Land grabbing is not new, nor is the overwhelming presence of transnational companies in developing countries, as throughout history there has been a reoccurring theme of weakening sovereignty of Southern states, and intensification for capitalist and neoliberal market economies. However, there are certain novel aspects.
1. The Global Crisis and food insecurity
The first most cited reason for the cause of the land grabs is the context of the global crisis. The oil price spikes in the mid 2000s, together with the food price increase in 2007-2008, and the global recession in 2009, created a perfect climate for land grabbing. The global crisis drove states to acquire land out of fear regarding to their food insecurity. Food insecure nations include the Gulf States, Southeast Asia and states within Africa itself.
For example, the Indian company, Karuturi Global Ltd in Ethiopia, acquired 35,000 ha, for thirty years starting 2008. Or South African firms such as AgriSA, who has acquired 200,000 ha of land in Congo (Brazzaville) with the option of expanding to 10 million ha, for food production. There is thus the paradox of food insecure nations providing food security for others.
The crisis meant that countries have sought to find alternatives to fossil fuels, hence land-grabbing for biofuels. As part of the EU Climate Change Package adopted in 2008, each Member State is required to use renewable energy for 10% of its transport energy by 2020. Subsequently, most of this energy will come from imported biofuels. Southern Africa has been perceived as the “Middle East for biofuels”, as firms have sought to meet the demand of the EU market, in which has directly contributed to the dispossession of land and the diversion of water for crops (Richardson, 2010). The increase in demand from Western nations for biofuels has not only fuelled land grabbing, but also has meant that food production has become increasingly sidelined.
A new actor fuelling land deals is finance. Land became an investable asset for speculation as equity finance investors, seeing the difficulty of investing in productive capital, invested in land against declining profitability in other assets. For example, GRAIN has argued that of the US$23 trillion in assets of pensions funds, US$15 billion are going into farmland acquisitions. Examples of banks involved in financing in land acquisitions include HSBC, who are one of the main financers of London-based New Forests Company, who dispossessed more than 22,500 people in Uganda for timber investments. Other notable names include Lloyds Banking Group, Barclays and Royal Banking of Scotland (check out Friends of the Earth 2012 report of European Banks). Land is attractive as it is assumed that with the increasing world population that needs to be fed, as land prices are relatively low in African countries, as well as in places such as Uruguay and Russia, the prices are seen to moving in sync with inflation, thus providing a diversified income stream with long-term pay-offs.
In my last blog entry, I asked whether we contributed to these land grabs. The answers lies in the fact that the banks we put our money in, the companies we buy food from and institutions we trust in are contributing to these large-scale land acquisitions. Our consuming habits are indirectly affecting the lives of others half way across the world. The secrecy behind these deals is an injustice not only to those affected by them, but to us whose trust is being violated. We need to respond.
Richardson, B. 2010. Big sugar in southern Africa: Rural development and the perverted potential of sugar/ethanol exports. Journal of Peasant Studies, 37 (4), 917–938.