the host country benefits in terms of improvement in income, knowledge, training and expertise.
This is not the case with this arrangement as the farmers are completely insulated from the local dynamic economy. This arrangement is also peculiar such that all the produce are specifically meant for the home country. Effectively, the international trade process on food is being circumvented. This can only be regarded as the height of neo colonialism because these countries are poor, some of them being fed by the World Food Programme (WFP). These countries have not got enough food, mainly because they cannot muster the capital requirements for improving their food production. A rich country now engages in some kind of cosy arrangement with dubious political leadership to guarantee food for its own people. The least acceptable, is for the home country and the investing country to share the produce.
Another ingredient of neo colonialism in this arrangement is the lack of any form of control by the home nation. The produce, the quantity of the produce, the method, and the destination of the produce are all decided outside the host country. It is also possible that the payments made to host countries are shrouded in secrecy, raising serious questions about taxes, tariffs, and duties and their applicability in such instances. The only benefit I see for now is the domestic jobs in these farms, but it is possible that existing jobs are displayed, anyway. And in the case of China’s investment, the report suggests the workers will be Chinese.
So, these arrangements are reminiscent of “banana republics” when many African countries served as plantations for European countries, but even those did not come with such explicit restrictions and rigidities.But, what can we learn from this? First, it is the most concrete evidence yet that food security remains a political issue, and should remain a number one political goal. Nations that have no much land will have to use their vast capital to ensure food security, even if it means another neo colonialism. Second, this is mostly in response to the 1997 and 1998 global food shortages that drove up food prices. In the context of these two issues, the response of the federal government is to provide access to N200 billion to commercial farmers. Third, it demonstrates that commercial agriculture value chain remains the best option for African counties such as ours to improve on agriculture produce. And finally, these rich nations realize that any measure of food insecurity is a return of poverty. Effectively, food insecurity is poverty!