Via NPR, a report on the rush for Mozambiquan farmland:
In these days of financial uncertainty, the hot new investment tip is farmland.
This spring, 750 Wall Street types crowded into New York’s Waldorf-Astoria Hotel for a conference on investing in global agriculture. Philippe de Laperouse, managing director of HighQuest Partners, which organized the event, says those investors started out just looking for a safe haven for their money. But with food demand up and future production uncertain, many of them have caught the scent of future profits.
Many development NGOs and advocacy organizations have sounded an alarm about this surge of private money. (Here are critical reports from GRAIN, Oxfam, the Oakland Institute and even that paragon of mainstream thinking, the World Bank.) Many of them call it a global “land grab.”
Investors, naturally, see opportunity for everyone. Jes Tarp, CEO of Aslan Global Management, says “Africa has a tremendous future in terms of agriculture. Africa could feed much of the world.”
I decided to take a closer look at the reality behind this rhetoric and went to Mozambique, which has become a hot spot in the global rush for land. It’s a country in southern Africa with beautiful beaches and also extreme poverty.Mozambique is a little bigger than Texas, and with slightly fewer people. It has a lot of land, and in many areas, a good supply of fresh water.
Nobody can actually buy land in Mozambique. The government owns it all. But the government will give companies exclusive rights to land for 50 or 100 years, and it’s really cheap. Mozambique’s government, in fact, has been encouraging investors to come take advantage of this land.
Dozens of companies, both foreign and local, have lined up to seize the opportunity, setting up mega-farms that cover thousands of acres. (You can find a list of land deals in Mozambique and many other countries in databases compiled by the Land Matrix or by GRAIN.)
One of these farms has landed right beside a small village called Ruasse, in northern Mozambique.
Getting there takes work. In my case, it meant bouncing along 60 miles of dirt road, passing a steady stream of people walking along the side of that road carrying firewood and bags of corn.
Ruasse is a collection of one-room brick houses with thatched roofs, scattered across hard-packed dirt. People here survive mainly on the crops they can grow on the land nearby.
Caterina Alberto, one of the most prosperous farmers in this village, says the arrival of a huge farming enterprise next door was a shock. “It was said that a company was coming here. But no one told us that the company was coming to destroy us,” she says.
The company, in this case, is Quifel Natural Resources, based in Portugal.
Here’s what happened, according to Alberto and others in the village.
Corporate Neighbors Move In
Representatives from the company showed up in Ruasse several years ago with a proposal. They explained that Quifel Natural Resources, through a subsidiary called Hoyo-Hoyo Agribusiness, hoped to grow cash crops — sunflower, sesame and soybeans — on the land across the road from the village. (There’s expanding demand for those crops in Mozambique, both for oil and for animal feed.)
The company wanted 25,000 acres — almost 40 square miles.
Most of the people in Ruasse were already growing crops on that land. It’s some of the most desirable land for miles around. It’s fertile and flat. Decades ago, a state-run company cleared that land and grew soybeans for a few years, but that farm fell apart during Mozambique’s civil war in the 1980s.
Alberto says Quifel Natural Resources made a lot of promises: that it would pay local farmers for any land that they might lose; that it would clear new land for them somewhere else; that it would drill a well for the village, and improve the school and clinic.
So the people of Ruasse said yes. And the national government gave Quifel Natural Resources rights to the land in December 2009.
The company never followed through on its promises, she says. “As soon as they got here, with all their gear, they just went ahead and started their work. They went into the places where people had already planted corn, banana trees and sugar cane.”
In fact, she says, the company plowed up crops that farmers were almost ready to harvest. She lost about 10 acres. None of the farmers got any money or new land.
It’s still happening. Two men showed me the spot. One of them, Francisco Muine Penaciaia, is trembling with anger. The other, Vitorino Munalile, a very old man, shows no emotion at all. He’s barefoot and has trouble walking across the rough, freshly plowed ground.
Penaciaia shows me the land where both farmers’ crops once stood. He says they were growing sorghum, corn and cassava, both to feed themselves and to sell, so they would have money to buy food later.
Munalile says now he has only a little food to get through the coming winter.
The farmers say the company never paid them any money for the crops it destroyed. “They always say that they’ll pay, but they never do,” says Munalile.
Hoyo-Hoyo Agribusiness hasn’t yet drilled the well that the village wanted. People here still carry their water from a nearby stream, and on the day I was in Ruasse, the company’s small fleet of John Deere tractors was hauling big tanks of water from that stream to some newly planted potato fields. Alberto says that’s another big problem.
“This whole community has just one river; this one here,” she says, gesturing toward the stream. By the month of August, this river will be all dry. That’s why the population is complaining. So you see the situation we’re in.”
She says that villagers have complained to local government officials, but the government hasn’t done anything to help them.
This conflict, however, is now getting increasing attention. It was the subject of a presentation at a high-profile conference on land issues at the World Bank in April.
I reached the CEO of Quifel Natural Resources, Rui Laurentino, in his office in Lisbon. Laurentino says that the company will soon start what he calls the “social component” of its project. That plan, he says, includes improving Ruasse’s medical services and school. He also says that the company plans to pay farmers for land that they’ve lost. Those payments, he says, “are imminent.” And he says that since my visit in May, the company has started to clear new land for those farmers.
Not Just An Isolated Incident
According to many observers at farmer advocacy organizations and at the World Bank, such conflicts are a common feature of large land deals in Africa. It’s not just in Mozambique; it’s in Tanzania, Ethiopia and Sierra Leone, too.
In many cases, poor villagers who use the land don’t have formal control over it and don’t have a voice in decisions to lease or sell the land to big investors. Those decisions are typically made by village chiefs or political leaders in national capitals.
Joao Muthombene, executive director of Mozambique’s Christian Association for Community Development, says local communities in his country do have legal protection — on paper. “There’s a law that says you have to negotiate with communities. But what we have seen is that no company is taking it seriously.”
Yet Muthombene doesn’t think it has to be this way. The fact that companies are interested in Africa’s farmland shouldn’t be a threat, he says. It’s a good thing. The deals just have to be fair for local people.
I heard much the same thing in the village of Ruasse. Small farmers told me that they felt that there was enough land for everyone — as long as there was equipment available to clear it. They had no objection to big investor-owned farms, if those investors keep their promises.
In fact, they said, there’s another big investor-owned farm just 10 miles away, and that one’s fine. That one’s been a good neighbor, the farmers say. Stay tuned for that story on Friday
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In some countries of Africa, there’s a land rush under way as investors claim farmland, establish mega-farms and try to cash in on high prices for food and biofuels. These deals are controversial. Critics accuse investors of dispossessing subsistence farmers.
But there’s another side to this story. There are plenty of people working in economic development who believe that this surge of interest in African farmland, if it’s handled well, could also be an opportunity for Africa.
Investors certainly think so. Among them is Jes Tarp, CEO of a company called Aslan Global Management. A native of Denmark and former pastor, Tarp now lives in Wisconsin and runs a company that owns tens of thousands of acres of farmland in Ukraine and Africa.
The money for these ventures comes from small investors: “There are farmers, there are doctors, there are insurance agents. People from all walks of life,” Tarp says.
Tarp tells these investors that they will do well. The farms in Ukraine are already profitable. And Tarp thinks the one in Africa eventually will yield “solid returns” of 15 to 20 percent each year.
But according to Tarp, his investors also want to do some good in the world. “The one thing that they have in common is, they are looking for an investment where their investment will make a difference,” he says.
Some of their money is transforming a remote corner of Mozambique, in southern Africa. It’s financing a farm called Rei do Agro, Portuguese for “King of Agriculture.”
Trying To Be A Model Corporate Neighbor
Chishamiso Mawoyo, who is in charge of this operation, takes me to the top of a rocky hill for a good view. He points to the right, to land covered by a green canopy of trees. That’s how this whole area looked two years ago, he says.
Only a handful of people were living on this land, or growing crops here, before Rei do Agro showed up two years ago. Mawoyo says that’s how the company wanted it. “We think it’s easier dealing with trees than with people,” he says.
And that’s probably the main reason why people I met in the closest village had no problem with Rei do Agro moving in here — in contrast to their anger at another farm nearby, operated by the Portuguese company Quifel Natural Resources, which took over some of the best land.
But there’s a cost to pushing the frontier. Clearing land is hard and expensive. Rei do Agro acquired 3,000 acres from the government almost two years ago, and so far, the company has managed to clear just 600 acres.
Also, the farm is 10 miles from any power lines. Mawoyo and his colleagues have to run a diesel generator almost nonstop to power their lights and computers.
It’s a long way from his former life in the comfortable office of a big accounting firm in Zimbabwe. “But once you’ve gotten in, there’s no way out. You’ve got to see it through,” Mawoyo says. “That’s part of the excitement, part of the exhilaration.”
The company wants to get even bigger. It’s hoping to acquire an additionanl 25,000 acres, which includes a small river that it could tap to irrigate some of its fields.
This farm is growing soybeans, which will go to feed chickens. One of the biggest chicken farmers in Mozambique, hundreds of miles south, is waiting to buy some of the harvest.
“[The chicken farmer will] send 15 of his trucks. In two weeks they’ll be here. Because he’s got a huge demand for soybeans,” says Mawoyo.
It’s a sign of Mozambique’s economic growth. People are earning a little more money, so they’re eating more chicken meat, and that means more demand for soybeans to fatten those chickens.
That upward curve of demand is the reason businesses are interested in commercial farming in Mozambique. It’s the reason investors in Aslan Global Management and its subsidiary, Aslan Group Africa, expect to make money.
But what about their bigger ambition, to do some good with their money? Tarp, the CEO, is sure that they will. “We are there not to extract wealth from the community, but to build wealth in the community,” he says.
Good For Companies, Good For Communities?
Whether that’s really true — whether foreign investment in African farmland is a good thing for local communities — is currently the subject of intense debate. Is it better, for instance, than providing aid directly to the farmers in those communities, most of whom grow crops by hand, on just a few acres?
On one side of this debate is Jake Walters, director of Mozambique operations for Technoserve. a nonprofit economic development group.
Investors have to preserve resources to make the land produce more or to produce more valuable crops, Walters says. “I think it’s the combination of technology and access to markets on a massive scale that these companies have, that really brings that rural area to life in a way that, bit by bit, small people having a little bit of access to capital would not be able to do,” he says.
Big companies employ more people, Walters continues. And getting a job is often the one thing that most powerfully transforms a subsistence farmer’s life for the better.
On the other side of this debate is Danielle Nierenberg, director of the Worldwatch Institute’s Nourishing the Planet project. She’s not enthusiastic about 10,000-acre mega-farms growing a single crop.And, she says, there are better alternatives, that preserve greater diversity in the landscape and in what people eat. Small farmers really can lift themselves out of poverty with just a little training and help — for instance, with irrigation. She has seen it happen in villages in Ethiopia.
“These were people who went from basically living in huts to being able to build their own houses, to buying bicycles, to sending their children to school for the first time. So you see that these things can work,” she says.
Yet Nierenberg and Walters don’t completely disagree. They both say that it’s doesn’t have to be one or the other. You can help small farmers and encourage big ones. In fact, the hot new trend among development agencies is trying to bring these two kinds of farming closer together.
To illustrate how this might work, let’s go back to Rei do Agro. That farm hopes to bring in electricity, better roads and water for irrigation.
Keeping Promises
This is often the case with commercial farms. They have to build essential infrastructure. Chris Isaac, the Mozambique-based director of business development for an agricultural development group called AgDevCo, says that once they have built that infrastructure, others can use it, too. “Around those farms, you can extend the infrastructure, including irrigation, to small farmers,” he says.
Rei do Agro isn’t that far along yet. But it is doing some things that don’t cost so much money. It has hired a full-time extension manager to work with a handful of local farmers — providing seeds, training, and storage for their crops at harvest time, so they can get better prices later.
One of those farmers is Caterina Alberto. She’s tall, dignified, and one of the most prosperous farmers in her village — although like everybody else here, she still has to carry her cooking water from a nearby stream. She and her husband grow crops on about 25 acres, which is a lot for this area.
“We’d like to have more land,” she says. “Maybe 60 acres. We have some goals to reach.”
In a way, her goals are also those of Mawoyo, the man in charge of Rei do Agro.
In another 20 years, “I would love to see 10 other farms like ours here, with a good cluster of emerging farmers within and around us,” he says.
For now, though, that’s just a dream. There’s not even any guarantee that this one farm will survive. It’s a few years, at least, away from making money.
But the company is doubling its bet on Africa, moving into the country of Tanzania, just north of here. Aslan Global Management recently got preliminary approval to buy 75,000 acres of farmland there.
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