Race for Africa Part I
“Buy land, they’re not making it anymore,” Mark Twain once said in the late 1800s. And true enough: There will be no more earth in the world; rather, there will be less land and more people to share it. In step with population growth, the area of cultivated land per capita fell from 1.45 hectares in 1960 to 0.78 hectares in 2003 – the world as a whole. In Africa, the decline has been over 50 percent.
- Why has the world entered a food crisis?
- Who is competing today for Africa’s resources?
- Why are they being cut?
- Is the race good for Africa?
But to buy land? Fifty years of falling real food prices, Mark Twain referred to oblivion for most of the post-war period: Agriculture and agriculture were not considered particularly forward-looking. Only in recent years can it seem as if the old master’s advice has gained renewed relevance. We see it in Africa, in Latin America, in parts of Asia and in the former Soviet Union, where new land leases and land acquisitions have skyrocketed.
2: Most clearly in Africa – The backdrop
Especially in Africa, according to computerannals.com, the trend has become so clear that many observers draw parallels to the European colonial powers’ historic race for the continent in the south. At that time, in a few decades, tens of thousands of African kingdoms were transformed into forty states ruled from Europe, through history’s most comprehensive redrawing of the world map.
In today’s Scramble for Africa (race…), it is admittedly Asian and Arab countries that lead, not deflated European powers. And the struggle is no longer about expanding the territory and building political power in the traditional sense.
But the race is still about land. Or more precisely: it is about soil – and about water . And about the need for increased supplies of food to the rapidly growing populations of the buyer countries.
The backdrop is the dramatic rise in world food prices since 2006, which reached a preliminary peak in May 2008. The food crisis , as the situation with rapidly rising prices soon became known, led 115 million new people into starvation and malnutrition, and ended in violent riots in over 30 countries.
Thus, the term ” food security ” was suddenly back in the political vocabulary, after being unused for decades. The problem of food insecurity soon proved to be most acute in a number of poor countries, where households spend up to 70 per cent of their income on food.
Then you just can not tolerate dramatic price increases on basic goods such as rice, corn or cooking oil. And as is well known: A hungry stomach does not listen to anyone. Food shortages jeopardize political stability .
3: When the food markets are not enough
The situation was not improved by a number of large agricultural countries introducing export restrictions on cereals and meat during the crisis to meet the needs of their own populations. The crisis-driven trade restrictions sent shock waves through countries with low self-sufficiency and poor conditions for agricultural production, such as Saudi Arabia, the Emirates and Kuwait. Plenty of money for food imports no longer proved to be enough: Control over the actual food production had suddenly become crucial.
Thus, the battle for food is becoming a battle for the earth. Or as Joachim von Braun, director general of the renowned Food Policy Research Institute in Washington, said in an interview earlier this year: “The global race for the earth is really an expression of a sharp fall in confidence in the world’s food markets.”
Admittedly, food prices have now fallen sharply since the summer of 2008 (cf. the financial crisis). But it is worth noting that the prices of key foods – cf. the food price index of the UN agricultural organization FAO – are still 30–40 per cent above the level from before the food crisis set in. Most experts believe that the price picture going forward will be characterized by large fluctuations and a long-term rising trend. Put another way: The time for cheap food is probably over.
The food crisis has shed new light on the fundamental uncertainty that characterizes the outlook for the world’s food supply, and which is due to major structural changes.
4: Rear: Structural changes
In part, the world gets about 76 million new mouths to feed – annually. On the one hand, the growing prosperity in countries such as India and China is contributing to more and more people eating more meat and dairy products , which occupy much larger agricultural areas than rice and vegetables. Furthermore, soil erosion, desertification and increasing water shortages in several areas make it more difficult to farm there. At the same time, more droughts, more floods and hurricanes give us less predictable crops. The climate threat is not least a threat to food security.
Investors are reorienting
World food production must be increased by an estimated fifty percent by 2030 and doubled by 2050 to cover the future need for food. Nevertheless, land prices are still low in many places in the poor part of the world. The return opportunities for large-scale food production are correspondingly large, and a number of multinational companies and hedge funds are looking for new investment objects now that the financial crisis has left so many of the old ones in ruins. Today, giants like Morgan Stanley, Deutsche Bank, Blackrock Inc. and Goldman Sachs are vacuuming the globe for fertile topsoil. Quite in the spirit of Mark Twain.
“In the last couple of years, it has become de facto profitable to farm all over the world. The money has discovered that, “said a Norwegian fund manager in the autumn of 2008, after his company had bought up heavily in agro shares in Russia and Ukraine, in the middle of the financial crisis. He added: “In a long-term perspective, investments in low-cost agriculture will be profitable. The world needs food. ”
Yes sure: The world needs food. Investors have discovered it, and politicians have discovered it. Private investors are becoming increasingly active, but as land investment in poor countries is often politically risky, the buyer countries’ governments – states – usually play an active role as facilitators, supporters and intermediaries . It is not uncommon for investments to be made with government funds, led by countries with a lot of money in the treasury, but potential shortages of food and water.
5: Who are the buyers?
China alone has bought up three times Norway’s total agricultural area in Congo alone . Here, the Chinese will grow palm oil for biofuel, another activity that is taking hold and further increasing the pressure on global soil resources – and thus on food production. It is estimated that one million Chinese farmers will be in Africa as early as 2010. Agriculture is seriously globalized.
At the same time, there is reason to note that the countries that sell or rent land are among the poorest and least stable in the world, such as Congo, Sudan and Ethiopia. Countries where corruption is widespread, domestic food supplies are under pressure and private property rights are weak.