Foreign investors are increasingly eyeing Africas vast
farmlands, particularly since 2007, thanks to rising food costs
and enthusiasm for biofuels. A picture of what outside
investment in African agriculture might look like is starting
A September report by the World Bank says in 2009 more than
45 million hectares of farmland deals were announced worldwide,
a huge increase over previous years, with most of the action in
Africa. Ethiopia, Sudan and Mozambique were hot spots.
The prospect of foreigners building large commercial farms
across Africa has raised concerns in activist quarters that
foreigners will damage the environment and exploit local
populations. In Africa, subsistence farming remains the norm,
and documentation of land ownership is usually unavailable or
impenetrable, even in cases where a family has farmed it for
generations. Charities are calling the investment push a new
form of colonialism.
For their part, investors argue that importing high-quality
seeds, fertilizers and other technologies will increase
subsistence crop yields as they bank steady, if not
spectacular, profits. Furthermore, they say the benefits of
industrial agriculture trickle down, providing farmers with
jobs and better access to markets.
Foreign investors have not always been greeted warmly. Most
notoriously, a deal in which the South Korean concern Daewoo
Logistics attempted to lease half of Madagascars arable
land sparked a 2009 military coup in the island nation
and the collapse of the deal. Land acquisition by foreigners
has been more common in Latin America, but in August, Brazil
limited the practice, citing national security and
Russell du Preez, chief investment officer of EmVest Asset
Management, a South African concern with European and US
investors and stakes in farms across southern Africa, echoes
the standard investor position that ecologically sound,
fair-minded operations are the best way to run farms that will
produce consistent profits.
EmVest employs 2,800 people, he says. In Mozambique he
conceded that the salary is extremely low but still
more than that countrys minimum wage for farm labour,
which is below $50 a month. It sounds terrible, but
before there was nothing, he says.
Enriching the local population also creates a market for a
commercial farms products. The population dynamics
are very favourable in sub-Saharan Africa, says Paul
Christie of London-based Emergent Asset Management (EAM), a
firm with an African agriculture fund. As Africas middle
class grows, peoples demands are changing and we
can respond to it.
However, its impossible to generalize over whether
investors are living up to their ideals. Their spreads are
scattered across a vast continent, and each player has its own
investing thesis EmVest, for example, is not keen to own
land, but EAM wants to own it and develop complementary
businesses like livestock and food processing. A Standard
Chartered report found that there is no consensus on the
best development model for agriculture in Africa.
Mark Cackler, manager of the World Banks agriculture
and rural development department, says transparency is the key
to evaluating any deal. Among other things, this means
disclosing terms and consulting with local communities.
However, he said he is not aware of any standard certification
process, such as that used to confirm that a crop is organic,
to approve land deals.
Cackler also argues that commercial agriculture could reduce
hunger. Of the worlds 925 million chronically
malnourished people, most live in rural areas. He suggests that
outside investment might also boost African crop yields, which
typically dont reach even 30% of their potential.
The World Bank report found that despite the intensive deal
making, farming has only begun on a small fraction of the land
foreigners have acquired. Even in those cases where planting is
underway, it hasnt always proved profitable for investors
or beneficial to the local community.
In addition to investments by foreign investors, nations
including China and Saudi Arabia have bought or leased huge
swathes of African land, with the aim of feeding their own
populations. Some entrepreneurs have seen Africa as a home for
growing biofuel crops such as jatropha, though the World Bank
was largely unimpressed by the early efforts.
Since Africa is itself food insecure, the crucial
question is its ability to address the issue of food security
in other regions, according to Standard Chartered.
It is also debatable whether land acquisition by foreign
investors can lead to a win-win situation for the host and the
Michael Taylor of the International Land Coalition
Secretariat argues that even when commercial farms do create
jobs, the process doesnt necessarily benefit locals.
Commercial agriculture inevitably overtakes land that has
practical and cultural significance. It can be a place to
harvest crops or collect firewood but also a burial ground. In
areas investors are eyeing, Theres no empty land
that has agricultural potential, he says.