The big land sell-off: with vast tracts of land being sold in Madagascar, and Sudan and other African governments actively seeking investors in agricultural land, are we witnessing a neo-colonial land grab or will the investment result in greater food productivity to the long-term benefit of recipient nations? M J Morgan ponders the possibilities.
Investments in African land by foreign interests are gathering pace. In August, Al-Qudra Holdings of Abu Dhabi said that it was looking to acquire 400,000 hectares of land in Asia and Africa, with Sudan a likely candidate, for the cultivation of corn, rice and cattle. The company already farms 1,500 hectares in Morocco and Algeria. Saudi Arabia and the United Arab Emirates have already acquired substantial holdings in Sudan. The Abu Dhabi Fund for Development alone is set to cultivate some 30,000 hectares of land in the north of Sudan and Hadco, of Saudi Arabia, is investing more than $96m in the country to lease 10,000 hectares on the banks of the Nile, near Khartoum, to produce wheat, vegetables and fodder. (See box).
Malawi takes new angle on the green revolution
Malawi's agriculture has made a remarkable recovery since the drought in 2005 which left close to five million people in urgent need of food aid. In 2007, the maize harvests grew 73% higher than the average in five years.
The bumper maize production was attributed to a farm input subsidy program which, in 2005, reduced the price of fertiliser from $27 to about $6.50 per 50kg bag. Last year the country had a maize surplus of 500,000mt tonnes.
In his mission to increase the country's food production, Malawi's president Bingu wa Mutharika has unveiled plans for an ambitious, nationwide irrigation project known as the "green belt" along lakes and major rivers. Currently, most crops cultivated in Malawi depend on rain-fed agriculture. Although the country has huge supplies of fresh water, only 2% of the land is irrigated. Mutharika's initiative aims to reduce food shortages, helping farmers harvest crops all year round instead of a single growing season. The project is expected to stretch from Karonga, a northern town near the border with Tanzania, to Nsanje, on the Shire River on the southern border with Mozambique.
"The idea is that areas that lie 10-20km away from water should be irrigated using water pumped from the lake or through various dams, ensuring there is water throughout the year. We will be growing all kinds of crops to feed ourselves and also to export," Mutharika said.
Malawi once had a number of irrigation projects along Lake Malawi and the Shire Valley. Many ground to a halt in 1994, partly because the project sites were used as training bases by the former ruling Malawi Congress Party's paramilitary wing, the Malawi Young Pioneers. Now the government is rehabilitating some of them. Mutharika said the initiative would also consider giving priority to growing rice, which brings a high export price.
"When I was receiving one of the awards [for achieving food security in Malawi] at the UN, I was told that the price of rice jumped from $600 to $800/t but now it's about $1,000/t. That means with 20 bags of 50kg, you can get $1,000. If we are sensible, we can make all the green belt productive and grow a lot of rice, export it earn to money; at the same time we will also be feeding the world," he said.
In Malawi, maize is mostly grown by small-scale farmers who depend on rain. Erratic rainfall has previously resulted in food shortages. In 2005, the government imported more than 300,000t of food to feed nearly 5m people.
According to Mutharika, the green belt will welcome large-scale farmers willing to establish their own irrigation projects.
"I want investors to invest in large scale-commercial farming. If someone comes and says 'I want 5,000 hectares, I want to grow rice,' we will find the land for them to grow rice and other food crops. Let's not leave only smallholder farmers to feed us. They are already doing a brilliant job," he said.
Mutharika has been applauded for sound agriculture policies, which have transformed Malawi from a food importer to an exporter. Last year he received several international awards, including the inaugural Food Policy Leadership Award.
Arab world looks to Sudan as bread basket
With food prices up 40% and inflation going up sharply, Gulf interest in acquiring agricultural land in Sudan is rising. Saudi Arabia is especially keen to secure its food supplies, having cancelled a project to grow wheat in its desert as the cost of irrigation proved too high. Saudi-based Hail Agricultural Investment Co is investing around $100m to grow wheat, vegetables and animal feed on 25,000 hectares of land in Sudan.
The Abu Dhabi Fund for Development is also to develop Sudanese farmland to guarantee the united Arab Emirates (UAE) supplies of maize, wheat, potatoes and beans. It will also grow alfalfa for animal feed and raise livestock.
The UAE has a population of 4m, but only 1% of its land is arable. The Abu Dhabi bilateral arrangement with Sudan will see the emirate lease up to 70,000 hectares in return for technology transfers and irrigation infrastructure. All produce will be exported to the UAE.
The Qatari government-owned Zad Holding Co has set up a joint venture company with the Sudan government to produce wheat, corn and oilseeds. The Gulf states, on average, import 60% of their food and they believe they can cut food prices by 25% by controlling the supply. Al Zubeir Bashir Taha, Sudan's minister of agriculture, says his government is anxious to attract more Gulf investment.
Gulf investments have focused on the north of Sudan but are now eyeing the semiautonomous south. The White Nile Group plans to put its controversial oil exploration operations in the region on hold to focus on agricultural projects across Africa, and will change its name to Agriterra. SW
There have been similar investments in Mozambique, Uganda and Zimbabwe, as well as globally in the Philippines, Cambodia, Pakistan and Ukraine--amongst other nations. Ethiopia's Prime Minister, Meles Zenawi, has been actively soliciting Middle East investment countries, describing himself as "very eager" to attract further land deals. Egypt too has been touting for such investment. A UK company recently acquired 3,000 hectares in Ethiopia to grow Jatropha, a plant whose non-edible seeds, if processed, can produce biodiesel. This follows the lease by Flora EcoPower of Germany, through a local subsidiary, of 8,000 hectares in Oromia province for the cultivation of castor seeds. UK biofuel company, Dl-BP Fuel Crops is also actively planting Jatropha in Swaziland and Zambia, and also has plantings in Madagascar. The growing of crops for biodiesel is contentious. World Bank economists have pointed to the increase in biodiesel crops as at least partly responsible for the spike in crop prices last year. Others are concerned it may damage the soil or environment. Western Australia has banned Jatropha as "invasive and highly toxic to people and animals".
The companies involved say that as the hardy Jatropha grows on marginal land unsuitable for crops, it does not compete with other crops. They also argue that it can be intercropped with coffee, sugar, fruits and vegetables. In many African countries it has been planted around the perimeters of farmland.
Jatropha, a native of Central America, may also not have been adequately domesticated. However, it yields four times as much fuel as soya bean and 10 times more than maize. Its proponents argue that it can also improve soil quality, as its leaves compost down.
The motives behind these investments in African land are straightforward enough. The opportunities to invest in African land, and land elsewhere in the developing world, offer great commercial potential. The surge in food prices last year (although prices have since fallen) led to wealthy food-importing nations seeking greater food security through the acquisition of reliable agricultural resources.
The Rome-based UN Food and Agriculture Organisation (FAO) economist, Concepcion Calpe, says "countries are looking to buy or lease farmland to improve their food security". These remarks echo those of Abu Dhabi's FAO head, Dr Kayan Jaff, who has said that the emirate needs to invest in overseas farms in response to higher food prices.
Whilst there is little doubt of the attraction of such investments for the investor nations, at least if one discounts the inherent political risks, the question is what benefits accrue to the host countries? After all, the primary purpose of such investments is to produce food for the investor nation, not the host nation. However, that is not to say that there will not be benefits to the host nation. As Al Qudra Holding's chief executive says: "Supplying food to the UAE will be one of our main objectives, but this business is international from day one. We are planning to supply other countries too."
Yet African land investments are contentious for other reasons. Critics in Nigeria, suspicious of what it regards as neo-colonialism in alliance with corrupt elements in the country, have claimed that local farmers in Sudan have been displaced to make way for powerful foreign agri-investors.
Foreign investors, in the modern era, and colonialists in the past, have always sought to capitalise on Africa's abundant resources. Unhappy memories of these experiences understandably colour current reactions to these investments, but there are also concerns regarding countries such as Ethiopia and Sudan which have a history of recurrent famine. Sudan imports a million tonnes of wheat a year and the Darfur region, for instance, depends on foreign food aid. Even while Addis Abba seeks foreign agri-investment, the country has a food export ban in force.
However, this is not to say that such investment is obviously to the detriment of the host nation. It may well be both welcome and needed. According to FAO figures, Africa is woefully under-irrigated, with just 7% of arable land irrigated (in sub-Saharan Africa--SSA--the figure is 3.7%) compared to 42% of arable land in Asia.
Foreign investment may provide muchneeded funds to improve this situation and provide better infrastructure, including lowering the high transport costs which hinder the competitiveness of African exports.
Such infrastructure improvements are urgently required. As the FAO's head, Jacques Diouf, points out, "less than 14% of all roads in Africa are paved and the proportion [of total freight] carried by air amounts to less than 1%. Power generation capacity per capita in Africa is less than half of that in either Asia or Latin America".
Then there is the impact of land investment on local populations. Some 70% of the population of SSA work in agriculture (producing around 30% of its GDP). Will foreign investment enable these workers to move from subsistence farming to more productive economic activities?
In Sweden, the working time required to produce 1kg of cereal is around 5 minutes; in India it is 37 minutes; in the Central African Republic, it is 6 hours! Given this appalling predicament one may feel there is everything to gain and little to lose.
In addition, African agricultural workers generally remain idle between seasons (around a third of the year) when they have little opportunity to earn enough income elsewhere to sustain themselves.
Many economists feel that there are clear grounds for optimism and that foreign investment in land will result in gains in irrigation, infrastructure, greater output and the benefits of technological transfer. Local farmers may also gain from agricultural innovations, such as better seeds and learning to improve planting techniques.
However, the advantages may not be clear cut. Amartya Sen, the Nobel Prize-winning economist, lived through the 1943 Bengal famine that killed 3m people. He later observed that that famine was not caused by a shortage of food, proving that enough food supply existed to prevent the disaster--the problem was one of distribution and people's inability to buy food.
In the light of Sen's observation that "starvation is characteristic of some people not having enough to eat. It is not the characteristic of there being not enough to eat. While the latter can be a cause of the former, it is but one of many possible causes", one may question whether the problem of recurrent famines can be solved by simply increasing the aggregate amount of food produced by whatever means or whether other--related--issues also have to be tackled.
A New Era?
What is most remarkable about the Daewoo investment is its sheer scale. Hitherto, the largest single investment in Africa was around 100,000 hectares, less than a tenth of the Madagascar deal. Sudan, by comparison, a major recipient of agri-investment due to its fertile Nile basin (10% of arable land in Sudan is irrigated), has leased a total of 800,000 hectares in 2008, despite the latter being more than four times larger than Madagascar.
However, Madagascar has been praised by conservation groups for creating, to date, 3.7m hectares of 'protected land' to preserve the country's extraordinary biodiversity. President Ravalomanana has pledged that 6m hectares in total will be protected territory when the government's scheme is fully implemented.
Despite the November announcement by Daewoo, doubts have surfaced more recently about the deal. Although the issue of cost had not been agreed, it is not clear whether Daewoo now believe that the lease will be free or not. The company admits that there is still no contract in place between the government and the company and that regulatory hurdles are still to be cleared.
Daewoo insists that it proposing a win-win situation that will provide Malagasy people with jobs, flood defences and food security, in a nation where 600,000 depend on food aid. But critics question the likelihood of a 'trickle-down effect' and how much of the food produced, in what amounts to 50% of the nation's total arable land, will end up being exported from a nation where some 50% of children under three suffer stunted growth as a result of malnutrition. Environmental impact factors are also disputed.
Such critics include not just agriculturally focused NGO's such as Spain's GRAIN but also the media, who argue that any agreement must ultimately be in the interests of the local population; they claim the Madagascar case looks positively neo-colonial.
As genuine as the worries over agri-investments in Africa might be, some of the current criticism is not consistent with the approach taken in other areas. After all, the $12bn of foreign investment in Sudan's oil industry dwarfs that being made in agricultural land, and the value of the former resource to the nation, even compared to the latter, is not in question.
In both instances, the crucial factor is whether foreign investments provide a fair share to the host nation, and there are arguments both for and against such investments. But, indisputably, Africa needs a solution to famine and food deficiencies. The FAO say that, in 2008, 963m people, 14% of the world's population, had insufficient food--an increase of 40m on the previous year. In SSA, the figure is nearer 33%. A fair distribution of Africa's agricultural wealth, and its material wealth, must be the objective.
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|Title Annotation:||FOOD PRODUCTION IN AFRICA|
|Comment:||The big land sell-off: with vast tracts of land being sold in Madagascar, and Sudan and other African governments actively seeking investors in agricultural land, are we witnessing a neo-colonial land grab or will the investment result in greater food productivity to the long-term benefit of recipient nations? M J|
|Author:||Morgan, M J|
|Date:||Feb 1, 2009|
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