Why Corporations, Emerging Powers and Petro-States Are Snapping Up Huge Chunks of Farmland in the Developing World
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Stop me if you think you've heard this one before:
Investment banks, sovereign wealth funds and other barely regulated financial entities in search of fat paydays go on buying binges structurally adjusted to maximize their earnings reports and employee bonuses, while simultaneously screwing their business associates and everyone else in the process. It's all done in near-total secrecy, and by the time everyone finds out about it, they're already in the poorhouse.
That's more or less the playbook for the derivatives and credit-default swaps gold rush that ruined the global economy, which cratered in 2007 and has yet to recuperate.
The bubble money has now moved on from housing and turned to the commodities markets, especially global food production. Given what that money did to the housing market, things don't look good for local communities whose land is being bought up by governments, sovereign wealth and hedge funds, and other investors on the hunt for real value in a hyperreal economy.
Entrenched and developing economic powers -- the U.K., China, South Korea, India and more -- have launched land rushes to outsource production of everything from staples like rice, wheat, corn and sugar to finance bubbles like biofuels. That includes oil-wealthy Gulf States, which recently feasted on commodities speculation that exploded oil prices in 2008.
The hard numbers are alarming: According to the Guardian, in the last six months over 20 million hectares (around 50 million acres) of arable land, mostly in Africa and Southeast Asia, have been sold or negotiated for sale or lease. That's about half the size of all arable land in Europe, or the size of entire U.S. states North Dakota or Oklahoma.
The aptly titled report, " ' Land Grabbing' by Foreign Investors in Developing Countries," from the International Food Policy Research Institute, which declined to be interviewed for this article, explains that "details about the status of the deals, the size of land purchased or leased, and the amount invested are often still murky."
It's no wonder: The economic valuation of land and water has increased in concurrence with both price commodities and the ravages of climate change, whose droughts, wildfires and other extreme environmental events are quickly shrinking what's left of the planet's arable land and clean water.
That exponential process will only be intensified by the biofuels some of these lands will be used to grow, which is a particularly shameless insult. Rather than use the 2.8 million hectares China bought from the Congo -- or the tens of thousands of hectares the U.K. bought from Ethiopia, Mozambique and Tanzania, and so on -- to feed the hungry, those investor nations will use them to grow food for our cars. What biofuels will do is make a few outsider nations very rich at the expense of a great many locals who could use the land to feed themselves.
But don't call it a land grab, cautioned Rodney Cooke, technical advisory division director of the International Fund for Agricultural Development (IFAD), who, along with the United Nations' Food and Agriculture Organization (FAO), also declined to comment on this article, commissioned a study from the International Institute for Environment and Development (IIED) to analyze the disturbing trend. "I would avoid the blanket term 'land-grabbing,' " Cooke said. "Done the right way, these deals can bring benefits for all parties and be a tool for development."
Keep dreaming, argued Patrick Woodall, research director for Food and Water Watch.
"These investments are effectively land grabs for a number of reasons," he told AlterNet by phone. "They're going to be used to grow crops for exports. They're taking arable land out of the domestic food supply. Most of these deals are totally secret, and there are no standards of access to public information. We're also concerned about places with weak legal systems, where farmers and pastoralists won't even know these lands are being sold from beneath them. Some don't even have formal land-titling systems, so this is going to push people off the land and take away their access to food."