Last year’s soaring food prices caused a global crisis that triggered a shopping spree on farm land around the world. Rich countries that normally import food have now bought up large tracts of land in poor food-exporting countries.
Arab countries have gotten in on the act, as a result of losing confidence in normal food supply chains. To ensure their food security, many have bought millions of hectares of farmland in Africa and Asia, creating offshore food sources in countries like Indonesia and Ethiopia.
“It seems that it has become an important concern for countries in the Arab region which want to meet the growing demands of their populations,” says Devlin Kuyek, a researcher at GRAIN, an international non-profit organization that supports small farmers.
Last year, Egypt signed a contract with Sudanese President Omar al-Bashir to produce 2 million tons of wheat per year in the north of Sudan for export to Egypt, according to GRAIN, which includes Egypt in a report on “land grabbing” countries. Egypt has also leased 840,000 hectares from the Ugandan government, which represents about 2.2 percent of Uganda’s total area.
Countries such as Saudi Arabia, Bahrain, Kuwait, Libya, Jordan, Qatar and the United Arab Emirates have also been featured in GRAIN’s land grabbers report. In September 2008, the governments of Qatar and Vietnam announced plans for a $1 billion joint investment fund, of which some $900 million was invested by Qatar’s sovereign wealth fund, the Qatar Investment Authority.
“In August 2008, Ethiopia’s prime minister told the Financial Times that he was eager to give Saudi investors access to ‘hundreds of thousands’ of hectares of farmland for investment and development,” notes GRAIN’s report.
“It is however very difficult to estimate the total value of land grabbed today as most deals remain in the negotiations phase and are, for the most [part], very obscure,” says Kuyek.
But the United Nations’ Olivier de Schutter, the UN’s special rapporteur on the right to food, quotes an estimate from International Food Policy Research Institute (IFPRI) that between 15 and 20 million hectares of farmland in developing countries have been subject to transactions or negotiations involving foreign investors since 2006.
Not always a fair deal
“States would be acting in violation of the human right to food if, by leasing or selling land to investors, whether domestic or foreign, they deprived the local population from access to productive resources indispensable to their livelihoods,” he said. “They would also be violating the right to food if they negotiated agreements that might lead to a situation of food insecurity, a dependency on foreign aid or on increasingly volatile international markets.”
The land purchased by countries is usually fertile farm land with relatively easy access to water.
Some say the purchases can have adverse repercussions on indigenous people and pastoral populations who are evicted from the land they have used for generations for cultivation and irrigation.
“Land grabs are becoming institutionalized as clear strategies that are developed by governments, which also rely on the private sector and international organizations,” insists Kuyek.
For example, the Saudi Eastern Province Chamber of Commerce has sent a circular to all businessmen in the eastern region, directing them to invest in agriculture projects overseas, following a government directive that the private business sector should undertake agricultural production ventures abroad, according to the Saudi Gazette.
“The objective is to achieve long-term food security for Saudi Arabia and secure a continuous supply of food to the kingdom at low and fair prices,” Adnan al-Naeim, secretary general of the Asharqia Chamber in the Eastern Province, told the Gazette.
Governments, often through sovereign wealth funds, are negotiating acquisition or lease of farming land.
“The Bin Laden Group signed an agreement to invest about $4.3 billion, on behalf of a consortium of 15 Saudi investors [know as] the Middle East Foodstuff Consortium, to develop 500,000 hectares of rice land in Indonesia,” the GRAIN report said.
In August 2008, three Gulf firms — Abu Dhabi Investment House (ADIH), Ithmaar Bank and Gulf Finance House — announced the creation of AgriCapital, a new $1 billion Islamic investment fund which purchases land overseas to produce food for the region, as well as fund biotechnology research.
The report also quoted Abraaj Capital, a private equity firm, saying it had acquired, together with the UAE government, about 324,000 hectares of farmland in Pakistan for rice and wheat production.
“Gulf countries are also operating through the Islamic Development Bank,” adds Kuyek.
A spokesperson at Abraaj, speaking on condition of anonymity, told Executive, “This is the first time I have heard of such a thing.” ADIH and the Binladen group did not reply to requests for comment.
Beyond food security concerns, it appears that land purchases are increasingly being perceived as a powerful investment tool for global firms. A flurry of investment companies and private funds have been acquiring farmland around the globe, banking on increasing food prices in the future and cheap fertile land. Among the companies named by the GRAIN report are Goldman Sachs, Deutsche Bank, Black Rock and the International Finance Corporation.
“In August 2008, Goldman Sachs invested $300 million to acquire full control over more than 10 poultry farms in Hunan and Fujian provinces in China,” says the report.
In spite of the power and influence these countries and international companies exert, more and more opposition groups are fighting the deals.
“In the Philippines and Madagascar, opposition groups are challenging such deals and taking them to the government,” says Kuyek.
But many countries around the world remain unaware of the possible dangers lurking in the near future. According to the Saudi Gazette, Saudi Arabia launched a major food security initiative, in cooperation with the International Fund for Agricultural Development, identifying Mauritania, Yemen, Algeria, Senegal, Sudan, Morocco, Bosnia and Lebanon as countries where land may be purchased to guarantee food security.