Sunlight on Land Deals

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A worker picks tea at a plantation in Githunguri, 30 km (18 miles) from Kenya’s capital Nairobi, January 6, 2012. REUTERS/Thomas Mukoya

A group of nonprofit organizations has released the first-ever database of foreign investments in land deals throughout the developing world, as critics of the trade called for lifting a veil of secrecy over the way governments award rights over vast swaths of land to foreign investors.

In recent years, a virtual buying frenzy has reshaped the agricultural sector of many developing nations. Driven by the prospect of food shortages, the demand for biofuels and the market in carbon credits, foreign investors in agriculture have bought up some 200 million acres of land in developing countries, an area roughly the size of northern Europe, in recent years.

The buyers include governments like Saudi Arabia, which has bought rights to farm 761,000 acres in the Gambella region of Ethiopia, to companies planting crops for conversion to biofuels, to hedge funds that are betting demand for food and land will increase as populations grow.

But the agreements surrounding these acquisitions are typically shrouded secrecy, a number of studies have found. Because the government is the official owner of land in many developing countries, citizens who may have been farming land for years often lack formal legal title, and so are disregarded during negotiations.

“Far too many people are being kept in the dark about massive land deals that could destroy their homes and livelihoods,” said Megan MacInnes, senior land campaigner at Global Witness, a London-based nonprofit organization that pioneered transparency in the gas and minerals sector.

A review of the deals by Global Witness, the Oakland Institute and the International Land Coalition found that often, subsistence farmers in developing countries only learn their land has been sold once the bulldozers arrive to level their houses.

The report, Dealing with Disclosure, recommends governments focus on transparency at four stages, starting with how lands are allocated and investors chosen.

Too often, the report contends, these decisions are made in secret deals between government officials, foreign firms, and, occasionally, a local official who signs off on the deal. The groups are calling for informed consent of the affected communities, with disclosure of the terms, documentation of  any underlying water, oil, gas or mineral rights that are being handed over and public review of the lease contracts.

The database released by a consortium of non-governmental organizations this week, the Land Matrix Project, covers roughly half the reports of land deals that advocacy groups have so far confirmed independently. The interactive site shows that the most intense foreign investment in land takeovers is occurring in Africa, and that the heaviest investing is from companies in India, the United States, Malaysia, Great Britain and Korea.

A World Bank conference this week examined “land governance” in the face of growing challenges, from climate change to increased demand for gas, oil and mineral rights. At the same time, institutional investors gathered in New York to hear about the potential for big returns on such land deals.

Activists criticized the World Bank, whose own research arm has found serious fault with the land deals, for guaranteeing some of the investments and giving advice to bolster large-scale landholdings. Instead, they say, the bank should throw its weight behind helping small farmers protect their rights and improve productivity of small land-holdings.

In a statement Thursday, the Bank rejected the criticism, saying that some civic groups were “using the media to paint an inaccurate and distorted picture of the World Bank Group’s work.” Instead, bank officials said, they had helped small leaseholders in Mexico, Rwanda and Indonesia register their properties with government agencies, giving legal protection to their claim on the land.

At New York’s post Waldorf-Astoria hotel,  agricultural investment firms offered a primer on agriculture–including large-scale farming in Africa–as an investment vehicle. Among those in attendance were public employee pension funds, foundations and investment managers representing  Princeton, Yale, Harvard, Fordham and Tufts universities and the University of Connecticut.

The funds reportedly offer institutional investors all-but irresistible returns, of 40 to 60 percent on their money. A brochure for the “African Farmland” panel at the conference cited the lack of infrastructure and modern production techniques in the region, but promised, “for the handful of managers pioneering agricultural production in Africa, returns outweigh these challenges.”

This story was modified following corrections by the International Land Coalition to its original list of top investor countries in foreign land rights acquisitions.

 

Diana Jean Schemo

Diana Jean Schemo

Diana Jean Schemo is co-founding executive editor of 100Reporters and an award-winning former foreign, national and cultural correspondent for The New York Times and the Baltimore Sun.
Diana Jean Schemo

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