International Farmland Deals: Landgrab or Markets at Work?

Farmer in Mount Kenya

David Cleary is a strategy director, agriculture at The Nature Conservancy.

A suggestive juxtaposition happened a few days ago: on the same day that G20 agriculture ministers agreed to collaborate on standardizing information on agriculture and coordinate agricultural research, Oxfam released a report on “landgrabbing,” the buying up of agricultural land by foreign investors in places like Africa, often to the detriment of local small farmers.

We could really do with the G20 agriculture ministries paying some attention to this issue, since this is one area where reliable statistics and numerical overviews are very hard to come by.

So full marks to Oxfam for doing as much as can probably be done from public sources in pulling together information on this topic (although some of the numerical claims, like the idea that an area twice the size of western Europe has been bought up since 2000, mostly in the last two years, seem tendentious and the cited evidence for it is unpublished).

The cases of irresponsible investing documented in places like Uganda and Guatemala seem to give substance to accusations that an unholy alliance of western hedge funds, Middle East oil powers and Chinese enterprises are buying up land in vulnerable countries, booting out the local inhabitants and turning to large-scale commercial farming, with dubious environmental and social consequences.

But things are more complicated than that.

Irresponsible investing that has led to what can fairly be termed landgrabbing has happened on some scale in some countries in sub-Saharan Africa and Central America. There’s equally no doubt, however, that this is a governance issue, rather than an agricultural one. There’s a danger that looking at investment in land as landgrabbing will have perverse consequences. In a world that needs to double food production by 2050, it would be a very dumb move to impose controls on investments that would make the improvement of agricultural land more difficult.

Throwing out the baby with the bathwater in this way will make it more difficult to address the governance issues around investment, in agriculture and everything else, that lie at the heart of this problem.

It’s important to remember that not every country where foreign investors are buying land has weak governance, even in sub-Saharan Africa, and that where governance is adequate a very important role is played by companies and investors that buy land to improve it, reselling it at a profit or running new farming operations on it themselves.

For example, Adecoagro, a company The Nature Conservancy works with in Brazil and Argentina, has for years bought large areas of ranchland, and improved them to the point where the fairly unproductive pasture it was before is converted to cropland. As local laws demand, Adecoagro also restores areas of natural habitat and creates biological corridors. Much of this restoration takes place in savanna and tropical forest habitats that are extremely strategic for biodiversity.

The single most important strategy for world farming going forward, whether African smallholdings or large commercial farmers in South America, is to intensify, increasing yields and volumes on land already cleared.

Converting underutilized pasture to productive cropland is one of the best ways to do that, and growing numbers of scientists and policymakers are looking hard at how to do it to scale. The greatest repository of expertise on that — certainly the people doing it on the largest scale right now — are in the private sector. Cramping their style — and vilifying the investors who stand behind them — is not the way to go.

So what is the best way to deal with the abuses in Uganda, Guatemala and elsewhere that Oxfam documents in its report? It is not to impose blanket controls on investment in land that will be indiscriminate in their application and counter-productive in their effects. It is to set up, through international spaces like the G20 or the UN’s Food and Agriculture Organization, a registry of international land deals.

That’s all. Just a central, transparent space where everyone can see who is investing where.

Then let the media and groups like Oxfam, and the governments involved, all of whom need foreign investment and shouldn’t be penalized for going after it, duke it out as to the rights and wrongs of individual deals. Scandalous deals will have political costs. In countries like Uganda, or Guatemala, foreign investment can be corrupting. But it is also subject to foreign and domestic pressure, blowback and retaliation. Even China, licking its wounds as it thinks again about how to secure access to Libyan oil, is not immune to these pressures.

The problem here is not with an international market in land, or international land deals. Markets need transparency and secure property rights to work properly. Compared to where we were a generation ago, big strides have been made in places like eastern Europe and southern Africa. The problem is not a lack of control over foreign investment in land, but a lack of  transparency and a lack of the secure property rights that should have protected the dispossessed Ugandan and Guatemalan peasants. Weak governance, along with all its other ills, means weak and imperfect markets.

It is depressing to see the usual suspects lining up on their respective side of the ideological barricades on this issue: free marketeers on one side defending the status quo, and human rights campaigners on the other, arguing for regulation. Free markets and human rights go together here. International investment in farmland ought to be an issue on which Adam Smith and Oxfam can agree.

(Image: Farmer in Mount Kenya. Source: Flickr photographer Neil Palmer/CIAT via a Creative Commons license.)

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