Agribusiness Carves Up Africa

Investors are rushing into Africa with a new fervor for land. Major players like Goldman Sachs and Morgan Stanley are raising hundreds of millions for agro-funds in Africa and Latin America, which will essentially be used to export crops to developed nations for profit. According to Agcapita, a fund in Calgary, private equity funds raised over $2 billion in the first half of 2009. Blackrock alone has raised $500 million to invest in agriculture, and Philippe Heiberg’s Jarch Capital has leased 1 million acres in Sudan to grow rice and wheat for export. Arab nations are looking to relieve their dependence on infertile acreage and over 1 million Chinese farm workers inhabit Sub Saharan Africa.

This land rush is a result of various global factors. High oil prices drove up the cost of food production and transportation in 2007. Exorbitant food prices were worsened by severe droughts in Eastern Europe and Australia. Corporate farmers turned to Kenya, Sudan, Tanzania and Ethiopia for crops in exchange for promises of infrastructure and education. However, this impromptu land reform was not cleared with local farmers, who were less than happy when their land was expropriated. Economic colonialism reared its ugly head in Africa once again.

Corporate farmers claim that the benefits from the least land are not being funneled out of Africa, but rather invested back into increasing productivity of the land, educating local communities and providing health facilities. However, famers that have lost land in Kenya to Dominion Group, a privately held conglomerate involved in real estate development and manufacturing, say that tens of thousands of farmers and herders have been relocated and pushed off Dominion land to make room for reservoirs and dams. About 50 families were compensated and the dams have created even more widespread flooding during the rainy season. While Dominion set 300 acres aside for communal farming, local conflicts arose with authorities has disallowed farming on this land and corruption has prevented local workers from receiving payment owed to them for menial jobs. The company’s executives show little remorse for uprooting subsistence farming which they saw as little more than “unproductive gardens.”

As these conflicts arise between newcomers and natives, issues are not easily resolved. Often times, national governing law conflicts with local laws, and both can be difficult to enforce. When environmental degradation occurs, from pesticides, water pollutants, and infrastructure that disturbs the area’s natural ecology, these countries lack regulatory structures or clout to hold corporate farmers accountable for their actions. As this agro-invasion proceeds, government, local, corporate and international bodies will need to keep a close eye to ensure that social development and environmental preservation are priorities to making healthy, long-term investments.

Indian farming companies buying land in Africa