Worldwide Corporate Control of Agriculture: The New Farm Owners

16 November 2009

-- With all the talk about "food security," and distorted media 
statements like "South Korea leases half of Madagascar's land,"1 it 
may not be evident to a lot of people that the lead actors in today's 
global land grab for overseas food production are not countries or 
governments but corporations.  So much attention has been focused on 
the involvement of states, like Saudi Arabia, China or South Korea. 
But the reality is that while governments are facilitating the deals, 
private companies are the ones getting control of the land. And their 
interests are simply not the same as those of governments.

    "This is going to be a private initiative." - Amin Abaza, Egypt's
    Minister of Agriculture, explaining Egyptian farmland acquisitions
    in other African nations, on World Food Day 2009
Take one example. In August 2009, the government of Mauritius, 
through the Ministry of Foreign Affairs, got a long-term lease for 
20,000 ha of good farmland in Mozambique to produce rice for the 
Mauritian market. This is outsourced food production, no question. 
But it is not the government of Mauritius, on behalf of the Mauritian 
people, that is going to farm that land and ship the rice back home. 
Instead, the Mauritian Minister of Agro Industry immediately 
sub-leased the land to two corporations, one from Singapore (which is 
anxious to develop the market for its proprietary hybrid rice seeds 
in Africa) and one from Swaziland (which specialises in cattle 
production, but is also involved in biofuels in southern Africa).2 
This is typical. And it means that we should not be blinded by the 
involvement of states. Because at the end of the day, what the 
corporations want will be decisive. And they have a war chest of 
legal, financial and political tools to assist them.

    "What started as a government drive to secure cheap food resource
    has now become a viable business model and many Gulf companies are
    venturing into agricultural investments to diversify their portfolios."
    - Sarmad Khan, "Farmland investment fund is seeking more than
    Dh1bn", The National, Dubai, 12 September 2009

Moreover, there's a tendency to assume that private-sector 
involvement in the global land grab amounts to traditional 
agribusiness or plantation companies, like Unilever or Dole, simply 
expanding the contract farming model of yesterday. In fact, the 
high-power finance industry, with little to no experience in farming, 
has emerged as a crucial corporate player. So much so that the very 
phrase "investing in agriculture", today's mantra of development 
bureaucrats, should not be understood as automatically meaning public 
funds. It is more and more becoming the business of ... big business.

The role of finance capital

GRAIN has tried to look more closely at who the private sector 
investors currently taking over farmlands around the world for 
offshore food production really are. From what we have gathered, the 
role of finance capital -- investment funds and companies -- is truly 
significant. We have therefore constructed a table to share this 
picture. The table outlines over 120 investment structures, most of 
them newly created, which are busy acquiring farmland overseas in the 
aftermath of the financial crisis.3 Their engagement, whether 
materialised or targeted, rises into the tens of billions of dollars. 
The table is not exhaustive, however. It provides only a sample of 
the kinds of firms or instruments involved, and the levels of 
investment they are aiming for.

Private investors are not turning to agriculture to solve world 
hunger or eliminate rural poverty. They want profit, pure and simple. 
And the world has changed in ways that now make it possible to make 
big money from farmland. From the investors' perspective, global food 
needs are guaranteed to grow, keeping food prices up and providing a 
solid basis for returns on investment for those who control the 
necessary resource base. And that resource base, particularly land 
and water, is under stress as never before. In the aftermath of the 
financial crisis, so-called alternative investments, such as 
infrastructure or farmland, are all the rage. Farmland itself is 
touted as providing a hedge against inflation. And because its value 
doesn't go up and down in sync with other assets like gold or 
currencies, it allows investors to successfully diversify their 

    "We are not farmers. We are a large company that uses
    state-of-the-art technology to produce high-quality soybean. The
    same way you have shoemakers and computer manufacturers, we produce
    agricultural commodities." Laurence Beltrão Gomes of SLC Agrícola,
    the largest farm company in Brazil

But it's not just about land, it's about production. Investors are 
convinced that they can go into Africa, Asia, Latin America and the 
former Soviet bloc to consolidate holdings, inject a mix of 
technology, capital and management skills, lay down the 
infrastructures and transform below-potential farms into large-scale 
agribusiness operations. In many cases, the goal is to generate 
revenue streams both from the harvests and from the land itself, 
whose value they expect to go up. It is a totally corporate version 
of the Green Revolution, and their ambitions are big. "My boss wants 
to create the first Exxon Mobil of the farming sector," said Joseph 
Carvin of Altima Partners' One World Agriculture Fund to a gathering 
of global farmland investors in New York in June 2009. No wonder, 
then, that governments, the World Bank and the UN want to be 
associated with this. But it is not their show.

 From rich to richer

    "I'm convinced that farmland is going to be one of the best
    investments of our time. Eventually, of course, food prices will get
    high enough that the market probably will be flooded with supply
    through development of new land or technology or both, and the bull
    market will end. But that's a long ways away yet." - George Soros,
    June 2009

Today's emerging new farm owners are private equity fund managers, 
specialised farmland fund operators, hedge funds, pension funds, big 
banks and the like. The pace and extent of their appetite is 
remarkable - but unsurprising, given the scramble to recover from the 
financial crisis. Consolidated data are lacking, but we can see that 
billions of dollars are going into farmland acquisitions for a 
growing number of "get rich quick" schemes. And some of those dollars 
are hard-earned retirement savings of teachers, civil servants and 
factory workers from countries such as the US or the UK. This means 
that a lot of ordinary citizens have a financial stake in this trend, 
too, whether they are aware of it or not.

It also means that a new, powerful lobby of corporate interests is 
coming together, which wants favourable conditions to facilitate and 
protect their farmland investments. They want to tear down burdensome 
land laws that prevent foreign ownership, remove host-country 
restrictions on food exports and get around any regulations on 
genetically modified organisms. For this, we can be sure that they 
will be working with their home governments, and various development 
banks, to push their agendas around the globe through free trade 
agreements, bilateral investment treaties and donor conditionalities.

    "When asked whether a transfer of foreign, 'superior', agricultural
    technology would be welcome compensation for the acquisition of
    Philippine lands, the farmers from Negros Occidental responded with
    a general weariness and unequivocal retort that they were satisfied
    with their own knowledge and practices of sustainable, diverse and
    subsistence-based farming. Their experience of high-yielding variety
    crops, and the chemical-intensive technologies heralded by the Green
    Revolution, led them to the conclusion that they were better off
    converting to diverse, organic farming, with the support of
    farmer-scientist or member organisations such as MASIPAG and PDG
    Inc." - Theodora Tsentas, "Foreign state-led land acquisitions and
    neocolonialism: A qualitative case study of foreign agricultural
    development in the Philippines", September 2009

Indeed, the global land grab is happening within the larger context 
of governments, both in the North and the South, anxiously supporting 
the expansion of their own transnational food and agribusiness 
corporations as the primary answer to the food crisis. The deals and 
programmes being promoted today all point to a restructuring and 
expansion of the industrial food system, based on capital-intensive 
large-scale monocultures for export markets. While that may sound 
"old hat", several things are new and different. For one, the 
infrastructure needs for this model will be dealt with. (The Green 
Revolution never did that.) New forms of financing, as our table 
makes plain, are also at the base of it. Thirdly, the growing 
protagonism of corporations and tycoons from the South is also 
becoming more important. US and European transnationals like Cargill, 
Tyson, Danone and Nestlé, which once ruled the roost, are now being 
flanked by emerging conglomerates such as COFCO, Olam, Savola, 
Almarai and JBS.4 A recent report from the UN Conference on Trade and 
Development pointed out that a solid 40% of all mergers and 
acquisitions in the field of agricultural production last year were 
South-South.5 To put it bluntly, tomorrow's food industry in Africa 
will be largely driven by Brazilian, ethnic Chinese and Arab Gulf 

Exporting food insecurity

Given the heavy role of the private sector in today's land grabs, it 
is clear that these firms are not interested in the kind of 
agriculture that will bring us food sovereignty. And with hunger 
rising faster than population growth, it will not likely do much for 
food security, either. One farmers' leader from Synérgie Paysanne in 
Benin sees these land grabs as fundamentally "exporting food 
insecurity". For they are about answering some people's needs - for 
maize or money - by taking food production resources away from 
others. He is right, of course. In most cases, these investors are 
themselves not very experienced in running farms. And they are bound, 
as the Coordinator of MASIPAG in the Philippines sees it, to come in, 
deplete the soils of biological life and nutrients through intensive 
farming, pull out after a number of years and leave the local 
communities with "a desert".

    "Entire communities have been dispossessed of their lands for the
    benefit of foreign investors. (...) Land must remain a community
    heritage in Africa."
    - N'Diogou Fall, ROPPA (West African Network of Producers and
    Peasant Organisations), June 2009

The talk about channelling this sudden surge of dollars and dirhams 
into an agenda for resolving the global food crisis could be seen as 
quirky if it were not downright dangerous. From the United Nations 
headquarters in New York to the corridors of European capitals, 
everyone is talking about making these deals "win-win". All we need 
to do, the thinking goes, is agree on a few parameters to moralise 
and discipline these land grab deals, so that they actually serve 
local communities, without scaring investors off. The World Bank even 
wants to create a global certification scheme and audit bureau for 
what could become "sustainable land grabbing", along the lines of 
what's been tried with oil palm, forestry or other extractive 

Before jumping on the bandwagon of "win-win", it would be wise to ask 
"With whom? Who are the investors? What are their interests?" It is 
hard to believe that, with so much money on the line, with so much 
accumulated social experience in dealing with mass land concessions 
and conversions in the past, whether from mining or plantations, and 
given the central role of the finance and agribusiness industries 
here, these investors would suddenly play fair. Just as hard to 
believe is that governments or international agencies would suddenly 
be able to hold them to account.

    "Some companies are interested in buying agricultural land for sugar
    cane and then selling it on the international markets. It's
    business, nothing more" Sharad Pawar, India's Minister of
    Agriculture, rejecting claims that his government is supporting a
    new colonisation of African farmland, 28 June 2009

Making these investments work is simply not the right starting point. 
Supporting small farmers efforts for real food sovereignty is. Those 
are two highly polarised agendas and it would be mistaken to pass off 
one for the other. It is crucial to look more closely at who the 
investors are and what they really want. But it is even more 
important to put the search for solutions to the food crisis on its 
proper footing.


1 - It was not South Korea, but Daewoo Logistics.

2 - See GRAIN, "Mauritius leads land grabs for rice in Mozambique", 
Oryza hibrida, 1 September 2009. (Available in English, 
French and Portuguese.)

3 - The table covers three types of entities: specialised funds, most 
of them farmland funds; asset and investment managers; and 
participating investors. We are aware that this is a broad mixture, 
but it was important for us to keep the table simple:

4 - COFCO is based in China, Olam is based in Singapore, Savola is 
based in Saudi Arabia, Almarai is based in Saudi Arabia, and JBS is 
based in Brazil.

5 - World Investment Report 2009, UNCTAD, Geneva, September 2009, p. 
xxvii. Most foreign direct investment takes place through mergers and 
/GRAIN is a small international non-profit organisation that works to 
support small farmers and social movements in their struggles for 
community-controlled and biodiversity-based food systems. Their 
support takes the form of independent research and analysis, 
networking at local, regional and international levels, and fostering 
new forms of cooperation and alliance-building./