Land Rush Continues, Deals Target Poor, Group Says

The global rush to buy farmland continues, and international investors are focusing on the poorest countries with weak land-rights security for deals, according to a report by the Land Matrix research group.

Land purchases continue at a slower pace after a peak in 2009, the group wrote in the report published today, citing a database of 1,217 reported deals.

Investor interest in land was triggered by the 2007-08 spike in food prices, and the long-term trends that drive deals are rising commodity prices, population growth, growing consumption and demand for biofuels and timber, the group said. The Land Matrix partnership includes the University of Bern, German government agency GIZ and French researcher Cirad.

“The rush for land is real,” the group wrote. “It is still difficult to estimate the true scale of the phenomenon, which may still be larger than all the reported deals together, because of the lack of transparency that surrounds many deals.”

The deals in the database amount to 83.2 million hectares (205.6 million acres) of land in developing countries, or 1.7 percent of the world’s agricultural land, according to the Land Matrix. Information on 51 percent of the deals is considered to come from a reliable source, the group said.

Investments originate from developing countries including China and Brazil, countries on the Persian Gulf as well as Europe and the U.S., according to the Land Matrix.

Most of the investors are private companies, accounting for 442 projects covering 30.3 million hectares, followed by state- owned companies with 172 projects and 11.5 million hectares, based on the data. Investment funds were behind 32 projects covering 3.3 million hectares, according to the group.

Soybeans, Sugar Cane

Food production accounts for 34 percent of investments, non-food crops for 26 percent and crops that can be used for either, such as soybeans and sugar cane, made up 23 percent, the Land Matrix group wrote.

Governments often sell land already in use by smallholder farmers, according to the group. About 45 percent of deals target cropland or “crop-vegetation mosaics,” where investors are competing for land with local farming communities, the group reported.

“Investors are targeting countries with weak land tenure security, although they try to look for countries that at the same time offer relatively high levels of investor protection,” the Land Matrix group said. “Only very few projects seem to engage in adequate consultations with local communities.”

Some land purchases may lead to evictions, the group said. Compensation is often “very low” and prone to theft, according to the report.

Community Interest Neglected

“Local authorities such as village chiefs who often play a key role in allocating land rights appear to frequently fail to act in the community’s interest,” according to the report.

“Acquisitions are rarely based on free, prior and informed consent and there is limited but worrying evidence on evictions,” the research group wrote. “Scarce reports on other benefits suggest some infrastructure provision, but provide little evidence on benefits from employment generation.”

Africa accounted for 754 land deals covering 56.2 million hectares, compared with 17.7 million hectares in Asia and 7 million hectares in Latin America, the report said. Reported land acquisitions in Africa cover the equivalent of about 4.8 percent of the continent’s agricultural area, a territory the size of Kenya.

Eleven countries account for 70 percent of the land area in the reported deals, including Sudan, Mozambique, Zambia, the Democratic Republic of the Congo and Indonesia, the group said. Two-thirds of reported deals go to countries with a high prevalence of hunger, the Land Matrix partners wrote.

Cropland in Demand

“Investors tend to target cropland where the yield gap is relatively large, and where additional inputs may create greater yields,” the group wrote.

In two-thirds of the countries picked for deals, water use will increase as a result of large-scale land acquisitions, with the increase in water consumption in those countries estimated at 13 percent, according to the report.

“Investors are acquiring water,” the Land Matrix group wrote. “Water scarcity is increasingly a key constraint on agricultural production. Land acquisitions can be expected to have a positive effect on the freshwater balance of investors’ countries of origin.”

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net

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