How to feed the world
By Peter Guest | Published: 01 December, 2008
The prevalance of large scale, foreign-owned farm projects has courted controversy, but just why has Africa failed to capitalise on its natural advantages in agriculture?
Tarmac for food seems like an unorthodox barter, but it could be an ever more prevalent model for securing supplies in a world that is outgrowing its ability to feed itself.
After a year of relative food shortage and consequent high prices, fears over security of supply among major importing nations prompted several to look to African nations, acquiring large areas of arable land. Saudi Arabian and Emirati investors are working on projects in Sudan, as well as developing sites in Asia and Eastern Europe. One of the largest and most recent of these deals is the lease of 1.3m hectares in Madagascar by Daewoo Logistics, the Seoul-based resource development company, announced in November 2008. The 99-year lease in Menabe, Melaky and Sava states is intended to replace up to half of South Korea’s corn imports. In return, the South Koreans will build roads, provide employment for locals and arrange knowledge transfer.
The agriculture sector employs 60 percent of the available workforce across Africa. Between 25 and 40 percent of GDP in most sub-Saharan economies results directly from agriculture, rising to 60 percent in some countries. Around half the continent’s manufacturing base is agricultural in origin. Its unused land, water resources and fertile soil represent one of its greatest natural resources, and yet some projections suggest that, given current rates of production and demographic growth, the continent will only be capable of feeding half of its population by 2015.
Given current levels of usage of advanced farming techniques and varieties and the consequent low yield in Africa, there are any number of quick wins that could dramatically boost production. The average grain yield on the continent remains stagnant at 1 tonne per hectare, little more than a third of that in South East Asia. Rice production across sub-Saharan Africa has risen by just 0.2 tonnes per hectare to 1.5 in the past 40 years. By contrast, Vietnam delivers around 5 tonnes per hectare.
The summer of 2008 saw global food prices rise to unprecedented levels. Rice breached $1000 per tonne in May, while corn and wheat also spiralled to new record highs, attributed to rising consumer demand in China and the US government’s decision to promote domestic ethanol production. The sudden spike demonstrated once again the fragility of many of urban populations in Africa and across the world who remain dependent on imports of agricultural products and reminded policy makers that Africa’s demographic challenge is, to a lesser extent, a global challenge, as the worldwide rate of production increase still lags that of population growth. Major producers, such as Argentina, tightened their export rules, a warning that not only could food become unfeasibly expensive, but it could be totally inaccessible.
It was in this environment that these international deals were conceived. Despite a drop-off in global food prices, the issue of security remains very much on the political agenda in nations such as previously self-sufficient Saudi Arabia, which has determined to conserve its remaining water resources by diverting them from intensive farming; or populous Asian nations such as South Korea with limited land. Both countries shared concerns over high inflation being driven by increased food and fuel prices, which added a short-term economic spice to long term security worries.
Such arrangements are understandably controversial, perceived in some quarters as neo-colonialism. But the effect of such massive projects on regional and international food security is not immediately clear.
David Hallam, head of trade at the Food and Agriculture Organisation of the United Nations, admits that the agency is still working on its position regarding these projects. “We have spent so much time labouring the point that investment in agriculture in developing countries, especially in sub-Saharan Africa, has been almost non-existent and is the root of a lot of the food security problems,” he says. “And we’ve also been bemoaning the fact that agricultural spending within development aid has also L been declining as a proportion. So for those reasons… you would expect any investment funds flowing into sub-Saharan African agriculture is, at least on the surface, a good thing.”
The principle of attracting foreign direct investment aligns, then, with the FAO’s hopes for development. The difficulty, however, is in how those development benefits permeate into the local communities.
“As the history of foreign direct investment in other sectors shows, there are also potential downsides and so from the host country’s point of view, if we can see increases in employment, poverty reduction, improved productivity through technology transfer, then fine, but these things don’t happen automatically,” Mr Hallam says.
Beyond this, there is a question over whether these large scale issues are a systemic risk to the existing food markets, Mr Hallam suggests. “South Korea is a big importer of cereals… and if you get a major player pulling out of normal international market transactions, then there’s going to be an impact on the stability of world markets – do you get more price volatility, which is bad then for those other countries that don’t have the resources to invest and secure their food supplies?” he asks.
