Africa: Hot Bet For Land Investors

Via The BBC, a report that farmland in sub-Saharan Africa is a hot bet among investors.  As the article notes:

“…Population increase, changes in eating habits and demand for bio-fuels are putting farmland at a premium worldwide.

“And African farmland prices are the lowest in the world,” Susan Payne, chief executive Emergent Asset Management says.

Her fund is in the process of buying or leasing a total 50,000 hectares, equal to roughly 80,000 football pitches, in several African countries including Mozambique, South Africa, Botswana, Zambia, Angola, Swaziland and the Democratic Republic of Congo.

Ms Payne says the investment leads to better harvests and creates jobs.

But some land deals have sparked accusations that foreign investors, corporations and countries are engaged in a damaging “land grab” in Africa and a new form of colonialism.

Last year’s food price crisis, which triggered riots in a dozen countries, has made governments more focused on the security of their food supplies.

Countries short of arable land, such as China, Saudi Arabia, South Korea and Kuwait, have been seeking agricultural investments in Africa.

“This has woken people up to political issues surrounding food and agricultural land ownership,” says Ms Payne.

“As an investor you can take advantage of that,” she says.

Ms Payne says the investments made by her company are welcomed and is confident that charges of land grabbing won’t stick.

“Frankly we are seeing amenable terms because local groups, including governments, want us there,” she says.

“We are not bringing in our own farm workers and then taking the food and exporting it.”

She says local communities benefit from access to new farming techniques, new seeds and technologies, as well as the above-average wages paid by Emergent’s local partner.

For now, the vast majority of the food produced stays in the country in which it is produced although it can be exported.

“There is a lot of enthusiasm for this and there should be,” she says.

“Without private pools of capital like we are providing, there will not be the jump-start to get Africa growing rapidly in agriculture – or frankly – any other sector.”

Nonetheless, it is a highly politicised arena to invest in.

South Korean firm Daewoo Logistics was forced to abandon a project to lease one million acres of land in Madagascar to produce corn earlier this year.

The country’s new president scrapped the deal following criticism that local people had not been consulted, and Daewoo was unsettled by unrest in the island state.

But Ms Payne says the risks to investors are overplayed and such views are based on an outdated view of African governments.
She says that 70% of African governments are democratically led and their economies are much better regulated than in the past.

“We only operate in counties where we can have clear land title. If we can’t get this, or we don’t have a 99-year lease from the government then we won’t operate in that country,” she says.

However, the UN and other agencies warn that smallholders, who often don’t have formal rights to the land they farm, can end up being short-changed.


Sub-Saharan Africa – $800 to $1000
Poland – $6000
Argentina/Brazil – $5,000 – $,6000
US – $7000
UK – $18,000
Germany – $22,000
Source: Emergent Asset Managment

They say that, while on paper many countries have progressive laws that seek to take local voices into account, there are big gaps between statute books and the reality on the ground.

Furthermore, the International Food Policy Research Institute (IFPRI), a Washington-based think tank, says bargaining power is often on the side of the foreign firm, especially when it is supported by the host government or local elite.

“Since the state often formally owns the land, the poor run the risk of being pushed off the plot in favour of the investor, without consultation or compensation,” the IFPRI says in a recent report.

Development agencies say more transparency is needed as land deals are often shrouded in secrecy.
July’s meeting of the G8 group of rich countries pledged to develop a proposal on principles and best practices on purchases of land in developing countries.

But anti-poverty campaigners Action Aid said this did not go far enough and have called for an independent UN commission to establish an enforceable code of conduct.

“Given the huge land grabs that are taking place across Africa at the moment this just isn’t good enough,” Action Aid says.

And as Africa’s land becomes more sought after by international investors, the risk only grows that a continent that has often needed to extend a begging bowl to the world could instead find itself feeding richer neighbours.

This entry was posted on Thursday, August 6th, 2009 at 2:28 pm and is filed under Uncategorized.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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About This Blog And Its Author
Seeds Of A Revolution is committed to defining the disruptive geopolitics of the global Farms Race.  Due to the convergence of a growing world population, increased water scarcity, and a decrease in arable land & nutrient-rich soil, a spike of international investment interest in agricultural is inevitable and apt to bring a heretofore domestic industry into a truly global realm.  Whether this transition involves global land leases or acquisitions, the fundamental need for food & the protectionist feelings this need can give rise to is highly likely to cause such transactions to move quickly into the geopolitical realm.  It is this disruptive change, and the potential for a global farms race, that Seeds Of A Revolution tracks, analyzes, and forecasts.

Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has long held a keen interest in natural resource policy and the geopolitical implications of anticipated stresses in the areas of freshwater scarcity, biodiversity reserves & parks, and farm land.  Monty has lived, worked, and traveled in more than forty countries spanning Africa, China, western Europe, the Middle East, South America, and Southeast & Central Asia, and his personal interests comprise economic development, policy, investment, technology, natural resources, and the environment, with a particular focus on globalization’s impact upon these subject areas.  Monty writes about freshwater scarcity issues at and frontier investment markets at