by David Zetland from Aguanomics
Fred Pearce sent me a review copy of his new book, The Land Grabbers: The New Fight over Who Owns the Earth, which I enjoyed very much for its detailed description of the pros and cons resulting from foreigners investing in land in developing countries.
In the book, Pearce appears to see more cons with land deals than I do. Perhaps that’s because he saw only bad land deals, or perhaps he associates ALL large-scale agriculture with exploitation, inefficiency and environmental degradation. Any of you who read my paper (“The Political Economy of Land and Water Grabs”)* will know that I am annoyed that we do not have a good definition of when a land deal is a “bad” grab or “good” foreign direct investment (FDI). Pearce appears to call ALL deals grabs, but I think there are many well-run, sustainable farming operations that produce profits for the farmer, good jobs for locals, and quality food for markets.
Anyway, here are my notes on the 300pp+ book, which has six parts and 27 chapters covering “grabs” from buy-side and sell-side locations in Europe, N and S America, Africa and SE Asia.
- Many grabs convert “fallow” land to industrial-scale agriculture, but local communities often “cultivate” this land in long rotations of crops, grazing and recovery. Their methods are not just sustainable; they are cheaper and more productive for meeting a diverse range of local needs. Nomadic herders have practiced sustainable land management for centuries.
- Such methods are also egalitarian. Poor farmers can eat, but poor urban residents will suffer from political corruption and/or favoritism.
- That said, Pearce seems over-suspicious of markets (and financial instruments) that can improve food security and supply, views that I recently called shortsighted and misleading.
- Food security, for example, is often used as an excuse for protectionism that favors local food growers over consumers. Grabs directed at security also fuel “countervailing” grabs in which market supplies are replaced by managed supplies that will waste calories, inputs and environmental flows. Yes, the Saudis are engaging in grabs, but that was only after their failure to grow wheat at home (a bad idea that wasted water) and their exposure to volatile food markets. The trouble with their “grab” strategy is that they will not be able to export food if large-scale shortages arise and their “indigenous” farms are wasting water now that they will need in the future. It’s far more efficient, for example, to rely on markets for supplies, store a year’s supply of grain in case of market failure, and save water for cultivation should market interruptions last longer than a year.
- Land grabs are also often water grabs. The weak property rights that allow land grabs (by definition, a grab takes land from other users) are almost surely accompanied by even weaker rights over water and even greater misuse of that water.
- Grabs, as a business strategy, often depend on corrupt dictators who will not be around as long as the 50-99 year contracts may promise, making it difficult to invest over the long term or care about sustainability.
- Even worse, most grabs are arranged in distant bureaus, where “buyers” and “sellers” may not have a clear idea of what they’ve agreed, let alone who else may be interested/affected by their agreement.
- It seems that Pearce considers deals involving foreigners to be “bad” while deals with locals are “good,” but local thieves are not just more common, but more thorough, since they know the maximum local tolerance for greed.
- That said, it’s great to improve local productivity. It just takes a lot longer because locals do not just “copy/paste” good ideas from other areas. The upside is that locals who develop “organically” will have diversified, robust systems that will contribute to market stability. Pearce would agree with this assessment, I am sure, but local is not the ONLY way to go…
- Remember remember remember that foreigners cannot just show up and exploit (at least not in these post-colonial days) — they need corrupt local partners, and THOSE people are the ones with power to make or break a deal (as I discussed in my paper).
- Unsustainable operations are a bigger problem than grabs. They are fueled by a combination of short-term thinking (high discount rate) that may be fed by over-capitalization (need to generate cash to pay off debt), poor property rights (get money before land is gone), tragedies of the commons (get water before neighbors take it), etc. These problems occur in ALL countries, but they can be minimized by stable, sensible policies.
- Land grabbers may be taking “marginal” land (often conservation areas, etc.) but only because domestic farmers have already taken prime land, often before environmental perspectives had any weight.
- Pearce appears to laud reverse grabs, e.g., when Chavez or Mugabe break large farms into smaller holdings, but those “fair” actions are often driven by corruption or revenge. Even worse, the land often ends up with cronies who cannot farm instead of poor farmers who can.
- Remember that there would be NO land grabs if individuals or communities had title to their land! That’s why many grabs are occurring in Africa — about 80 percent of the land there is “managed” using informal, communal methods.
- Pearce also covers the interesting case of “green grabs” — where environmentalists take land out of production (or protect it), to keep it pristine. These grabs sometimes exclude locals from their traditional lands; they can also be sustainable (e.g., locals live in the lands under traditional conditions, while earning money from fees paid by foreign tourists who want to hunt beasts with cameras or guns).
- Pearce loses his way when discussing “grabs” in Australia that are really FDI. That’s not the case in Cambodia, where corruption underpins land seizures, but it’s not good to mix up fair deals (even if they upset nationalists who prefer to avoid competing with foreigners for land) with theft.
- There’s an interesting discussion of grabs in Malaysia and Indonesia, in which rainforests are cut down for timber and palm oil plantations. It’s not just that these grabs impoverish locals of their traditional lands, or that the biofuels produced on the land may actually be “carbon positive” but that the wood products produced from them are certified “good” by the FSC when they really are not. The main point is that eco-labels are meaningless unless there’s a 100 percent accurate way to prevent counterfeits — and that’s hard in corrupt countries.
- Take this last point with my point on property rights and long term views above, and you will see how real sustainability results from accurate pricing of resources that belong to a community over the long term (50+ years).
- The world’s largest sugar farm in Sudan uses 2.4mafy (~3,000 GL), or 4 percent of the Nile’s flow!
- Water grabs, no surprise, reduce environmental flows that nourish wetlands that traditional users depend on for food, fiber and fish. No rights = hunger.
- Mega farms may be unsustainable, but subsistence farms cannot generate enough production. Perhaps the middle way — small-scale, mixed-use farms managed by owner/entrepreneurs who innovate and adapt to local conditions — are the best way to feed the world over the long run. Oh, and don’t forget that these guys need to trade and benefit from trade.
Bottom Line: I give this book FOUR STARS for its vivid description of the problems related to land grabs that benefit outsiders at a cost to locals whose land is taken from them. Read it to understand the choices between hunger and food, rebellion and stability but don’t forget that property rights (legal, traditional or communal) would stop unfair grabs while allowing local people to benefit from their resources, locally and globally.
* The working paper is no longer online, due to spurious copyright claim by the publisher of the book where it eventually appeared. Email me if you want to see it.
reposted from Aguanomics