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Selling farms to foreigners: Question of profit or loss

Discussion in 'Habari na Hoja mchanganyiko' started by Shadow, May 1, 2009.

  1. Shadow

    Shadow JF-Expert Member

    May 1, 2009
    Joined: May 19, 2008
    Messages: 2,908
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    mwanzo wa kuwa na 'banana republic'

    MANILA, May 1 — Rattled by last year's food price crisis, governments and corporations have signed a slew of deals to lease or buy arable land in cash-strapped nations, mainly in Africa and Southeast Asia. The entire harvest is shipped to the buyer.

    Water-scarce Gulf states, along with China and South Korea — both have rising populations and food security concerns — are leading the rush for fertile land. When Tanzania's President Jakaya Kikwete was in Riyadh last month for a state visit, he met a Saudi investor group eager to lease 500,000ha of his country's farmland to grow wheat and rice for the desert kingdom.

    “The food and financial crisis combined have turned agriculture land into a new strategic asset,” said the sustainable farming advocacy group Grain.
    The Washington-based International Food Policy Research Institute (IFPRI) estimates the value of signed farmland deals in recent years, as well as those in the pipeline, at between US$20 billion (RM72 billion) and US$30 billion, covering an area of 20 million ha — 20 per cent of the entire amount of arable land in the European Union.

    “We see opportunities and threats,” said IFPRI's director-general Joachim von Braun in a conference call this week with reporters from around the world.

    For IFPRI, which is funded by government and development banks, these agreements have the potential to inject much-needed investments into neglected farm sectors in developing countries.
    But they also raise concerns over their impact on the rights of small farmers and on the environment.

    A political worry is the spectre of a re-emergence of the “banana republic syndrome with foreign investors getting involved in national problems”, said von Braun, noting that this was exactly what happened in Latin America in the 1970s.

    Wheat rather than rice seems to be the main crop in these ventures right now. “We are hearing that plenty of investments are planned by commercial interests for rice, although not much has happened on the ground yet,” said Dr Achim Doberman, deputy research director at the International Rice Research Institute based in the Philippines.

    Spain-based Grain views the sharp escalation in deals since last year's food price crisis as a sign that “food-insecure” governments have lost faith in the market and are trying to secure supplies through the direct control of farmland overseas.

    Foreign governments and companies with deep pockets that are making large land investments in the developing world clearly have the potential to cause trouble, especially in these raw times of global recession.
    There was widespread public anger in Madagascar when South Korean conglomerate Daewoo leased 1.3 million ha of farmland — a huge chunk of the impoverished island's arable land — to grow corn for South Koreans. The backlash played a role in the coup overthrowing the country's president in March. One of the first acts of Madagascar's new leader was to scrap the agreement with Daewoo.

    The Philippines suspended an agreement with China to lease 1.4 million ha to grow crops for Chinese consumption two years ago. The government said it needed to take a closer look at the social impact after protests from local farmers' groups and the country's politically active Catholic Church.
    The deal would have brought in nearly US$4 billion over several years for the Philippines.
    “The interest of foreign direct investors in agriculture is potentially very good because small farm holders in developing countries have been starved of capital because of the credit crunch from the financial crisis,” said von Braun.

    Groups tracking these transnational land deals are noticing fewer government-to-government agreements and far more commercial ones.
    IFPRI wants an international code of conduct set up for foreign investors — whether governments or corporations — and the host countries to protect the interests of small farmers, as well as address environmental concerns on biodiversity and water and land resources stemming from the impact of large-scale farmland investments.

    And in times of national food security — in the case of a drought, for instance — domestic supplies should have priority, it said in a policy brief: “Foreign investors should not have the right to export during an acute national crisis.” — The Straits Times

    source:Selling farms to foreigners: Question of profit or loss