The Land Rush, New Investment Models and Agrarian Change (Global and West Africa)
Ward ANSEEUW
Pan-African Parliament West Africa Regional Seminar for Parliamentarians
“Making agricultural investment work for Africa” Cotonou, Benin, 4-5 October 2012
Presentation
• The global land rush – some features and drivers
• The investment dynamics – new actors, new development models
• Broad implications - Agrarian change and social transformations
Results from several projects
The global land rush – Some features
Global
2012 announced/reported deals 228.130.787 ha +400-500% compared to WB report 1107 verified deals (55% announced/reported deals) 67.042.000 ha (29% announced deals) +45% compared to WB report
Global
Announced/reported verified
Africa is the main target
Announced/reported - 161,666,675 ha in Africa (948 projects) - 42,723,526 ha in Asia (699) - 17,643,692 in Latin America (240) -5,423,632 ha in other regions (112) Verified - 34.195.189 ha in Africa (542) -27.902.236 ha in Asia (458) -3.360.697 ha in Latin america (84) -1.583.878 ha in other regions (23)
Africa is the main target
Announced deals (ha)
West Africa
0
50
100
150
200
250
Reliable Total
# projects
# projects
0
2000000
4000000
6000000
8000000
10000000
12000000
Reliable Total
ha
ha
Africa is the main target
Announced (ha)
Host countries
0
20
40
60
80
100
120
140
160
IND KHM ETH MOZ TZA PHL LAO MLI MDG NGA PER SDN PAK ZMB IDN ARG MYS BRA
Number of reported deals
0
20
40
60
80
100
120
140
IND MOZ KHM ETH PHL LAO TZA MDG PER IDN MLI NGA CMR MYS SDN KEN SLE COL
Number of verified deals
0
10000000
20000000
30000000
40000000
50000000
60000000
ZARZMB
COG IDN
ETHTZA
PHLBRA
SDNARG
TUNIN
DPAK
MYSMDG
COLKHM
RUSMOZ
UKRSEN
Reported hectares
0
2000000
4000000
6000000
8000000
10000000
12000000
IDN
ZARETH
PHLSDN
IND
MYSZMB
TZAMDG
MOZBRA
KHMBEN
KENRUS
CMRGHA
LBR
UKRPER
Verified hectares
Host countries
0
10
20
30
40
50
60
Reliable
Total
# projects
0
500000
1000000
1500000
2000000
2500000
3000000
Reliable
Total
ha
Concentration of investments
The sectors invested in
Reported (global): -39% food crops -28,5% biofuels
Importance of flex crops or multiple cropping systems
Sectors per region
Origin of investors
Intra-regional
Extra-regional
A complex and inter-dependent environment …
Drivers
LT Demographic
Change in diet and energy use
MT Food production
Biofuels Industrial production
Forest/fibre production Ecosystemic
Services/Tourism Speculation
Triggers
Food price crisis
Facilitators
-Land governance -Democratic governance -Economic
governance and market regulations -Crisis of family
farming (the perception thereof)
A GOVERNANCE PROBLEM
(not an investor one only)
Not a recent phenomenon, but…
A complex and inter-dependent environment …
Drivers
LT Demographic
Change in diet and energy use
MT Food production
Biofuels Industrial production
Forest/fibre production Ecosystemic
Services/Tourism Speculation
Triggers
Food price crisis
Facilitators
-Land governance -Democratic governance -Economic
governance and market regulations -Crisis of family
farming (the perception thereof)
A GOVERNANCE PROBLEM
(not an investor one only)
Large-scale land acquisitions as aggravator
Drivers Food production
Biofuels Industrial production
Forest/fibre production Ecosystemic
Services/Tourism Speculation
Triggers
Food price crisis
Facilitators -Crisis of the
perception of family farming
-Land governance -Economic
governance and market regulations
-Democratic governance
LSLA as aggravators
The investment dynamics – new actors, new investment models
Investors
0
10
20
30
40
50
60
70
80
90
China
Saudia
arab
ia UKInd
ia
south
Africa
USA
Netherl
ands Ita
lyEgy
pt
France
Canad
aUAE
German
y
Portug
al
Sweden
Brazil
Israe
lLib
ya
Djibou
ti
Nigeria
Norway
Qatar
Austra
lia
Belgium
Malaisia
Singap
our
Japa
n
Num
ber o
f ann
ounc
ed d
eals
Announced/Reported deals
Investors in Africa
0
10
20
30
40
50
60
Great B
ritain
South
Africa
China
India
USA
Netherl
and
Portug
al
Sweden
German
yIta
lia
Mauriti
us
United
Arab E
mirates
South
Korea
Saudi
Arabia
France
Austra
liaBraz
il
Canad
aEgy
pt
Malays
ia
Belgium
Norway
Djibou
ti
Japa
nLib
ya
Switzerl
and
Hunga
ryIsr
ael
Kenya
Liban
Qatar
Russia
Singap
ore
Ukraine
Virgin
British
Islan
ds
0
5
10
15
20
25
30
Great B
ritain
South
Africa
Portug
al
Netherl
ands
Sweden Ita
liaUSA
France
German
y
Austra
liaInd
iaEgy
pt
Malays
ia
Norway
South
Korea
Belgium
Brazil
Canad
aJa
pan
United
Arab E
mirates
Angola
China
Djibou
ti
Hunga
ryIsr
ael
Kenya
Liban
Libya
Mauriti
us
Mozam
bique
Switzerl
and
Ukraine
# projects announced
# projects verified
Investors in West Africa
0
5
10
15
20
25
Reliable
Total
Investors
• Traditional Western food-producing, processing, and exporting companies seeking to increase market share
• Capital-rich / food insecure Land and water scarce populous but capital-rich (Asian countries, Gulf States - China: 20% of world pop / 9% of world arable land)
• New actors – Outside of agriculture
(financial sector, …)
• Direct gov. involvement • Sovereign wealth Funds • State-owned enterprises Avoiding markets
• Hedge funds, • Pension funds • Invest banks • Asset management comp Diversifying portfolio/ speculation
• Private investors
7 investment models in Africa
Independent farmer model
Associative farmer model
Cooperative farmer model
Speculative 1000-day model
Asset management and Investment funds model
Nucleus estate model
Agribusiness Estate model
High failures
Increased integration
Few inclusive models
Adaptation strategies
New investment models in South Africa
Commercial banks engagement in primary agricultural production
Agricultural engineering/asset
management companies Investment/equity funds
• High cost of productive, competitive agricultural production (Increase of debt - Input prices increase - the land is not enough as collateral) - no collateral
• Internalisation - The production is never owned by farmer • Price risk - managed through hedging on futures markets (SAFEX) • Production risk (flood, drought…) is covered by the multi-peril insurance &
geographical/commodity diversity • Lowering transactions costs • Speculation
Broad implications - Agrarian change and social transformations
Agrarian change and social transformations
More than land loss, food security issue, etc. Profound restructuring of agrarian societies
Beyond land, •The renewed interest to control land-based activities •LSLA top of the iceberg of wider dynamics, diverting
attention from broader dynamics
Agrarian change and social transformations
1) New actors and the financiarization/corporization of agriculture
-Renewed types of actors (Macro-actors - engineering, financial, industrial sectors) -New development models
-Non-agricultural paradigms -Generation of new productive agricultural models & redefinition of orthodox frontiers of the agricultural sector (IRR – 20-25%) -Speculation henceforth long-term strategies, led by actors external to the sector -Agriculture equivalent to any other sector
Agrarian change and social transformations
2) Parallel and closed value chains, private norms and foreign powers
- Establishment of numerous parallel value-chains, global but closed - Economic agents’ direct involvement and control over agricultural regulation mechanisms - Private norms developed by very same actors (financial actors!) - Foreign economic powers control an increasing part of the production, emphasizing food sovereignty issues
Agrarian change and social transformations
3) Concentration and dualisation within the sector
- Dominion of a few large international groups
(US$30M investment threshold, International corporates)
- Marginalization of the majority of the farmers,
leading to extreme dualisation -Medium-scale commercial farms swallowed -Corporate/very large scale vs subsistence
Agrarian change and social transformations
4) Socio-professional implications
- The end of the farmer? - Marginalization in the decision making process for the
independent family (small scale and large scale) farmer and communities
- Farmer = Probably more a service provider/rent seeker
- Is this model viable under present social/
environmental stress? - Labour creation on a continent that has not yet achieved its
demographic transition, nor its industrial revolution?
Thank you!
Dr Ward ANSEEUW CIRAD Researcher
Post Graduate School of Agriculture and Rural Development University of Pretoria
Pretoria 0002 South Africa
Tel: +27 (0)12 420 5022 Fax: +27 (0)12 420 3206
Websites:
www.cirad.fr www.up.ac.za
www.landportal.info/landmatrix
www.commercialpressuresonland.org
