Does the backlash against land purchases in the developing world mean that the era of globalisation is coming to an end?
Two very different reports by two very different columnists dwell on the future of agriculture. In the first, motoring columnist (and farm owner) Jeremy Clarkson muses on the hay shortage in his part of the world. Because of a poor harvest, hay has unexpectedly become very expensive, leading previously upstanding country gels to consider pinching their neighbours' supplies. Looking further afield, wheat crops have also been dreadful in Russia, pushing the price of bread up in UK supermarkets. Britain is supposed to have a secure network of food supplies - yet the impact of a hopeless summer in the Ukraine can affect us all: Wheat prices are up 70 percent since the beginning of the year.
Clarkson doesn't mention the numerous other disasters that could befall nations who produce to sell in the west. War, disease, drought, the arrival of a protectionist regime, competition from nations with more money to spend, or a more agreeable regime... globalisation is caused by and a result of interconnectedness. But just as wealth and talent circulate freely, less welcome phenomena can also spread with ease.
Why can't we grow in Britain, wonders Clarkson, no doubt surveying his 400 acres in Oxfordshire. 400 acres which the government pays him to grow nothing on - with the exception of hedgerows - doubtless to fulfill some EU regulations, to keep big supermarkets sweet and to protect the various animal species which inhabit his land.
So where is our future food security coming from?
Soon we might need Clarkson's acres. Ambrose Evans-Pritchard reports in the Telegraph on how a backlash is developing against the "Neo-colonialist" rush for agricultural land in the developing world.
For some years, rich nations have been buying land in the developing world in order to feed their growing populations. China, South Korea and Saudi Arabia are among the biggest purchasers in Africa. Even India is getting in on the act, with Indian businesses backed by soft government loans purchasing vast tracts of land in Ethiopia, Kenya, Madagascar and other African nations.
It is easy to depict this as a neo-colonialist land grab by the rising powers of Asia, but Western funds are also aggressive purchasers of African and Latin American land. Our governments, steeped as they are in colonial history, are understandably wary of being seen to send men to Africa with Pith Helmets again, and prefer private enterprise to lead the charge. It is the business of leading financiers to be one step ahead of business, government and the wider public. They study geopolitical currents and global forecasts, laying bets on where money can be made in the short-to-medium term future. And there's a growing consensus that agricultural land will soar in value.
From Ambrose Evans-Pritchard:
"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'."
The official line is that much of the land being bought is unused or poorly exploited by its previous occupants; that globalisation's policy of openness benefits us all; that farming in Africa allows Indian and Chinese businesses to develop economies of scale and transportation unavailable to the village-sized family farms at home (it is estimated that because of inefficient transport, £6 billion of India food rots before it ever reaches market).
Cultivating the developing world will also help the rich and almost-rich world to feed its own people.
According to the World Bank, demand for food is likely to rise 50 percent within the next two decades, due to increasing population, greater prosperity and the consequent change in diets (we eat more meat as we become more affluent, for example). Much of what used to be farmland in China and India are being paved over; Saudi Arabia and South Korea, for different reasons, simply lack sufficient usable acres.
One can understand why so many western financiers are now looking at agricultural land as the greatest safe bet investment of them all.
However, the World Bank, which is officially positive about the globalised economy, is beginning to show concerns about the scale of acquisitions and their potential effect on the developing world.
Some reasons for their concern from Evans-Pritchard:
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.
Governments are belatedly waking up to the crisis. Foreigners are believed to own 7 percent of Argentina's land laws are being drafted to limit what is for sale. There are particular concerns about foreigners occupying regions rich in hydrocarbons, minerals and water, which suggest that they don't plan to grow but to exploit other resources. Madagascar recently pulled a deal with Korea's Daewoo to plant corn on an area of land half the size of Belgium: "Madagascar is neither for sale or for rent", said the new government.
Brazil's government minister has said that Brazil must belong to Brazilians, prompting Ambrose to comment that this could signal the end of globalisation's half-century.
Land has totemic value, as Evans-Pritchard observes. Politics will always prevail over the demands of the globalised economy. Imagine an African or Latin American country suffering famine or drought, its citizens looking wistfully through barbed wire at thousands of fertile hectares, now producing wheat for China or who-knows-what in the name of one of the west's great maligned hedge funds. How could a government justify this? And if an angry, starving mob stormed the barrier to feed itself - to be fought off by Chinese or private security workers... it is not difficult to imagine such a scenario, or the potential outcry.
And so EURSOC wonders, just how secure is our food security, dependent on it is on a teetering network created by globalisation? And when will Britain look closer to home for a means of feeding more of its people?
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