GRAIN and the Economic Research Foundation, Rick Rowden (2011)

In recent years developing countries such as China and India too have joined in the process of multinational agribusiness companies acquiring prime agricultural land in developing countries. This paper explores the role of Indian agricultural companies that have been involved in the recent trend of large-scale overseas acquisitions of farmland.

The process of multinational agribusiness companies from Europe and the United States acquiring prime agricultural land in developing countries to grow cash crops and biofuels has been going on for some time now. In recent years, developing countries such as China and India too have joined in in this process. In the case of Indian companies, a part of the reason for such acquisition has to do with the strategy of ensuring domestic food security.

In this paper, Rick Rowden, provides some startling insights into this process and the explicit and implicit encouragement provided by the Government of India. By far, Africa, South America are seen as the promising new destinations for such land purchase and lease arrangements.

Based on data provided by governments in East African region, Rowden finds that more than 80 Indian companies have invested about $2.4 billion in buying or leasing huge plantations in countries like Ethiopia, Kenya, Madagascar, Senegal and Mozambique. Food grains and other cash crops that are to be grown on the land are meant for the global market, and in some cases specifically for the Indian market. 

Among the various factors driving this process, Rowden notes that both ‘push factors’ as well as ‘pull factors’ have played significant roles. Other than food security concerns, the allure of much cheaper land and the promise of more abundant water sources in these locations are the major ‘push factors’ that have driven these investments. The Indian government, for its part, has both facilitated and encouraged such investment, while the Eximbank has provided concessional lines of credit and soft loans to African governments as well as to Indian companies engaged in such transactions.
 
At the same time, active courting of Indian and other agricultural investors by many governments in the African region has played an equally significant role. Therefore, to an extent, such ‘land grabbing’ has also been made possible by African governments who have typically offered very liberal incentives to foreign investors. The usual justification given is that all this land was surplus or unutilized which will now be used for more efficient and productive cultivation.

Rowden's study provides detailed analysis of several contracts, while focusing on one of the most high profile of recent deals. The latter relates to the acquisition of around 300,000 hectares of land on long lease in the Gambela region of Ethiopia by the Indian company Karuturi Global Ltd. 

While, the claim of ‘idle’ or ‘surplus’ land has been fiercely contested by several local analysts, Rowden points out various negative impacts such land grabs are likely to have or are already having on the local people and the local environment.

One, the author argues, in almost all cases of land lease involving foreign enterprises, there have been complaints by locals of loss of access to grazing land and water. Worse, there have been many cases of loss of cultivated land as well as homestead land. As a result of loss of land, some of which were used mainly for growing the traditional staple food crop teff, the local prices of this basic food crop has increased significantly. Second, since the new cultivation practices are likely to be highly mechanized, it would lead to a substantial problem of unemployment for displaced farmers.  There are also growing concerns that the large scale and heavily mechanised monocropping farms, that involve high levels of water usage and heavy doses of pesticides and herbicides, are going to result in rapid depletion of the soil quality.

While such deals that “focus solely on financial profit can leave rural populations more vulnerable and without land, employment opportunities, or food security”, the “Indian companies are being given everything and being asked for very little in return that would benefit Ethiopian small farmers and workers”. In this context, Rowden points out that the foreign companies are being offered all kinds of incentives, ranging from exemptions from taxation, repatriation of capital and profits, to government guarantee against nationalisation.

Meanwhile, there is little in terms of what these companies can be held responsible for. Thus, while, the contracts mention that the Indian companies have the “right” to provide power, health clinics, schools, etc., these are not seen as obligations. In addition, all five contracts analysed by Rowden only mention that that the companies have the right to build dams, water boreholes and irrigation systems as they see fit. But there is no mention of paying for this water, how much water would be used or over what period of time etc. Similarly, the contracts do not mention labour laws or specify any wages or working conditions for their local employees.

In fact, what is perhaps the most disturbing aspect of the contracts, especially in the case of Karuturi, is that it suggests that if necessary the Government would itself resort to evicting local people who are in the way of the commercial project.

The author concludes on the note that for addressing these problems a number of actions need to be initiated. Of these, the need to pressure governments to make food sovereignty for their own people the top policy priority, and hence regulate foreign investment in agriculture accordingly, is an import one. In addition, increased national agricultural investment in local small holder areas must be treated as number one priority. Also, governments have to be politically pressured to invest in smaller-scale agro-ecological approaches. In short, addressing the land grabbing crisis requires active involvement of various civil society groups, human rights activists, student bodies, faculty from around the world.