The Economist, that radical magazine, has produced an editorial and a long article about how rich countries in the Middle East and Asia are rapidly acquiring agricultural land--and the water rights that go with it--in impoverished developing countries in order to ensure food security for their own populations. The buyers are Saudi Arabia, Kuwait, South Korea, China, and the like. The sellers? Sudan, Ethiopia, Congo, and Pakistan.
If this sounds uncomfortably like colonialism revisited, it is for good reason. As The Economist so nicely puts it, while putting agricultural land to good use might help reduce Third World malnutrition, "these advantages cannot quell a nagging unease." From whence comes the unease? The deals raise questions about lack of transparency, government collusion, bargain prices, effects on local food markets, and who gets the benefits.
The Economist suggests the need for a dose of skepticism, not least because of the size of the purchases--an astonishing total of 15 to 20 million hectares so far (a hectare is about 2.5 acres). Advises The Economist: "defer judgment and keep a watchful, hopeful but wary eye" on the process.
This sounds optimistic to me. You?
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The Economist put it best themselves in the article you cite:
"It would be graceless to write off in advance foreign investment in some of the most miserable places on earth. The potential benefits of new seeds, drip-feed irrigation and farm credit are vast. Most other things seem to have failed African agriculture—domestic investment, foreign aid, international loans—so it is worth trying something new. Bear in mind, too, that worldwide economic efficiency will rise if (as is happening) Saudi Arabia abandons mind-bogglingly expensive wheat farms in the desert and buys up land in east Africa."
Many in the West are likely to cry "colonialism" -- especially those who are more prone to blame many Third World problems on their own rich country -- mostly out of their own guilt about the existence of poverty worldwide. However, as the Economist usually writes, reality is a lot more complicated and as always, they sing the praises of free trade over protectionism. I agree with them; we'll have to wait and see.
This is a very sound business decision. Africa is undervalued. Most investors got a good bargain as for the desperate even little is a lot in the short-run. As to what will happen to the locals - there are plenty of good case studies. One documentary called Darwin's Nightmare even won an Oscar for the subject at hand.
Eventually Europe and the US will lift their anti-free market agricultural policies (CAP & Co). But by that time the African land will be in US and EU hands. What a great first-mover benefit. Or better - the EU and US will lift their trade barriers once...
In the past - I have foolishly spread the whole Africa-investment-opportunity idea myself when pointing out that the rest of the world has long passed their sustainability thresholds.
I am all for free-market principles but we should start applying those at home first. Otherwise we are not merely subsidizing a few rich farmers but also a few rich investors as well.