“Land Grabs” – Economists’ Justifications of Agricultural Expropriation

Yves here. Robert Heilbroner described economics as the study of how society resources itself. It’s hard to think of a resourcing issue more basic than food. Not surprisingly, food and the means of producing it were the source of traditional wealth (the so-called landed aristocracy). Similarly, expropriation of rights that yeoman farmers had enjoyed, such as hunting rights and access to common pasture land, were the main devices that early industrialists used to end the farmers’ self-sufficiency and force them to sell their labor as a condition of survival. Even though similar land grabs are justified now under the idea that large-scale farming is more efficient than cultivation by smaller operators, Tim Wise contends that evidence is not conclusive, particularly in emerging economies.

The trend of large-scale ownership of agricultural land by foreign investors is troubling, given both the practical issues (do they have the acumen and contacts to hire the right people to manage the operation and supervise them well?) and the political ones (they lack the incentives to be good citizens and could well take steps that hurt the local population). But this post illustrates how easy it is to find an economist that will paint a happy face on a dubious policy.

As critical resources like water come more and more under pressure, expect debates over food security and landholding, which once were the province of development economists, to become a subject of mainstream debate and concern.

By Timothy A. Wise, the Policy Research Director at the Global Development and Environment Institute at Tufts University, where he is currently researching African food and agriculture policies as part of a project on a Rights-Based Approach to the Global Food Crisis. Originally published at Triple Crisis

Can land grabs by foreign investors in developing countries feed the hungry? So says the press release for a recent, and unfortunate, economic study. It comes just as civil society and government delegates gather in Rome this week to negotiate guidelines for “responsible agricultural investment” (RAI), and as President Obama welcomes African leaders to Washington for a summit on economic development in the region.

At stake in both capitals is whether the recent surge in large-scale acquisition of land in Africa and other developing regions needs to be better regulated to ensure that agricultural investment contributes to food security rather than eroding it by displacing small-scale farmers.

The recent study paper will not advance those discussions. It is the kind of study that gives economists a bad name. Economists like the one in the oft-told joke who, shipwrecked on a deserted island, offers his expertise to his stranded shipmates: “Assume we have a boat.”

In this case, these seemingly well-intentioned Italian economists came up with the dramatic but useless estimate that global land grabs could feed 190-550 million people in developing countries. The heroic assumptions they needed to get there should have stranded them on a deserted island, because they make no sense in the real world.

• Assume land grabs produce staple food. (Mostly, they don’t.)
• Assume such assumed food is consumed domestically. (Overwhelmingly it’s exported.)
• Assume the calories they might produce go to hungry people. (They don’t, they go to people who can afford them.)
• Assume calories are all that’s needed to nourish someone. (They aren’t.)
• Assume productivity-enhancing investments on such land would be made for an assumed market of hungry consumers. (They wouldn’t, the hungry are no real market at all because they have no effective buying power.)
• Assume the grabbed land didn’t displace anyone from producing food. (According to the same data relied on by these economists, most projects have displaced farmers.)

Perhaps the most absurd assumption, though, is that the governance mechanisms exist, at the national, international, or corporate levels, to manage the surge of investment we’ve seen since the food price spikes of 2007-8. Trust me, they don’t, which is why the UN’s Committee on World Food Security is meeting in Rome this week to negotiate the RAI guidelines.

Those negotiations have proven contentious, with developing countries and civil society groups demanding that land rights be included in the guidelines. Some rich country governments, such as that of the United States, resist such measures saying they interfere with the development of markets, which they see as the ultimate solution to … well … everything.

In Tanzania, those land markets are going fast and furious, fueled by government programs to make large tracts of land available to foreign investors. Many have gone for biofuel crops like sugar and jatropha, the oilseed tree that has proven to be a spectacular failure all over Africa. The governance failures include not just the taking of 20,000-acre tracts of good land, based on false promises to local villagers, but then the failure to return the land to those villagers when the project collapses.

In Kisarawe, Tanzania, that land instead was simply subleased by the bankrupt Sun Biofuels to Mtanga Farms, a Tanzanian company that has disavowed any responsibility to fulfill the promises made by Sun Biofuels when it secured the land in the first place. (See my previous article.)

This is the kind of irresponsible investment that has negotiators in Rome trying desperately to plug the yawning land-governance gap in order to protect the rights of small-scale farmers, most of whom lack formal titles to their land.

In Zambia, the government has taken the same proactive approach to attracting foreign land investors, securing good land and promising infrastructure development as part of the new wave of “public-private partnerships” that are supposed to stimulate agricultural development.

Mostly, investors don’t wait for the national government. They go straight to local leaders, who have traditional authority over “customary lands” farmed by small-scale producers. They cut deals that displace local farmers for the large-scale production of sugar cane or some other cash crop, often for export.

At best, you get a managed process to attract investors to one of the Zambian government’s “farm blocks” – 250,000-acre tracts intended to bring in a foreign investor to establish a “nucleus farm” of 25,000 acres around which other large, medium, and small farmers can get land to grow crops for the investor’s processing facility.

Such schemes have had some economic success in rice farming in some countries, but the issue of displacement of small-scale food producers, generally for export agriculture, remains. So does the limited involvement of small-scale farmers and the overwhelming export orientation of most projects.

Zambia has one such farm block project going in Nansanga, but this land is neither idle nor unoccupied, as proponents of such schemes often suggest. Some 2,500 farmers live on the Nansanga land and they do not want to be moved or swallowed up by the larger project.

It is certainly difficult to see how such projects address the desperate needs of the 80% of rural Zambians who are poor and food-insecure. They are food-insecure in part because they are land-poor; they do not have enough decent land to support their households. While the government auctions off the country’s best land, these villagers are dividing their small landholdings among their children, resulting in smaller plots and greater poverty.

Which begs the question: If the goal is to address the urgent issue of food security, why not give some of those good agricultural lands to land-poor smallholders?

In Zambia, I saw one very small project that did just that. The Chanyanya Smallholders Cooperative Society of 126 households in Kafue, south of Lusaka, got secure title to about 1,250 acres of land, irrigated it with European donor support, set up small garden plots for themselves on some of it, and sublet the majority to a commercial soybean and wheat farming business in which they retain significant equity shares.

They get more food, with year-round production of cash and subsistence crops from their garden plots, thanks to the irrigation. The land gets developed through capital-intensive investment, with cooperative members sharing in those profits and retaining title to the land. They seemed enormously better off, though they might do even better if they each had 10 irrigated acres and they were shown how to become mid-size commercial farmers.

Instead of touting the imagined food-security benefits of land grabs, why not look at the real-life food security benefits of giving good land to the hungry? And irrigating it?

Interpreting the data from that flawed land grab study a little differently, the researchers show, in effect, that in Tanzania 3.1 million people additional people could be fed by just giving the land to small-scale farmers. Or, more realistically, one could increase by 25% the caloric intake of 12.4 million people who don’t get enough to eat now. Invest in the land and, according to these researchers, one could do the same for 20.4 million people.

That would go a long way toward wiping out rural poverty in Tanzania. It doesn’t look anything like a “land grab.” But it sure looks like “responsible agricultural investment” to me.

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  1. Ben Johannson

    Failing agricultural programs simply demonstrate interference by local governments in market efforts to end world hunger. The price-signaling of empty bellies with no money to signal will efficiently create and distribute new food so long as socialists can be stopped from putting CEOs into their new Auschwitz tax-and-regulate-camps.

    1. Jess Asquin

      Why would markets want to end world hunger? Wouldn’t it be more profitable to just gas the poor and eliminate the cost and liability?

      1. Ben Johannson

        Oh, so because you screwed up and voted for Obama, now that everything sucks you want to blame markets? Well the socialists are coming for freedom just like Hitler came for the Jews, and you can bet they’ll put corporations into gas chambers and ovens after stealing everything and giving it to some coked-out union thug who will make Obama president for life.

        1. Jess Asquin

          Actually, everything sucks because I voted for Reagan and, I don’t blame markets for anything. Constrained by the moral principle that freedom does not include the right to injure others, markets are the answer. There is no tragedy of the commons if the dominant grazer assures that those who have less access to the grass don’t have worse lives. Efficiency creates more product from the same capital.

  2. cnchal

    How the Other Half Dies, by Susan George. Written decades ago, it revealed to me the corruption and twisted thinking of our “leaders” at the time. As time has marched on it has gotten much much worse.

    Foreign aid, as was told to us, was a way to help poor starving people in third world countries to not starve. The reality was that foreign aid was used as a method to kick small farmers growing native food off the land, and plant crops that could be sold on world markets. Providing tractors and modern farm machinery employed people here, so it was a transfer from taxpayers to farm equipment manufacturers, but those tractors died in the field within a few weeks due to lack of maintenance, and were useless to the recipients.

    What this post lays bare is how successful the corruption and twisted thinking of past “leaders” was, if you define success by how many people can be starved and ruined.

    Yes, economists have a bad name. All sorts of insanity and stupidity is justified by economists.

    Let’s use globalization as an example.

    We have a system that rips raw materials from the ground from anywhere in the world, and then ships it to China, where it is processed into finished goods, and then shipped back to all over the world, to sit on a Walmart shelf for a few months.

    That “trinket” is bought and brought home for a few months to end up in the ground again when it breaks. Cycle complete.

    There are so many bad things about this system. Extreme energy consumption, extreme pollution in China and in the “developing ” economies that supply the raw materials. Lack of jobs here producing “trinkets”.

    No economists has ever said, hey wait a minute. This is crazy!
    Then again, no economist has ever sweated for a paycheck, or starved.

    1. James Levy

      But these aren’t the “leaders”. These are the people ostensibly trained and paid to do the thinking for the leaders. These are people who are supposed to be capable technocrats actually solving problems. What this shows is that they are stupid, delusional, frightened fools (or staggeringly venal and mercenary sociopaths) who have a great technical education and no common sense or ability to think outside the constipated, constricted categories their education taught them to valorize and reify. Using the magic incantation “efficiency” in a dumb, narrow sense that takes no account of real world conditions, they have gone abracadabra and out has popped a reassuring answer that will make their paymasters happy and not get them into trouble with their peers. Everybody wins, except the starving people, but since these economists will never see or know a starving person, what’s to worry.

      1. cnchal

        A few weeks ago, Yves straightened us out on the influence that economists have at the policy table. Immense, was my impression.

        This idiotic, wasteful system of globalization was built on their watch. The financial meltdown of 2008 was on their watch. Economists claim they didn’t see it coming. Why were they not fired for gross incompetence? Why do they still make six figure salaries for, in essence getting it wrong time after time? Do we ever hear an I’m sorry?

        The reviled trade agreements that will entrench the corporate overlords as some toll taking troll that you have to pay to get by, overseen by economists.

        Canada’s Prime Minister, a frigging economist for crying out loud, but at least he isn’t a lawyer.

  3. mellon

    False promises just like Obamacare. Guess the administration had a role model for their bait and switch routine.

  4. Jim Shannon

    ALL natural resources should be NATIONALIZED for the exclusive benefit of a Nation’s citizens! Landed wealth includes ALL mineral rights! ie crude oil, natural gas, coal, water, iron ore, etc
    Always and everywhere governments decide who is rich and who is poor!
    “We the Peole” are the government, what exists can only be explained by the corruption of and by government.

  5. Irrational

    This is a very interesting articles. At a time when there is political pressure to include agriculture/-business in development aid, how do you avoid supporting the wrong schemes?

  6. steelhead23

    This process of disenfranchising native peoples of their lands and livelihoods has been going on for a very long time. It is the seedy backstory of Norman Borlaug’s green revolution. Sure, low energy, unmechanized farming is inefficient, but it produces real food for real people, not profits for corporations. It is wholly unsurprising that eager neo-liberal economists would show that plantations growing sugar cane beats natives growing squash. The issue here is that many (Ben Johnson perhaps?) cannot fathom traditional use and un-titled land and tend to perceive that those displaced by aggregating community farmlands into large private commodity extraction facilities would share the benefits, when in truth, those benefits accrue exclusively to investors and the chieftains and tyrants they bribe.

  7. bluntobj

    I’m amused at most of the comments so far. This is what they are up against:

    “As an environmentalist, I seriously question anything that increases the human population in areas that should be preserved for wildlife, as it helps me assuage my first world guilt as I drive my SUV, drink my quad latte, and speak truth to the evil business powers in the world. I make a six figure salary lobbying the government to increase regulations that are impossible to follow without major corporate investment, and lead to more food imports. I blame the failures of the industrial food system on small farmers that cannot exist under my regulations. I don’t care, I’ve got the money.

    As a socialist, I know that I can promise the world to the poor and destitute. They’ll elect or appoint me, and I’ll promptly sell the development rights to my cronies and offshore companies that pay my fees to my swiss or cayman account. Then I can blame them when the projects fail, and it lets me apply for more aid from gullible first worlders. If they succeed, I know I can rake a nice tax off of all the exports. I can pass laws to easily yank any rights away from the people, because I’ve got the guns and the army to do so. It does not matter if people starve, because I have the money.

    As a corporate CEO, I know that I can go to any government and get what I want. I can have regulations proposed, rules made, tax decisions made in my favor, even broad laws passed that I can change in the future to suit my whims through manipulation of the regulation and application of the law. The government grants my corporation competitive advantage that I use to enrich myself and my wealthy shareholders. My wealthy buddies only hang out with each other, even tending to intermarry their sons and daughters. I look forward into a new aristocracy where the richest own and control the world, without even having some conspiracy group pulling the strings. I don’t care about nations or their peoples, because money is global, and I can go anywhere and buy justice. I’ve got the money.”

    From the OP’s article, it is evident that it is governance and the ability to regulate that is the real evil. If you can accept that a government can take land and resources and “give” it to the poor, you must accept that you can be taken from by that government. It’s important to realize that if you do not have money or power at this point in your life you are one of the people that can and will be farmed, milked, and slaughtered like cattle. Make your choices accordingly.

    1. hunkerdown

      Yawn. Libertarians will never imagine the possibility of instant, binding, no-questions-asked popular right of recall because such a right eliminates their viability as The Only Alternative to TINA.

  8. Rosario

    Nearly all famines of Africa in the 20th and 21st century have been the result of forced mechanization of agriculture, warfare/displacement, and colonial exploitation/apartheid (which is occurring now more than ever). Those causes are never discussed in the media outlets we view everyday. The causes are always portrayed as acts-of-god and the African victims pitiful and to be pitied. Africans (I know it is an inappropriate and potentially insulting term for the many cultures of the continent but I use it for brevity) have been doing just fine for a very long time tilling fields by hand, hoe, and plow (which is far more energy efficient). They have dealt with droughts. They understood and understand the importance of maintaining minimum yields by tilling multiple plots at various locations. They also, in earlier times, had villages organized in such a way where malaria was not nearly the problem that it is today (spotty, at higher elevations thus drier ground, light smoke creating fires going all day). I’m not saying Africans should go back to this nor am I implying we should not work with Africans in a respectful, equitable way, I’m just tired of the same worn out colonialist, racist justifications for the “developed” countries directing Africa where “it” wants using coded modern language. It was patronizing in the 19th/20th century and it is patronizing now. Africans have figured their stuff out before and they can figure it out again. They are just as intelligent, creative, and resourceful as the rest of the world. The “developed” world just needs to stop taking and telling and start listening.

    1. Irrational

      Agree + support them at the techniques they already good at and provide means to get production to market with fewer losses.

  9. mellon

    A very similar land grab is going on in America over intellectual property.

    The victims are the people who create art and music and their families.

    Every single group that has some illusory “right” or thing of value who do not have the money and power to defend it is having whatever it is taken from them right now, or soon will.

    No group is immune unless they can pay for the lobbyists and lawyers, etc. So the only solution s for everybody to wise up to the point where they can move beyond where we are now. Evolve beyond it.

    An eye for an eye makes us both blind, as they say.

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