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Land grabs: Africa's new ‘resource curse’?
international | miscellaneous | non-anarchist press Thursday December 03, 2009 18:57 by Khadija Sharife - Pambazuka News editor at pambazuka dot org
As developed nations attempt to secure supplies of food and biofuels to mitigate the impacts of climate change on the food and energy security of their populations, Khadija Sharife writes in this week’s Pambazuka News about the rush by foreign investors to buy up agricultural land across Africa, all too often at the expense of the wellbeing and livelihoods of local communities.
It has been called the next golden commodity by investment firms, and ‘neocolonialism’ by the now repentant director general of the UN’s Food and Agriculture Organization (FAO) Jacques Diouf.
The phenomenon better known as ‘land grabbing’ i.e.: Large-scale purchase or lease of farmland (often packaged as ‘idle’, ‘under-utilised’ and ‘uncultivated’) in ‘land-rich developing’ regions has catalysed a policy shift from geostrategic control over food production (institutionalised via structurally unjust trading mechanisms underpinning bodies such as the World Trade Organization), to that of sovereignty.
Whereas the US$1 billion per day in protectionist (Northern) subsidies served to artificially depreciate the price of primary commodities from developing regions, ‘land grabs’ are motivated by the intent of developed governments in ‘land-poor’ nations and representative corporate entities – composing over 50 per cent of the world’s largest economies, to secure exclusive rights to the assets used to produce food.
The global food crisis of 2008, forcing 100 million people below the poverty belt, may have been a catastrophe for the working poor of the world – peoples living in slums and on streets with no name, but for Wall Street, the ‘crisis’ – pushing up the price of grain by 140 per cent, was nothing less than the beginning of a new frontier: Harvesting power through dominion over farmland. Though the US squarely laid the blame for increased food prices on scarcity and the rapidly growing ‘middle class’ segment of both China and India – estimated at 650 million – a leaked document written by senior World Bank analyst Don Mitchell, revealed that 65-75 per cent of the increase was caused by the conversion of ‘crops for fuel’ ie: biofuels.
Massive profits punctuated the poverty underpinning the crisis: Monsanto – the company which declared that people would have GM soy ‘whether they like it or not’ posted three-month profits of US$1.2 billion, an increase of about 50 per cent from US$543 million, with Cargill experiencing a similar jump. ADM, allegedly the largest agricultural processor and also known as ‘the supermarket to the world’, posted increases of 42 per cent.
The precedent certainly existed: In 2007, for example, almost 40 billion litres of corn-based ethanol was produced in the US, which also produced 40 per cent of global corn trade. And the usual suspects profited in the build-up: During the last two years, reported profits from the world’s top three grain producers (ADM, Cargill and Bunge), controlling 90 per cent of global grain, rose by 103 per cent. Meanwhile, the profits of the top three seed/agro-chemicals (DuPont, Syngenta and Monsanto) and the top three global fertiliser companies (Yara, Mosaic and Potash) rose by 91 per cent and 139 per cent.
This was not an accidental occurrence, but rather a well-planned strategy. As Dwayne Andreas, former chairman of ADM stated, ‘The competitor is our friend, the customer is our enemy. There isn’t one grain of anything in the world that is sold in a free market. Not one.’
Andreas should know – just as oil giants are subsidised to the tune of US$300 billion per annum, ADM remained a chief recipient of billions in subsidies from the US government injected into the corn industry – a policy backed by President Obama and subsidised by US taxpayers. Unsurprisingly, ADM – one of several bundlers financing Obama’s ‘yes we can’ platform, recently stated that the company expected the percentage of ethanol allowed in US fuel supplies to increase from 10 per cent to 12 per cent or more.
The rising price of food dances in sync to that of oil – from 2004-2007, the prices of crude oil and food rose in tandem by 89 per cent and 84 per cent, revealing the interlocked need to secure oil resources. One tonne of US corn for example, utilises 160 litres of oil. This is synchronised with the corresponding rise in arms sales, exporting weaponry to regions rich in finite oil resources, and poor in rights. According to recent studies, there is a 92 per cent correlation with rising arms sales and oil prices and over 50 per cent of US clients in developing countries were ‘undemocratic governments or regimes that engaged in major human rights abuses.’
Seen from this angle, the ‘food crisis’ appears to be quite selective, the consequence of policies composed of several intertwined tentacles (biofuels-oil-militarisation) operating in synchrony and broadly spanning ‘global traumas’ from the war in Iraq, to the expanding presence of US African Command (AFRICOM).
Thanks to the ‘Made in Wall Street’ global recession, rooted in the deregulated trade in paper assets delinked from fundamentals, hedge fund specialists have hastened the pace in the financialising of ‘real assets’ with intrinsic value, and which constitute the basic building blocks of survival – farmland.
The power of food security should not be underestimated. In the ever-fertile but desperately undernourished and ‘impoverished’ Congo, where 200 000 hectares of land have been provided free of charge to South African farmers (characterised by tax exemptions, repatriation of profits, no export restrictions and other subsidies), one year’s food security holds the power to reduce debt from 70 per cent to 40 per cent. The vast raft of exemptions granted – including 10 million hectares for the taking – marks no break from the ‘business as usual’ policy of the Congo’s rentier regime, lead by Denis Sassou-Nguesso.
Generous as ever, Nguesso’s regime even offered to lend armed forces to securitise the ‘abandoned’ state farms, an offer quickly rejected by the farmers who were humbled by the warmth of the people. The 30 year lease, with priority access to a further 30 year period following assessments by a committee composed of six representatives – three from the Congolese state, and three from the commercial farmers unions, is the primary determining factor. Yet, at no time was the right of the Congo’s rentier regime to export ownership of farmland ever questioned, despite the Congo – a booming petro-state – being ranked as one of the world’s most corrupt countries.
Studies by the International Institute for Environment and Development (IIED) revealed, ‘Many countries do not have sufficient mechanisms to protect local rights and take account of local interests, livelihoods, and welfare. Moreover, local communities are rarely adequately informed about the land concessions that are made to private companies. Insecure local land rights, inaccessible registration procedures, vaguely defined productive use requirements, legislative gaps, and other factors all too often undermine the position of local people vis-à-vis international actors.’
Sadly, this situation is not unique in Africa: In Sudan, where 95 per cent of land is state-owned, the North-South and East-West conflicts, rooted in access to scarce ecosystem services such as water and grazing land, have been exacerbated by the exploitation of oil, militarising the region. In the North, lies the Chinese-backed Khartoum government; in the South, where the bulk of oil reserves are based, the US-backed Sudan People’s Liberation Movement (SPLM). Jarch Capital, acquired 400 000 hectares of land from the son of SPLM General Paulino Matip, with a further view for 400 000 hectares before end 2009. Jarch, headed by ex-Wall Street banker Phillip Heilberg, was described by the Financial Times, as ‘believing that several African states, Sudan included, but possibly also Nigeria, Ethiopia and Somalia, are likely to break apart in the next few years, and that the political and legal risks he is taking will be amply rewarded.’
Not a little ironically, Heilberg’s second in command is Joe Wilson, former senior director for African Affairs at the US’s National Security Council. Though an ‘independence’ referendum has been scheduled for March 2011, SPLM Secretary Pagan Amum has already declared that South Sudan will breakaway, even if majority votes are not forthcoming. (Once again, oil plays a crucial role. Since China’s entrance into Sudan in the 1990s, the Khartoum government – ‘evicting’ Chevron in the early 1990s, became the US’s ‘number one security concern in Africa’ in 1997, according to John Prendergrast of the National Security Council. Meanwhile, the UN’s Jean Christophe revealed that the villages of the displaced in Darfur, a region straddled by China’s oil block, ‘marked the oil concessions on the land.’)
African rentier regimes appear be using the same formula informing secretive development agreements, to exclusively negotiate and barter away natural resources, and relocating capital through tax competition.
Since June 2008, over 180 deals have been reported, with foreign entities seeking or securing a ‘coup d’état’ over 37 million hectares of land during the past three years. Africa alone has experienced acquisitions to the tune of 30 million hectares, chiefly negotiated between African states – often rentier economies, dependent on unearned resource revenues or rents from extractive industries, and private investors. More than 40 per cent of all deals negotiated were South-South.
In Africa, just 2-10 per cent of land is privately held, with the remainder constituting resources held in commons (aka the commons), large-scale land acquisitions, financialising agriculture, appears to recognise host communities only in the form of employment i.e.: a class of farm labourers, with ‘pre-existing users’ marginalised or displaced. The lack of land titles, of course, excludes the notion of compensation while in countries like Ethiopia, Mozambique and Tanzania, where land is nationalised, even legal recourse is difficult. Despite the ‘win-win’ rhetoric espoused by international finance institutions such as the World Bank and FAO, fundamental issues such as land reform, food security, tax exemptions including cheapened access to water, and other externalities including pollution, continue to remain private affairs.
In Madagascar, a 99-year lease on 3.2 million acres of land – 50 per cent of Madagascar’s arable land, granted to multinational Daewoo ‘ensuring food security’ for South Korea, lead to a coup. ‘In the constitution, it is stipulated that Madagascar’s land is neither for sale nor for rent, so the agreement with Daewoo is cancelled,’ said current president Andry Rajoelina, a baby-faced former DJ, backed by the army – and allegedly, the majority of Malagasys, 70 per cent of whom depend on farmland for income. ‘One of the biggest problems for farmers in Madagascar is land ownership, and we think it’s unfair for the government to be selling or leasing land to foreigners when local farmers do not have enough land,’ an official from Madagascar’s Farmer’s Confederation revealed to Reuters.
The mentality of ‘grabbers’ could not be more different. ‘We are not farmers…’ stated an official from SLC Agricola, Brazil’s largest ‘farm’ corporation. ‘The same way you have shoemakers and computer manufacturers, we produce agricultural commodities.’
For many citizens in Africa, farmland is not a means to an end – it is the lifeline used to survive life. The lack of basic service delivery – the intended consequence of states deliberately reduced to ‘enabling environments’ via structural adjustment reforms, manufactured an Africa impoverished. States are thus dependent on resource revenues, and citizens, on direct ecosystem services, such as fisheries and farmland – composing 70 per cent of citizen ‘wealth’. This is in contrast to high-income nations, deriving 80 per cent of ‘wealth’ from intangible capital. But with Africa losing an estimated US$148 billion in development finance each year, 60 per cent as a result of multinational mispricing, in addition to the direct servicing of odious debts – (amounting to a global figure of US$560 billion per annum of an outstanding US$2.9 trillion), little or no rents derived from the liquidation of exhaustible resources is redistributed in intangible capital. This is precisely because across Africa citizens are not required to finance the state budget – as occurs in high-income countries through intangible capital – they lack the political representation necessary to influence policies and usurped power structures.
This is the primary reason why Africa remains on ‘the continent most vulnerable to climate change’ – despite 60 per cent of global ecosystems already having reached critical tipping points.
According to the UN’s Inter-governmental Panel on Climate Change (IPCC), African farmers will experience a 90 per cent decrease in crop revenue by 2100, mainly affecting small farmers. Globally speaking, 40 per cent of the world depends on agriculture for survival and income. This figure is 70 per cent in the ‘South’, where 1.5 billion small farmers depend on less than 2 hectares of land, with these farmers ‘constituting two-thirds of the world’s food producers’. And though the world already produces twice as much food as is required to feed its entire population, the primary problem remains access and cost.
The terms differ from country to country, with the bulk of Ghana’s leased land allocated for export, in contrast to Ethiopia’s mixed status, but the issue remains one of control and exploitation, whether it is over local food monopolies or exported crops.
While African nations constitute three of seven countries estimated to hold over 50 per cent of the world’s ‘net land’ balances, the selling price marketed by investors ranges from US$300-$800 dollars, as opposed to Argentina, another ‘land-rich’ nations at US$5000. Despite over one-third of Africa lacking access to clean water, the resource is yet another ‘pull’ for the region, sold on the cheap.
Agriculture accounts for 70-90 per cent of water use annually. Though embedded water has yet to be taken into account, the 15,000 litres of water required for one kg of beef is a good indicator of hidden uses. But scarcity (real or perceived) is what defines the speculative profitability of markets. ‘Water is going to be a fantastically scarce asset,’ said Susan Payne, head of the UK-based Emergent Asset Management holding investments in Mozambique, South Africa, Botswana, Zambia and Swaziland.
Thus far, over 100 known specialised land funds and investments firms have embarked on ‘private sector’ land grabs, including well-known entities such as Morgan Stanley. Facilitating this process is the International Finance Corporation (IFC), the private sector arm of the World Bank group, ensuring for investors the ‘enabling environments’ and positive ‘investment climates’ required for the extractive industries, such as repatriation of profits and tax ‘competition’. From 1991-2002, deregulation proposed by IFIs composed 95 per cent of changes implemented in host countries.
According to the Bank’s Strategy for African Mining, ‘The private sector should take the lead. Private investors should own and operate mines. …Existing state mining companies should be privatised at the earliest opportunity. The overall drive of the Bank and donors should be directed at reducing country ‘risk’ for the investors.’ Part of this risk includes mandatory information exchange – revealing the source of illicit flight from countries, the various pit-stops and the end destinations i.e.: Secrecy jurisdictions connected to high-income nations such as the UK, head office to over one quarter of the world’s tax havens. Over 75 per cent of the world’s mining companies, for example, are headquartered in Canada and active in 100 host resource-rich host countries globally. Their presence is due to the country’s favourable law allowing for corporations to repatriate profits.
But development finance siphoned from Africa, whether through the extractive industries, or land grabs, are unlikely to be revealed as the IMF scrapped mandatory information exchange. Global watchdogs, such as the Financial Action Task Force (FATF) remained beholden to high-income nations as a ‘subsidiary’ unit in the Organisation of Economic Co-operation and Development (OECD). Meanwhile, the International Accounting Standard Board (IASB), founded and finance by the ‘big four’ accounting firms – maintaining units in secrecy jurisdictions such as the Cayman Islands – prefers multinationals to self-regulate trade via arms length transfer. What this effectively does is enable multinationals, conducting 60 per cent of global trade within rather than between corporations, to determine the future of entire continents such as Africa, where primary commodities – extracted by corporations, account for 80 per cent of exports.
On a global scale, identified trends include biofuels, emphasis on climate change spurring land-poor nations to secure sources of agriculture, geostrategic control of oil supplies, and the relocation of investment funds toward ‘real assets’ i.e.: land. This lends to the expansion of ‘usable’ resources in Africa, traditionally limited to the capital-intensive extractive industries, where contracts bartering land for infrastructure or nominal land fees are exclusively negotiated following the same secretive formula.
It is in this context, amongst others, that ‘land grabbing’ should be contextualised. Certainly, Africa is already awake to this reality. But it is hard to stand your ground when it is being sold from right under your feet.
SOURCED FROM PAMBAZUKA NEWS
* Khadija Sharife is a journalist and a visiting scholar at the Centre for Civil Society (CCS) based in South Africa. This paper was presented at the Rosa Luxemburg Foundation conference ‘The Global Crisis and Africa: Struggles for Alternatives’ in Randburg, South Africa on 19 November 2009.
 As quoted by the Oakland Institute