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Resource centre on India's rural distress
 
 

The backlash begins against the world landgrab by Ambrose Evans-Pritchard

The neo-colonial rush for global farmland has gone exponential since the food scare of 2007-2008.

Last week's long-delayed report by the World Bank suggests that purchases in developing countries rose to 45m hectares in 2009, a ten-fold jump from levels of the last decade. Two thirds have been in Africa, where institutions offer weak defence.

As is by now well-known, sovereign wealth funds from the Mid-East, as well as state-entities from China, the Pacific Rim, and even India are trying to lock up chunks of the world's future food supply. Western agribusiness is trying to beat them to it. Western funds - many listed on London's AIM exchange - are in turn trying to beat them. The NGO GRAIN, and farmlandgrab.com, have both documented the stampede in detail.
 
Hedge funds that struck rich 'shorting' US sub-prime have rotated into the next great play of our era: 'long’ soil. "Productive agricultural land with water on site, will be very valuable in the future. And I've put a good amount of money into that," said Michael Burry, star of 'The Big Short'.

Needless to say, this has set off a fierce backlash. Brazil has passed a decree limiting acreage held by foreign-owned companies, the latest evidence that our half-century era of globalisation may be drawing to a close.

Authorities are probing whether firms are using local fronts to disguise investment in Mato Grosso and Amazonia. "Brazilian land must stay in the hands of Brazilians," said the farm development minister, Guilherme Cassel. It is starting to feel like the early 1970s when the military regime more or less froze out foreign buyers.

Where will this leave the plans of SinoLatin Capital, Goldman Sachs, Harvest Capital, or Berkshire Hathaway? Warren Buffett, wisely, is exploring his $400m venture in soya and sugar with a Brazilian partner.

Argentina is drawing up its own law, pressed by the country's bishops. More than 7pc of national territory is owned by foreigners. The Benetton brothers have 900,000 hectares of Patagonia, some on disputed Mapuche tribal land. George Soros has holdings, so does CNN's Ted Turner, and currency trader Joe Lewis, who made himself a public enemy by blocking public access to the majestic Hidden Lake.

"There are many foreigners who don’t buy to produce, but rather to position themselves in places with water, mineral resources and hydrocarbons," said Pablo Orsolini, a sponsor of the legislation.

In Madasgascar, a deal with Korea's Daiwoo Logistics to plant corn on territory half the size of Belgium led to the downfall of the government in 2008. The lease was revoked. "Madagascar's land is neither for sale nor for rent," said the new president. Even Australia's senate has called for an audit of foreign-owned land and water projects.

The allure of global land is obvious. The World Bank says industrial and “transition” countries are losing 2.9m hectares of cultivated farmland each year. China is paving over its fertile belt on the Eastern seabord, and depleting the water basin of the North China Plain for crop irrigation.

Cheng Siwei, head of China's green energy drive, told me last week that eco-damage of 13.5pc of GDP each year outstrips China’s growth rate of 10pc. National wealth is contracting. "We have an intangible environmental debt that we are leaving to our children," he said. So does India. Much of the globe is stealing food from the future.

The World Bank said we must lift production 70pc by 2050 to meet a triad of converging demands: extra mouths; rising use of animal feed from grains as Asia moves up the affluence ladder to meat-based diets; and the biofuel drive.

This will not be easy. The great leap forward in crop yields is fading. The Bank said rises in wheat and soya yields have declined from 2pc a year to zero since the 1970s in the West. Yield growth for rice and soya in emerging economies has fallen from 3pc to 1pc.

"With few break-through technologies on the horizon, the scope for yield gains seems lower than in the past. Irrigation has contributed to past growth in crop yields, but water scarcity in many regions is now a major constraint," it said. The Green Revolution is "exhausted".

There is plenty of land in the former Soviet Union, where crop planting has fallen by 30m hectares since the sovkhoz collectives of the Khruschev era. Yields are still barely half Western levels on many Russian farms.

Untapped hinterlands lie in Africa (Congo and Sudan) and Latin America. Developing countries are freeing up 5.5m hectares a year. There is a theoretical reservoir of 445m hectares of unforested cropland in the world, on top of the 1.5bn hectares in production.

Rich countries do not face a Malthusian crisis. They face a shift in the terms of trade between country and city, a reversal of urban dominance since the industrial revolution. We are on a thinner margin of food security, just as we are on a thinner margin of oil security.

But those who live in poor countries that rely on food imports most certainly did have a Malthusian moment in 2008 when bread riots swept Egypt, Indonesia, and a string of states in Africa.

Last week, 10 people died in riots in Mozambique, set off by Russia's grain export ban. Wheat prices have doubled since June. The World Bank said the number of people who go to bed hungry each night has risen from 830m to more than 1bn over the past three years.

The morality of the global land rush is finely balanced. Good projects are exactly what we need to solve the food crisis. They bring investment, know-how, and transport links. They create jobs. Peru's auction scheme on the Pacific Coast has been a success.

Yet the World Bank appears deeply torn. While the report endorses the Bank's open-door globalisation agenda, the sub-text dissents on every page. "Large land acquisitions come at a high cost. The veil of secrecy that often surrounds these deals must be lifted," it said.

It warns of a "resource curse" that may enrich a small elite, leaving wreckage behind. Proposals are not properly screened. Peasants are forcibly displaced. Communal grazing lands are closed off. Some investors manipulate opinion with a media blitz of false promises. Nothing has been produced so far on almost 80pc of the land purchased. Benefits are often minimal, "even non-existent". In Africa, the land rush is diverting effort from the core task of helping small farmers raise yields.

The Bank implicitly questions whether it is wise to divert half of the world's increased output of maize and wheat over the next decade into biofuels to meet government “mandates". It will be another decade before the stalks and other inedible parts of plants can be used in bulk.

Personally, I am coming to the conclusion that the biofuel drive is misguided, given that mass solar power and throrium-based nuclear reactors – coupled with electric cars - could step into the energy breach with less destructive effects. All it takes is global leadership. As Friends of the Earth reproaches us, every time we make a frivolous journey in an over-powered car we are hurting somebody.

Land is not a commodity. It has an atavistic pull in most cultures, and is semi-sacred everywhere. Absentee landlords who amass chunks of the earth – however well-intentioned - will be expropriated. Politics always prevails.