The Philippine Online Chronicles

South Korean corporation Daewoo very nearly purchased half of the arable land on Madagascar two years ago. The car conglomerate would plant 1.3 million hectares with corn and oil palm. A Tamil-Malaysian oilseed producer acquired nearly 1.5 million acres in Argentina. Pakistan has been looking to open its borders to corporate farmers from Qatar, the United Arab Emirates, Saudi Arabia, China and Germany. Ethiopia has leased 3 million hectares of its most fertile land to European and Arab states. The Philippines very nearly leased 1.2 million hectares of land to the Chinese amidst the domestic debate on agrarian reform law. Gulf States have various deals aimed at leasing land for food production with the Philippines and other developing countries.

In recent years global “land grabbing” has been fueled by food insecurity and a chance to cash in on biofuels demand. Arable land-scarce countries are looking at “outsourcing” their agricultural production to other nations. Some have responded to the demand for biofuels after the spike in petroleum oil prices in 2008. Apart from governments seeking to secure their population's food security, investors as varied as agro-industrial corporations, investment banks, hedge funds, commodity traders, sovereign wealth funds, pension funds and foundations are looking to lease or purchase foreign land. The global financial crisis of 2008 may have also spurred the acquisition of more “solid” investments as prices of liquid assets fell or disappeared into thin air.

According to the International Food Policy Research Institute (IFPRI), foreign investors have secured or were in the process of securing as much as 49 million acres of farmland in developing countries between 2006 and 2009. These land leases and purchases take place in a time when millions around the world still go hungry and when governments in rich countries spend billions of dollars and euros in farm subsidies. In places like the United States, farmers are paid not to plant. In the European Union, the Common Agricultural Policy effectively keeps domestic food prices high and keeps cheaper Third World exports out.

A policy brief of the Food and Agriculture Organization notes some of the recent patterns in international agricultural investments. They involved purchase or long-term leasing. Major investors were China, South Korea and the Gulf States and the main investment targets were African states but also Pakistan, Kazakhstan, Cambodia and Brazil. Investors were primarily from the private sector but governments and sovereign wealth funds were also involved. The private sector investors were not primarily agro-food specialists but these projects were often funded by government or sovereign wealth funds. In host countries governments are brokering the deals.

Those who argue the merits of this new wave of foreign agriculture investments claim the need for capital-infusion in places like Africa. Jacques Diouf, Director-General of the Food and Agriculture Organization (an arm of the United Nations), sees the opportunity to further along economic development in host countries. It could have the potential of transforming the domestic economy through technology transfer, the generation of employment and spill-over effects in other industries. The language from various actors would also seek to legitimize these deals by calling for "sustainability", "win-win" solutions and respecting "land rights".

In April this year the World Bank was supposed to have released a study it conducted on the phenomenon. Those who have been waiting for the results were disappointed however as the bank merely released a presentation of the content and expected outcomes of the study. It made an inventory of 389 land deals in 80 countries. 37 percent of the projects were for food production and 35 percent were allocated for the production of biofuels. About half of the land deals are in Africa. In the Asia-Pacific most of the deals are in Indonesia followed by the Philippines and Australia.

To date the study has not yet been released to the general public. Observers are questioning the delay and ponder the possibility of enormous pressure on the bank. GRAIN, the Barcelona-based NGO which first compiled a list of global “land grabs,” point to some of the findings in the World Bank presentation. The initial results found that these projects were not benefitting local communities. The environmental assessments were rarely carried out and people were often forcibly booted off the land without compensation. The Bank also revealed that investors were deliberately looking for places with "weak land governance."

The study was commissioned in order to help formulate guidelines to investors. The bank may have hesitated to issue the full report given the negative impacts on local communities. Following the furor over land grabbing in the past couple of years, the Organization for Economic Cooperation and Development (OECD) responded by initiating the formulation of possible guidelines in foreign agricultural investments.

This new trend in land acquisition, observers argue, may not be so new. They have called it a new type of neocolonialism, harkening to the age of empires where colonies served as mere economic appendages of metropolitan powers. International power struggles aside, the impact on local communities are real and immediate. Small farmers are displaced, their tethers to the land uprooted. This may well result to not only the destruction of local agro-economies and the compromise of domestic food security but eventually heightened political tensions.

But the movers and shakers in the world’s richest countries would see only the positive. The communiqué of the recently-concluded G8 Summit included a call for enhancing international investment in the agricultural sector and a support for developing principles being undertaken by the World Bank and other international institutions.

The trend of consolidation of the world’s food systems continues. Peasants are going extinct and financial institutions are taking over farming.