Economics

Study Notes

Land Grabs

Level:
A Level
Board:
AQA, Edexcel, OCR, IB

Land Grabs have become an important and controversial issue in development economics in recent years

Throughout the world, it is estimated that 445 million hectares of land are uncultivated and available for farming, compared with about 1.5 billion hectares already under cultivation. About 201 million hectares are in sub-Saharan Africa. Only 10% of Africa’s rural land is registered.

The vast majority of land deals are for agricultural projects. Forestry is the next largest sector. Of the agricultural deals, fewer than 30% are for food crops alone. Almost 20% are for non-food crops such as bio-fuels and livestock feed.

Arguments in favour of land purchases

The buying of land by transnational investors / companies is viewed favorably by some economists. They see it as an opportunity to reverse under-investment in developing countries’ agricultural sectors, to create new jobs, and to bring improved technology to local farming industries that will boost productivity, raise farm incomes and reduce the extreme poverty.

Criticisms of land grabs

Opponents of “land grabs,” argue that transnational land buyers neglect local rights and do not pay a fair price for the land. They seek to extract short-term profits at the cost of long-term environmental sustainability. They claim that land grabs are closely connected to corruption on a large scale. Another argument is that selling thousands of hectares to large-scale investors hurts small-scale farmers. Mechanized farming reduces employment in labour-intensive farming and can accelerate forced migration into urban areas.

A report published by Oxfam in 2011 claimed that much of the farm land bought by western investors in recent years has been left idle or given over to bio-fuel production for motorists in rich nations instead of being used to grow food and reduce malnutrition among the poorest communities

Oxfam campaign over land grabs

According to development economist Professor Paul Collier there are two main types of land grab:

  • Pioneer commercial investment: buying unused land at low prices to see if it is viable for production; risky but high-gain. Increases factor productivity; if successful, draws others – as such, it should be encouraged because there is a net benefit
  • Speculative acquisition of large areas of useless land: may not stay useless – it has an option value. The investor hopes that the land will become useful in the long run (e.g. because of climate issues), causing the market value to rise.

Paul Collier believes that the 1st type is beneficial to developing countries but the 2nd is not. Some countries are introducing legislation to place barriers to foreign buyers of land.

From 2013, Tanzania is restricting the size of land that single large-scale foreign and local investors can "lease" for agricultural use. The vast majority of Tanzanian small-scale farmers do not have legal protection for their property. Tanzania has an estimated population of 42 million people and 12,000 villages, but only 0.02% of its citizens have traditional land ownership titles.

Oxfam Report on Land Grabs

"More than 60% of investments in agricultural land by foreign investors between 2000 and 2010 were in developing countries with serious hunger problems. But two-thirds of those investors plan to export everything they produce on the land. Nearly 60% of the deals have been to grow crops that can be used for bio-fuels."

“Many projects are abandoned, often after inflicting serious damage on the local resource base.”

Chatham House Report on Land Investments

Depending on the business model, land deals can

  • 1/ Provide access to markets and technology for local producers
  • 2/ Generate employment
  • 3. Increase tax revenue locally and nationally

Cambodian farmers claim land grabs is costing their livelihoods

Thousands of Cambodian farmers claim they are losing their land and livelihoods to big sugar plantations, some of which are directly supplying the EU through companies such as Tate & Lyle Sugars.

Nearly 100,000 hectares (250,000 acres) have been cleared make way for sugar plantations since 2006, activists allege – and most of that land, they argue, has been stolen from subsistence farmers.

Sugar is big business in Cambodia, thanks to a preferential EU trade scheme which allows Cambodian sugar to be sold duty-free on the EU market at a minimum price.

Source: news reports, July 2013

Investors deny Africa land grab claims

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