The Trouble With International Land Deals

Late in 2008, Korean conglomerate Daewoo made headlines when it acquired 1.3 million hectares of land in rural Madagascar to produce crops and biofuels for export. The host government touted the venture as a leap forward for the country's agricultural development, but critics referred to the deal as neocolonialism.

This month, the Food and Agriculture Organization released an alarming report concerning governments and private corporations buying farmland in impoverished countries.

Although the investigation focused on five African states, the report made clear that international land deals are emerging as a global phenomenon and the associated issues of food security, displacement, local interests and land values are ill-understood.

Since 2004, a total of 2,492,684 hectares of land in Ethiopia, Ghana, Madagascar, Mali and Sudan have been allocated to private firms and foreign governments, according to the report.

Food production is often the justification touted by investor firms and countries including China, South Korea and Saudi Arabia. But the report highlighted ulterior motives.

"Many government-backed deals are driven by investment opportunities rather than food security concerns (e.g. China)," the report noted. "Related drivers behind current land deals in Africa are global demand for non-food agricultural commodities and biofuels, expectations of rising rates of return in agriculture and land values."

The report did note the potential mutual benefit of cross-border farmland deals, including boosting global food security as well as providing investments in agriculture and employment. But many countries involved do not have legal institutions in place to protect local interests.

Grassroot groups in many of the developing countries protested the allocation of lands to foreign governments while locals remained impoverished and landless. Such was the case in Madagascar, where pressures from local interests eventually led to the cancellation of the controversial Daewoo deal.

FAO outlined recommendations for investors and host governments to promote investment in agriculture while also benefiting the local poor. These include local consultation, short-term land leases, and innovative business models that promote local participation.

About the author

  • Jody Nesbitt

    Jody is a Devex international correspondent in Washington, D.C. Previously, he worked as a monitor in South Africa's provincial parliament, as well as a researcher for the Center for Economic and Policy Research and for Glass Lewis & Co. He has studied at Rutgers University, the University of Natal and the University of the West Indies, earning a bachelor's in political science and a master's in international relations.