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Africa: Questionable Land Investments
AfricaFocus Bulletin
Oct 28, 2010 (101028)
(Reposted from sources cited below)
Editor's Note
"Africa needs investment in agriculture--better seeds and inputs,
improved extension services, education on conservation techniques,
regional integration, and investment to build local capacity. It
does not need policies that enable foreign investors to grow and
export food for their own people to the detriment of the local
population." - Howard G. Buffett
In his foreword to a report by the Oakland Institute on land grabs
in Africa, farmer, investor, and photographer Howard G. Buffett
notes that he is just the demographic to which such deals are being
pitched. But, he cautions, even if they make the investors richer,
promised benefits for Africans are dubious and the potential damage
significant.
Nevertheless, institutional institutions such as the World Bank's
International Finance Corporation and European encouragement of
biofuel production on environmental grounds, provide systematic
encouragement for this trend.
This AfricaFocus Bulletin contains:
(1) excerpts from the foreword by Howard G. Buffett to a report
from the Oakland Institute on International Finance Corporation
encouragement of questionable land deals in Africa. The full
report, with case studies of Liberia, Sierra Leone, and Ethiopia,
is available on the Oakland Institute website (http://oaklandinstitute.org).
(2) excerpts from a report by Friends of the Earth Africa and
Friends of the Earth Europe, focusing on land deals encouraged by
Western European demand for biofuels. The full report is available
at http://www.foeeurope.org.
Two other AfricaFocus Bulletins released today have related
information on this issue, as well as links to even more sources.
- "Africa: Land, Take 2" (http://www.africafocus.org/docs10/ag1010a.php) features excerpts
from the new World Bank report entitled "Rising Global Interest in
Farmland," published in September (an earlier version leaked in
July had the title "Global Land Rush.")
- "Africa: Land Grab or Development" (http://www.africafocus.org/docs10/ag1010c.php), which contains
excerpts from a report by the UN Special Rapporteur on the Right to
Food, with suggested principles for large-scale agricultural
investment, and from the executive summary of a 2009 study of
recent land deals in Ethiopia, Ghana, Madagascar, Mali, Sudan,
Mozambique, and Tanzania, by a team from the FAO, IFAD, and the
International Institute for Environment and Development.
For previous AfricaFocus Bulletins on issues related to
agriculture, see http://www.africafocus.org/agexp.php
++++++++++++++++++++++end editor's note++++++++++++++++++++
(Mis)investment in Agriculture: The Role of the International
Finance Corporation in Global Land Grabs
The Oakland Institute
April, 2010
Foreword by Howard G. Buffett
[For the full report to which this is a foreword, with case studies
of Liberia, Sierra Leone, and Ethiopia, visit http://oaklandinstitute.org/]
I have never considered myself an activist. I'm a father and a
husband as well as a businessman, an author, a philanthropist, and
a farmer. But when most people see me with my cameras, they quickly
identify me as a photographer.
...
As a permanent resident of South Africa and someone privileged to
do a great deal of traveling, I have visited 38 of Africa's 54
countries and made repeated trips to many of these nations. In the
process, I've experienced countless cultures and traditions while
exploring the continent's 17 major agroecological growing zones.
...
In Africa--where I usually spend half the year--I am also reminded
of what I am not. I am not, nor have I ever been poor. I have never
had to look at my five children and decide which of them will eat.
I have never had to choose just one of them to attend school. I
have never contemplated giving one of my daughters to a much older
man who would pay me a handsome price for a child bride. And I have
never worried that I will be forced off my farm, evicted so that a
powerful corporation or foreign investor could lease or buy it for
an absurdly low price in a deal brokered by my own government.
...
Proponents of land grabs do not like this moniker. They classify it
as media hysteria. Activist jargon. And they claim it is
deliberately inflammatory. I'm not a fan of sensational titles, but
this time the title fits. There's no disguising what is happening
right now, on our watch. It is estimated that 50 million hectares
have already been leased to foreign entities with at least 20
African countries considering similar deals. Some of these
leases--99 years at $1.00 per hectare--are unbelievable deals. But
they are only available to a select few. Local farmers--people who
struggle to feed their families, gain access to fertile land and
secure water for both personal consumption and agricultural
activity--are not eligible for the deals being promoted in
countries where millions of people remain dependent on food aid.
It turns out I'm the demographic that the host countries are hoping
to attract. Just a few months ago I was personally offered an
equity stake in a land deal being brokered by a hedge fund. I was
assured that the partners would receive cash up-front with no
personal liability. I was also promised that the host government
would provide 70 percent of the financing, all utilities, and a
98-year lease requiring no payments for four years. The cost? $2.91
per acre per year after four years. Another fund provided a
prospectus that claimed it would generate returns of between 15 and
20 percent. U.S. agricultural land has averaged a return of about
six percent over the past thirty years. Therefore, these deals are
either that good for investors, or the managers of these funds are
misrepresenting the facts. If I didn't know better, this would
sound like a great opportunity! But 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.
Africa needs investment in agriculture--better seeds and inputs,
improved extension services, education on conservation techniques,
regional integration, and investment to build local capacity. It
does not need policies that enable foreign investors to grow and
export food for their own people to the detriment of the local
population. I'll be even bolder--such policies will hurt Africa,
fueling conflict over land and water. Conflict is already the
single largest cause of hunger on the continent; war, fighting, and
repeated disputes destroy households, pitting families against each
other, even children against parents. It results in horrific
crimes--genocide, displacement, infectious disease, famine, sexual
and gender based violence, human trafficking, and recruitment of
children in armed activities.
We need agreements that outline principles and frameworks. However,
these policies must be documented and enforceable. And, whether we
like it or not, history proves that codes of conduct do not always
transfer from paper to people; principles do not feed children.
There are some simple questions to ask. When local people lack land
rights in so many places, why should foreign interests take
precedence? What assurances are in place to mitigate food
insecurity risks for local populations? What evidence is there to
suggest that the new land deals will be transparent when previous
ones have been marked by secrecy? Why should we believe that
communities will be fully incorporated into the negotiation process
when it is in the investor's interest to exclude potential
dissenters? How will best practices be replicated when there are no
role models to follow? What type of enforcement will be established
to ensure minimal environmental damage? What quantifiable social
benefits will the local communities derive and what types of
consequences will investors and facilitating governments face if
these benefits do not come to fruition?
These questions must be answered and accountability must be
insured. Unfortunately, mineral extraction in Africa has been less
than stellar. Soil and water are the essence of life--far more
valuable than oil or diamonds--so the stakes are even higher this
time around.
Proponents of the land deals will dismiss my concerns and claim
that this type of foreign investment will benefit the local people
by providing jobs and creating infrastructure. They will also say
that the land being offered is "unused." These are hollow
arguments. Investors have been quoted as saying they will employ
10,000 people and use high-tech, high-production farming
techniques. The two promises are completely incongruous. As a
farmer, I can tell you that high-tech, high production devices are
appealing precisely because they reduce labor. Investors will not
hire significant numbers of people and simultaneously scale-up
their production techniques. And if they choose the former, they
are likely to create low-paying jobs and poor working conditions.
I may be making assumptions, but they are based on history--a
history dating back to colonialism and one that has exploited both
natural resources and people.
Particularly disconcerting is the notion that the "available" land
is "unused." This land is in countries with the highest rates of
malnutrition on the only continent that produces less food per
capita than it did a decade ago. In most cases, this land has a
real purpose: it may support corridors for pastoralists; provide
fallow space for soil regeneration; provide access to limited water
sources; be reserved for future generations; or enable local
farmers to increase production. The fact that rich and emerging
economies do not have or do not respect pastoralists or use land
for age-old customs does not mean we have a right to label this
land unused.
...
Africa: up for grabs
The scale and impact of land grabbing for agrofuels
Friends of the Earth Africa | Friends of the Earth Europe
Full report available for download at http://www.foeeurope.org
Foreword
Proponents of agrofuels generally argue that agrofuel production
will address the economic crisis facing many developing countries;
they will create wealth and jobs and alleviate poverty. These
arguments overlook the other side of the story and leave many
questions unanswered. Is the push for agrofuel production in the
interest of the developing countries or are the real beneficiaries
Northern industrialised countries? Will the production of agrofuels
actually provide more jobs and enhance economic development at the
community level? Will it address the issue of food insecurity
plaguing the developing world? What are the social and
environmental costs of agrofuel production to host communities? Who
stands to benefit from the entire process?
These issues need to be assessed objectively. We should not accept
these arguments without subjecting them to empirical analysis. The
rationale behind this research is anchored on this premise. It
looks at the spread of agrofuel production across Africa and
highlights the social, economic, health and environmental concerns
found.
Executive summary and recommendations
Access to land provides food and livelihoods for billions of people
around the world, but as the availability of fertile land and water
is threatened by climate change, mismanagement and consumption
patterns, demand for land has been increasing. "Land grabs" - where
land traditionally used by local communities is leased or sold to
outside investors (from corporations and from governments) are
becoming increasingly common across Africa. Whilst many of these
deals are for food cultivation, there is a growing interest in
growing crops for fuel - agrofuels - particularly to supply the
growing EU market.
These land grabs have been taking place against a backdrop of
rising food prices which led to the food crisis in 2008. There were
food riots in some developing countries and in Haiti and Madagascar
the governments were overthrown as a result of the crisis. Crops
being used for agrofuels was a major factor in the rising price of
food.
This report looks at the extent of these deals for agrofuels and
questions the impacts on local communities and the environment. It
finds that although information is limited, there is growing
evidence that significant levels of farmland are being acquired for
fuel crops, in some cases without the consent of local communities
and often without a full assessment of the impact on the local
environment.
Extent of the problem
Studies suggest that a third of the land sold or acquired in Africa
is intended for fuel crops - some 5 million hectares. Friends of
the Earth has looked at cases of land grabbing in 11 countries
across Africa, from Ethiopia to Mozambique (see appendix). While
some of this land is sold outright - to private companies, state
companies or investment funds - most is leased and some is obtained
through contracting with the farmer to grow specific crops (known
as "out growing").
A number of, often small, EU companies are involved, sometimes with
support or involvement from their national government. Many are
keen to vaunt the social and environmental benefits of their
business, offering employment and the promise of development to
rural areas.
Green OPEC
Many of the host countries have encouraged this investment, keen to
develop a potentially lucrative export crop. Fifteen African
nations joined forces to set up what has been described as a "Green
OPEC" and a number of national governments have also introduced
domestic targets and strategies for agrofuel use at home.
But there is also a growing awareness of the downsides of this
agrofuel boom. As scientists and international institutions
challenge the climate benefits of this alternative fuel source,
local communities and in some cases national governments are waking
up to the impact of land grabs on the environment and on local
livelihoods.
Local protest
In Tanzania, Madagascar and Ghana there have been protests
following land grabs by foreign companies. Companies have been
accused of providing misleading information to local farmers, of
obtaining land from fraudulent community land owners and of
bypassing environmental protection laws.
Agrofuels are competing with food crops for farmland, and agrofuel
development companies are competing with farmers for access to that
land. And this appears to be as much the case for jatropha, as for
other crops, despite the claim that it grows on non-agricultural
land. When losing their access to traditional land, local
communities face growing food insecurity and hunger - their human
right to food is threatened.
Environmental damage
Pressure on farmland has led to forest being cleared to make way
for agrofuel plantations, destroying valuable natural resources and
increasing greenhouse gas emissions. In Ethiopia, land inside an
elephant sanctuary was cleared to make way for agrofuels.
Farmers have found that the much vaunted wonder crop jatropha,
rather than bringing a guaranteed income, in fact takes valuable
water resources and needs expensive pesticides. In some cases, food
crops have been cleared to plant jatropha, leaving farmers with no
income and no source of food.
Threat from genetically modified crops
What is more, there are concerns that biotech companies, keen to
find new outlets for their products, will see agrofuels as a way
into the African market. Research is on-going into genetically
modified (GM) varieties which might be suitable for agrofuels, and
biotech companies are eager to claim that their products can help
tackle climate change.
Resource exploitation
Growing European and international demand for agrofuels as a
transport fuel is creating market demand for agrofuels. While
African politicians may promise that agrofuels will bring locally
sourced energy supplies to their countries, the reality is that
most of the foreign companies are developing agrofuels to sell on
the international market. The EU's mandatory target for increasing
agrofuels is a clear driver to the land grabbing in Africa.
Is the tide turning?
Concerns about the social and environmental impacts have caused a
backlash in a number of countries such as in Tanzania and
Swaziland. Some companies have also withdrawn their investments.
But elsewhere the enthusiasm for agrofuels continues unchecked.
Just as African countries have seen fossil fuels and other natural
resources exploited for the benefit of richer countries, there is
a risk that agrofuels, and with them, Africa's agricultural land
and natural resources, will be exported abroad with minimal benefit
for local communities and national economies.
Recommendations for action
1. Put a brake on land grabbing
- Stopping the drivers - political targets that increase demand for
agrofuels should be scrapped, in particular the EU's mandatory
target.
- African states should immediately suspend further land
acquisitions and investments in agrofuels.
2. The real political priorities
Farming revolution - Investments and priorities given to develop
food sovereignty- the right of people to adequate, healthy, locally
produced and controlled food.
Energy revolution - the reduction of energy use in transport
through the rapid development of more efficient vehicles and
investment in sustainable societies through the use of public
transport, walking and cycling.
3. Dealing with land grabbers
Full environmental and social impact assessments of land use
changes before any land sale or lease takes place must be carried
out with the participation of local communities. These need to take
into account the impacts on biodiversity, natural resources,
genetic erosion, food sovereignty, gender, access to productive
resources of the local communities (including pastoralists or
itinerant farmers) and impacts of new technologies and investments
in infrastructure.
Full legal liability of companies and investors: Any land deals
should include clear, legally-binding and enforceable obligations
on the investor. Investors should pay into an obligatory liability
fund to cover for cases of non-compliance. Independent and
participatory ex post impact assessments should be made at
pre-defined intervals.
Full agreement of communities and the protection of indigenous
people: Any land sales or leases can only take place with the free,
prior and informed consent of the local communities concerned. The
customary rights of communities and the protection of indigenous
people are fundamental.
Farmer and environment friendly farming: Priority also needs to be
given to investing and developing farming in Africa that supports
small farmers and small-scale ecological agriculture. The farming
system developed shall respect ecological limits, not lead to
climate changing emissions, depletion of the soil and prevent the
exhaustion of water supplies. Such systems naturally forbid the use
of genetically modified crops or trees.
Farming for the local community: Due to the historic negative
impacts created by instable international markets, and to reduce
reliance on food aid, any new uses of land should be focused on
supplying the local market. One suggestion put forward recently is
to ensure that all land deals include a legal obligation that a
certain minimum percentage of crops produced should be sold on the
local market.
Food is a natural right and agricultural products should not be
treated as commodities whose ultimate purpose is the generation of
business profits rather than meeting needs of the people. Family
and small-scale farmers should be encouraged and strengthened in a
deliberate push to sustain the populations in urban and rural
areas.
Protection of farm workers: Agricultural waged workers should be
provided with adequate protection and their fundamental human and
labour rights should be stipulated in legislation and enforced in
practice, consistent with the applicable ILO instruments.
Increasing protection would contribute to enhancing their ability
and that of their families to procure access to sufficient and
adequate food.
...
chapter 2 What is really happening?
While assessing the full extent of land grabs across Africa is
impossible, given the limited available public information, there
are countless reports of land grabs across the continent,
particularly in sub-Saharan Africa.
A UN FAO study in 2009 looked at land allocations in five subSaharan
countries: Ethiopia, Ghana, Madagascar, Mali and Sudan. It
found documented evidence that 2.4 million hectares of land had
been transferred in land deals (of more than 1,000 ha) since 2004.
[Cotula, L., Vermeulen, S., Leonard, R. and Keeley, J., 2009, Land
Grab or Development Opportunity? Agricultural Investment and
International Land Deals in Africa, IIED/FAO/IFAD, London/Rome.]
This land was destined for food and fuel production, with
considerable areas designated for fuel crops in Ethiopia,
Madagascar and Ghana.
A separate study by the International Food Policy Research
Institute estimated that 20 million hectares of land have been sold
since 2006 in land deals, with 9 million hectares acquired in
Africa. [http://www.ifpri.org/publication/navigating-perfect-storm]
Of this, almost 5 million hectares - an area bigger than the
Netherlands - are reportedly intended for agrofuel, including
jatropha, oil palm and sweet sorghum.
In Mozambique, government officials report that biofuel investors
had applied for the rights to use some 12 million acres of land
(4.8 million ha) - nearly one-seventh the country's available
arable land.
In Congo-Brazzaville, President Sassou-Nguesso has ceded 10 million
hectares of fertile land to South-African farmers to grow staple
food crops for export without any percentage to remain in Congo,
alongside 70,000 hectares granted to the Italian oil company ENI to
plant oil palm monoculture plantations for agrofuel production,
threatening Africa's last precious tropical primary forest.
A comprehensive list of examples of land grabs for agrofuels
is found in the appendix.
...
Evidence suggests that while private companies are behind most of
the land deals in Africa, land is also being acquired by national
governments, often via state-owned companies and by private
investment companies.
These land grabs take a number of forms, depending on the local
situation and law. Although some land has been purchased outright,
more often it is leased, with long-term leases, in some cases up to
99 years. There are also cases of "out growing" - where local
farmers are contracted to grow a particular crop, such as jatropha.
3.1. Food security
The sudden interest in land appears to be driven by a combination
of factors, but concerns about food security and fuel supplies
dominate. The sharp rise in food prices in 2007 and 2008 and the
volatile oil price appear to have led a number of countries to
question the security of supply, with fears exacerbated by
expectations of how climate change will affect agriculture in years
to come.
Saudi Arabia, for example, is moving away from water-intensive
wheat cultivation because of concerns over future water supplies -
having been self sufficient in wheat until 2007. Instead, the Saudi
government is leasing land and, for example, a Saudi agricultural
consortium has announced plans to invest in food production in
Ethiopia, Sudan and Egypt.
3.2. Energy supply
Concerns about energy supply appear to be a key driver behind the
demand for agrofuel crops - with the EU aiming for 10% of transport
fuel to come from "renewable" sources by 2010. These EU targets
have established a clear market - which given land prices and the
lack of available land within the EU will inevitably be met by
imports.
While national governments and state-owned companies are behind
some of the investment in land for food, most of the "land grabs"
for agrofuels appear to be dominated by private companies, with
many of these coming from the EU.
China is the exception to this rule, with state-owned companies
securing more than 2.8 million ha of land in the Democratic
Republic of Congo to grow palm plantations.
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
AfricaFocus Bulletin can be reached at africafocus@igc.org. Please
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