Monday, August 16, 2010

Leaked report shows the negatives of African "land grabs"

A leaked World Bank report calls into question the "land grabs" that have been taking place in Africa. Countries or companies that needed land to grow food have been leasing land from African governments at a low price. The leased land grows more food for the hungry in China, India or middle eastern countries. However, the new study says that it might keep the poor even poorer.

From the Guardian, writer Katie Allen tells us about the leaked report on the African land rush.

The growing interest has prompted the World Bank to launch its own research into how developing nations could benefit from the foreign money. The full report is due any day now but the release has already been delayed several times. A leaked draft suggested that so far, wealthy investors have largely threatened local resources and exploitatively targeted countries with lax laws and low charges.

It is hardly the ideal outcome supporters of land deals have in mind: that the investor makes financial or food-security gains, while the recipient gets local jobs, higher yields and some share in the profits and crops.

NGOs were hardly surprised by the headlines from the World Bank leak. Opinion varies between them over whether investment, when responsible, can bring benefits. Oxfam, for example, has said it can. Others believe land sovereignty is paramount. African land should remain in African hands. But there is broad agreement that deals are often done under-the-counter and fail to involve local people.

Survival International highlights the example of the tribes of the Lower Omo Valley in Ethiopia. The charity says that after losing their hunting land as national parks were created in the 1960s and 1970s, local people then saw part of their territory turned into a state-run farm. Now the government is brokering deals to lease out tracts of tribal land to foreigners, so that they grow cash crops including biofuels. Survival says local tribes have had no say in the matter. It is a tale echoed by other NGOs, which report incidences elsewhere of consultations being held but letters inviting locals arriving after the fact.

This is not just about isolated tribes. The sheer numbers of Africans dependent on agriculture should raise alarm bells over what is at stake if opaque, bargain-basement land deals are to continue. In West and East Africa, agriculture contributed about a third to GDP between 2003 and 2007, compared with just 1.6% in developed economies, according to the UN Conference on Trade and Development. Agriculture accounted for more than half of total employment between 2002 and 2006.

Those farmers stand to gain from new technology but they also risk being disenfranchised and left hungry. In reality, the dream of a win-win relationship is often a skewed flow of profits to the investors. Go back to the proposition: a 99-year lease on arable land at $1 a hectare. To put that in context, farmland in Britain is selling at about £15,000 per hectare, according to the Royal Institution of Chartered Surveyors.

If you do not believe the low African land price quoted, how about the first-hand account of the farmer and philanthropist Howard Buffett, son of billionaire Warren. He recounts the recent offer of an equity stake in a land deal being brokered by a hedge fund. The host government would provide 70% of the financing and a 98-year lease, requiring no payments for four years. After that, the cost would be $2.91 per acre per year. Another fund pledged yields of 15-20%, dwarfing the average return on US agricultural land of 6%. As Buffett says: "If I didn't know better, this would sound like a great opportunity!"

But then he spells it out. "Here's what I'm sure of: these deals will make the rich richer and the poor poorer, creating clear winners who benefit, while the losers are denied their livelihoods," he writes in the foreword to the report (Mis)Investment in Agriculture: The Role of the International Finance Corporation in the Global Land Grab, by the Oakland Institute, a US thinktank.

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