A new form of colonization, infrastructure,
political and climate problems aside
India,
which doesn’t allow corporate farming domestically, has joined the growing list
of countries going overseas to look for food security, with more than 80 Indian
agribusiness companies investing more than Rp10.8 billion (US$211.2 billion) in
African countries including Rwanda, Uganda, Kenya, Ethiopia, Congo, Madagascar,
Liberia and Ghana.
India
is far from alone in looking for food security overseas, nor are the African
nations where India is investing unique. Many developing countries, according
to the Food and Agriculture Organization of the United Nations “are making
strenuous efforts to attract and facilitate foreign investment into their
agriculture sectors.” That has dovetailed with increasing nervousness on the
part of countries which, either because of population pressures, lack of arable
land or climate change problems, have begun to look overseas for land on which
to grow their food.
Critics
say this has raised concern whether food security FDI has the potential to harm
the host countries, distorting their local markets, taking food away from
poverty-stricken domestic citizens, distorting production, pushing people off
customary lands or forcing them into seasonal labor, increasing the dependence
of the poor on commercial foodstuffs, taking water or other natural resources
that the poor used for their own production, and other issues.
For
investment-strapped governments such as Sri Lanka, Laos and many others,
however FDI in any segment of the economy is generally regarded by traditional
economists as important, providing technology transfer, infrastructure
development and other important attributes.
For
them, FDI is regarded as a “potentially important contributor to filling the
investment gap and providing developmental benefits, for example through
technology transfer, employment creation and infrastructure development,” the
FAO said in a recent study. “Whether these potential developmental benefits are
actually likely to be realized is a key concern, as FDI has also the potential
to harm host countries.”
With
the global transport network now providing the ability to move vast amounts of
food around the planet cheaply, and with the world population having reached
7.023 billion, both the need and the ability to do so have overlapped.
According to a 60-page July 2011 report titled Land Tenure and International
Investment in Agriculture by the Committee on World Food Security, over the past
50 years, “Multinational companies have extended their global reach on supplies
of food, animal feed, biofuels, timber and minerals.”
Deals,
according to the report, occur at multiple levels, both within and between
regions. In particular, as Asia Sentinel reported in May 2009, the major
players were China, South Korea and countries in the Gulf States. However,
today the deals have spread far beyond those countries, with the South African
Commercial Farmers Association acquiring 200,000 ha in Congo and negotiating
with another 22 African governments for more land, for instance. Brazilians are
expanding their holdings in Bolivia, Vietnamese and Chinese interests are
moving into Laos, UK interests are acquiring land in Eastern Europe. Kuwait has
obtained 50,000 hectares of Cambodian farmland. Indian companies are growing
oilseeds, cereals, flowers and tea in seven countries across Africa.
“The
search for fertile and cheaper lands and labor are taking us to Africa. The
governments in most of the African countries are gradually getting more
democratic and stable. They are also proactive towards promoting industries,
especially agriculture to meet the demand for food,” an official of Karuturi
Global told India’s Financial Chronicle.
Although
Indian companies are looking thousands of kilometers away in Africa for land on
which to produce food, Sri Lanka is practically begging agricultural investors
to enter the country, now recovering slowly from decades of sectarian violence
and outright war. The government recently held a Sri Lanka Expo in Colombo at
which the country’s farmlands were marketed aggressively to Arabian Gulf-based
businesses. The island’s consul general in Dubai was quoted in media recently
as urging the acquisition of Sri Lankan land for agricultural export.
“The
UAE’s imports of food products have significantly increased over the recent
years. Investing in agricultural land will greatly benefit in preventing steep
increase in prices and ensuring steady supply,” according to Invest Sri Lanka, a
government publication.
That
has raised concerns because despite the lush tropical climate of the Indian
Ocean country, it can’t meet demand for fruits and vegetables and other staples
foods, authorities say. And in fact there is growing concern that extends well
beyond Sri Lanka.
It many
never come off in any case. Many eager developing countries simply don’t have
the ability to absorb large-scale investment. A venture capitalist who recently
visited Sri Lanka told Asia Sentinel that much of the land that is
under-utilized is in territory previously held by the Liberation Tigers of
Tamil Eelam, with well-connected Sinhalese taking Tamil land for corporate
farming, causing some corporations to shy away from investment.
Equally,
As Asia Sentinel reported in 2009, Saudi Arabia’s Binladen Corporation walked
away from a proposed US$4.3 billion scheme to plant rice on a half-million
hectare area of Indonesia’s Papua, apparently privately blaming red tape,
overlapping regulations, corruption and inadequate infrastructure. A
million-hectare oil palm plantation proposed by the Chinese in Kalimantan also
has never materialized. The South Korean company Daewoo was forced to drop
plans to plant more than 400,000 hectares of Madagascar land in corn in the
face of political opposition in 2008.
Still,
it appears that agricultural colonization is gaining pace although according to
the Committee on World Food Security, the amount of hectarage being purchased
across the world is shrouded in secrecy and estimates vary wildly. As an
example, one 2011study cited by the committee estimated that 46.6 million
hectares were taken over by foreign interests in 81 countries across the globe
between 2005 and 2009 while another puts the figure between 51 and 63 million
ha which reportedly was taken over in 27 African countries up to 2010.
“While
there clearly is much uncertainty about how much land is changing hands, all
sources agree that the trend is markedly upward and is likely to continue,” the
authors note. “Large-scale land investments involve a complex, interlocking
global system of interests. Investments may be direct or indirect,
international and domestic, productive or speculative, corporate, public or
farmer investments.”
The
direct players include companies seeking land to grow food, feed and biofuels.
However, as Asia Sentinel reported in November 2011, there is growing concern
over the “financialization” of agricultural products as indirect players such
as pension funds, hedge fund managers, real estate groups and other equities
funds pile into the market, not only on land but on commodities, for
speculation purposes.
“Evidence
suggests that many land deals have not been followed by productive investment,
with only 20 percent of investments that have been announced actually being
followed through with agricultural production happening on the ground.”
Asia
Sentinel
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