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May 09, 2010

China's 'land grab' could be a development opportunity for African agriculture

by Doug Saunders

What if Beijing’s ‘invasion’ could be a major development opportunity for farmers in Africa?

In the fertile lands south of the Sahara, the huge green apparitions have become an increasingly familiar sight. After crossing the long stretches of the dun-coloured wasteland and the tiny, emaciated peasant plots that make up much of Africa’s countryside, you’re suddenly confronted with a huge expanse of green, robust crops doused in modern irrigation, worked with tractors and scattered with scores of field workers.

Here is the most visible face of Beijing’s powerful presence in Africa. Virtually unnoticed by people outside, Chinese companies have spent the past two years accumulating millions of hectares of African farmland.

Since 2008, when worldwide food shortages and a boom in biofuels suddenly made farming an attractive target for investment again, at least 20 million hectares – and possibly as much as 100 million – have been leased by foreigners (actual buying is rare) in Africa. On one hand, you can see the appeal: Africa has the cheapest arable land in the world, valued at an average of $800 a hectare.

Many of these deals are being done by China – how much, we don’t know, because record-keeping is sketchy. Persian Gulf countries and Europeans are also making big agricultural investments in Africa, but China’s getting the attention because it’s moved in with so much money and because it’s a poor and authoritarian developing country whose motives and methods are widely distrusted.

Indeed, if you picked up an African newspaper this week, you’d likely have seen cries of protest at this Chinese incursion, one that’s being portrayed as an “African land grab” and a “new scramble for Africa” – both references to Europe’s catastrophic colonial theft of African resources in the past two centuries. A coalition of activist groups has organized to fight such deals and keep the land in African hands.

But it’s worth taking a second look. People see the Chinese as moving into Africa, kicking poor farmers off their land, and growing food to be shipped back to China for domestic consumption. This seems unlikely, however. China already produces far more food than it needs, and its agricultural productivity is increasing. What it does have is $2-trillion (U.S.) in foreign-exchange reserves that it realizes it ought to invest more widely. African farms are a great bargain for investors who don’t mind risk; they can be turned into high-output and, therefore, high-profit operations.

Scholars who’ve examined China’s Africa policy have found not a desire for immediate returns but a longer-term interest in developing the continent’s infrastructure, training, management and investment to the point that yields will be far higher.

This happens to be exactly what African farms need. Whether someone from another continent can deliver it is an open question, but we shouldn’t be so quick to assume the worst.

Hunger and malnutrition afflict most of Africa’s countries, which, despite having some of the most fertile land in the world, are net importers of food. This is purely a matter of productivity. In crops such as corn, African farms are typically producing between 30 and 60 bushels a hectare; North American and European farms get 120 to 160 bushels from the same hectare because of better technology and investment.

We have just lived through a 15-year period during which per capita African food production fell by 8 per cent, while it increased in Asia by more than 25 per cent. If what happened in Europe a century ago and what’s happening in Asia now can be made to happen in Africa, then one of the world’s most serious problems could be solved.

The only major analysis of foreign farm investment in Africa was recently completed by Lorenzo Cotula and his colleagues at the London-based International Institute for Environment and Development. Titled Land Grab or Development Opportunity, it found that, on the whole, there can be much more of the latter than the former if the deals are done right.

The result could be something like the shift that transformed European farming a century and a half ago: a move from hand-to-mouth subsistence farming to commercial farming that produces five times more food, employs many more people at far better wages than peasant earnings, and puts an end to rural poverty, which is currently the world’s largest killer of people.

Ugandan development economist Dick Kamuganga found that, if deals with foreigners are made to contract out the farming itself to local small-hold farmers (a practice that economists generally agree produces higher yields anyway), the result could “deliver the investment capital, technical know-how, jobs to local farmers and predictable food security for Africa.” If it takes a Chinese invasion to do it, it still might be worth it.

The Globe and Mail

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