Wednesday, January 15, 2014

Land grabbing

For some two or three years now I've wanted to do a blog post on land grabbing.  Attempts by big companies and even foreign governments to buy up large parcels of land to farm in countries in Africa, Latin America, and parts of Asia, were big new a few years ago.  The topic has somewhat slipped off the news radar more recently.  I don't know if it's because there's less land grabbing going on, or if some of the early projects didn't pan out, or what.

I still haven't gotten my thoughts together for a big, coherent overview and commentary on the land grabbing trend, so in this post I will just link to good things that have been written about it, and offer a few brief comments for each link.  Other than that, my general take is that land grabbing will almost always involve the violation of human rights, because it is not a viable proposition unless you commit some abuses to make it work.  What I mean is that big plantations usually have very low per-acre margins on whatever it is they're producing.  To get around this inherent low profitability, a company can improve its bottom line by reducing costs in at least two ways I can think of:  getting land for really cheap, or reducing workers or paying them poorly.  Both of these involve doing some bad things.  The only cheap land is unused land, but there is very little of that in the world today (despite the claims that you read in newspaper article about vast tracts of unfarmed or uninhabited land in different African countries).

So to get cheap land, you either have to intrude on pristine, unpopulated areas like jungle or savanna or steppe, which has the drawback of destroying important ecosystem functions, or you have to steal land that people are already using.  Luckily, most big land grabs that I know of don't go the first route of destroying prime wild habitat (though it does happen, as in this case in Liberia), but unfortunately, they do tend to kick people off their land.  This second strategy is what armed paramilitary groups have long employed in Colombia to extend their political and economic control over large areas, as I profiled in a past blog.  But unlike the paramilitary land grabs in Colombia (which are usually not even referred to as land grabs, since they occur at a very local scale and don't get much publicity), the companies perpetrating the modern wave of land grabs don't go in with guns.  They make cozy deals with the government to use "unoccupied" land at rock-bottom sale or lease prices, and it is the country government itself that takes care of kicking people off the land.  Aside from being wrong, this is poor business practice; the big land grabbers are only able to make a profit by externalizing their land costs, paying cents or dollars per acre.  If this artificial land price depression ever fails, as it is bound to in the face of angry people pushed off their land and demanding accountability from their government, the land grabber's business model will fail.

The second strategy to decrease costs on a big plantation is to pay low wages and not hire many workers to begin with.  This ties into the first issue of land grabbing--if you push people off their land, where they were more or less making a living, and then you only hire back a tenth of the people to work the same amount of land, you're going to end up with a lot of angry, destitute unemployed people lurking about the plantation.  Again, it's not a viable business model, and it's based on iniquities and artificial cost structures.

One last thing I didn't mention as far as maximizing company profit in a land grab project is to speculate on the land.  Even after paying absurdly low amounts for the land and the labor, a big company is still going to be operating on the razor's edge of profitability.  I mean, however you cut it, growing large plantations of sugar or corn or soybeans or whatever just isn't a high-margin business.  So when you see forecasts of big companies that expect to make a lot of money in these land-grab deals, another strategy they are often using is to profit not by producing anything on the land, but by flipping it for a higher price to other farmers or real estate developers.  If you get land for next to nothing, and then you sell it for a thousand dollars an acre, you can make the type of double-digit returns that Wall Street investors like to see.  Growing corn and beans, not so much.  At any rate, this is once again an example of a totally artificial, rent-seeking profit model based on corrupting government officials (to sell or lease you the land at a fraction of its real value) and externalizing your costs.

So without further ado, here are some more sources that can speak much more eloquently than I about land grabbing.  Stefano Liberti wrote a journalistic expose of land grabbing in a book reviewed here by the Financial TimesFred Pearce wrote another book along the same lines.  The New York Times weighed in on the subject a few months ago.  Here is a bit from my hometown paper about Coca Cola and other companies' seeing the light on land-grabbing, and making some demands on their sugar suppliers in order to decrease the trend.  It is particularly offensive to me that the reporter here presents Coca-Cola as a big hero for merely responding to the common-sense demands of civil society groups in Cambodia that have presumably spent years fighting land grabbing and risking their lives.  The groups in question in this case, the ones that got a court ruling against a major sugar supplier who had stolen their land, are 200 Cambodian villagers and two committed lawyers from the US and the UK.  Coca-Cola (or any other big company) isn't the one that has taken the lead on this; they are merely responding to civil society and even court proceedings.  For instance, it looks like Pepsi may follow Coke's lead on the land grabbing issue, under pressure from Oxfam.  The companies should be commended for their coming around on this issue, but it is a mistake (common in our corporate-dominated society) to think that companies are somehow doing us a favor by responding to our demands for basic decency and basic rights. 

Here is an article discussing the so-called Principles on Responsible Agricultural Investment, a controversial set of voluntary guidelines that (along with the Voluntary Guidelines on the Responsible Tenure of Land etc.) either assure businesses act responsibly when investing in land, or serve merely as a way to "responsibly destroy the world's peasantry", depending on who you ask.  Here is another damning analysis of these voluntary guidelines, and an even more nuanced critique of the inherent problems with big land deals.  Here is the website of a conference from a few years ago that examined the trend and ramifications of global land grabbing.  Here is an overview of the land grabbing phenomenon from the International Fund for Agricultural Development.  This next link is a critique of the World Bank's 2010 report on land grabbing (you can also download the original report here).  Here is a chilling profile of a war/land profiteer operating in South Sudan, and an article about a different land-grabber operating next door in Ethiopia.  Here is a summary of an Oxfam report on land grabs (the original is here).  Oxfam followed up that report with a call for a World Bank moratorium on lending for land acquisition deals.  Here is the WB's response to that call.  Here is a nuanced look at the trend of white South African farmers fanning out across Africa to create big new farms

And here is an excellent website that continuously compiles all pertinent articles on the web dealing in some way with land grabbing.  It has exposed me to general articles on African land-grabbing like this one from Al Jazeera, this article analyzing the difference between favoring large-scale vs. small-scale farmers in a land reform program, this article in favor of increasing corporate control in Indian farming, a view of Ethiopia's recent land deals to grow food for other countries, a US farmer's explanation of food sovereignty as an alternative to the agroindustrial land grab model, and this look at the logic and mechanics of speculative food investing in general.

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