The big land sell-off

January 29, 2009

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.

In November, South Korea’s Daewoo Logistics made the startling announcement that the company had secured a 99-year lease on 1.3m hectares of land, an area roughly half the size of Belgium, from the government of Madagascar. Daewoo’s investment of $6bn is intended to produce 4m tonnes of corn and 500,000 tonnes of palm oil a year, mostly for export. 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).

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, D1-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.