Land Grabbed is Land Wasted

The Old Ways of land investment+development don’t work in the non-Western world, and neither does the land grab/land rush paradigm. We’re throwing good money into bad projects. Let’s address that instead of consuming more Netflix Journalism about victims, villains, and the morally ambiguous.

Not that the stories about land grabs can’t be informative, provocative and entertaining — as illustrated by Tom Burgis’ FT article about a Saudi company’s $100 million investment in 14,000 hectares (~14 square miles) of Ethiopian land:

Saudi Star’s proprietor, a Saudi-Ethiopian tycoon named Mohammed al-Amoudi, has spent more than $200m turning a swath of bush into a farm the size of 20,000 soccer pitches. That puts the sheikh, as he is known, in the vanguard of the global land rush.

Forget the ethics and social cost. The main problem with these investments is their occurrence in a dangerously distorted market. Those distortions misdirect human and financial capital, leading to destructive collisions. Instead of creating wealth from nature, this market is creating conflict, famine and a mess of social-political upheaval.

I know what I’m talking about because I’ve experienced all the above firsthand. I was part of a company that stumbled into a “land grab” in an African country (take my word for it — it was ineptitude more than malice). I received the barrage of NGO rage and journalistic inquiries. I worked to try and turn that investment to the landholding community’s favor. I watched more inept and more malicious land deals get good people killed and drive that African country into another civil war. Through all that, I began a lifelong search for a viable put-the-community-first agricultural business model.

I’m still searching. And in case you’re with me, that means figuring out what we’re looking *at* in addition to what we’re looking *for*.

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Land deals like the Saudi Star investment in Gambella happen for good reasons.

On the investor side, companies go where the money is and their governments have a national interest in securing food, timber, fuel (e.g. feedstock) etc. China isn’t spending billions on African projects because they love to gamble.

There’s a telling quote in the FT article from Jemal Ahmed, Ethiopian co-founder of the Saudi Star company, who knows he could have made more money at less cost than investing in his own country’s agriculture:

“If I had invested $200m in Thailand, we could easily have produced more rice…Why do we do it in Gambella, with no roads, no electricity, no skilled workers? Because if we don’t, no one else will.”

Put another way, it’s a difficult investment and he’d rather put his resources somewhere else, so you can’t fault Mr. Ahmed’s motivations as being purely greed even if his reasoning is shallow. (Why would “no one else” invest in Ethiopian agriculture? Doesn’t the reason for there being “no roads, no electricity, no skilled workers” matter?)

On the landholding side, the nations hosting these land investments need the investment dollars along with the resources the land can produce — especially food. At the community level, people may have enough food but they’re more vulnerable than they’d like; they want want more and better food, jobs, access to markets, etc.

So far so good. This should be a simple matter of comparative advantage, of Globalization’s moving capital from one country to another.

Unfortunately, the host nations also have governments heavily disrupted from within (corruption, inefficiency) and from without (weak or ill-informed laws, poor physical infrastructure, armed opposition groups). Many authorities may have good intentions, but in these situations the wealthy Elite exert overwhelming power over the lives and property of the rest of the population (much less wealthy and much less powerful).

To keep things fun there’s some historical and geographical determinism added to the mix. The lands in question sit in areas of fluctuating natural environment and climate. The same conditions that (a) make the land so desirable and its acquisition/development such a buyer’s market (favoring the investors) also (b) set the stage for the earlier colonial interventions that, among other things, contribute to the landholder countries’ challenges. [Note: If you want to ask Jared Diamond about this, you can take a geographical-historical safari tour of Africa with him.]

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There is no good outcome in such conditions. But a bad method is better than no method for the main parties involved — investors, landowners and the respective governments. So some of those main parties make money. Some NGOs and authors make small change documenting and rallying against the injustice of it all.

Never mind the human cost of those vulnerable communities caught in between. And never mind that these conditions make the investments so incredibly risky.

We’re not just talking about “I lost my money” risk. Mismanagement of land at this scale means mismanaging the production of food and essential natural resources on a global scale. That means that if we’re not killing people outright (e.g. starvation, drought) we’re really pissing them off — touching off civil wars (Syria, South Sudan) and widespread militant uprisings (Daesh/ISIS, Al Shabab, Boko Haram).

We’re talking about wasting money, time and lives on bad projects when we should be bringing every mind and body to its full potential. We need every resource available to come out on top of the next pandemic, the next natural disaster, etc. The global economy needs more people more freely creating and exchanging goods and services.

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Is there a way out of this mess, where good money is being thrown after bad land projects that destroy lives and property? Yes. Why do I think this?

  1. This current land investment+development model sucks. Given how important it is to have a reliable supply of food and land resources, who could be satisfied with the current model’s high costs and higher risk of violent failure? (This is the No Such Thing as Free Lunch idea, i.e. you always pay more in a bad market, if not the price tag then in social or environmental costs)
  2. You can’t meet the level of demand for food/resources with an exclusively “organic” (no GMO/GEO, no industrial chemicals) and small-scale model. Nor can you “turn off” the profit motive or motive to trade. So we have to make land deals more fair, more efficient and more productive. That means connecting more money with the right people — i.e. we need to expand the market and create wealth.
  3. The wonderful thing about money is that money’s a wonderful thing (sorry A. A. Milne). Money is an excellent motivation (when the whole mass suffering of your fellow humans isn’t drive enough). It’s also a handy tool. Between the Saudis, the Buffet family, China, and the Bill and Melinda Gates Foundation alone there are billions of dollars available.
  4. Humans have a pattern of finding new and better ways to develop land. This includes ways of collaborating for mutual benefit. What normally disrupts this isn’t a local unwillingness to compromise but an outside-empowered military interest — the warlord who wants to muscle in.

“Ok that’s nice,” you might think, “But principles aren’t plans.” True enough. These principles do show the opportunities for better plans, though. Technology matters. Yields matter. Supply chains matter. Transport logistics matter. The manner of financial transactions (sales, banking, etc.) matters. More than that, the money-backed demand for solutions is there.

What if the African country community with land had a way of directly interacting with an international customer — if they could make a financial transaction, produce the desired good and had a way of transporting it to the buyer?

To scale up that business, what if more African country communities had more ways of productively collaborating— pooling their land and resources in a legally protected way— and getting more yield from their land?

What if — instead of donating or purchasing from “buy one give one” vendors (e.g. Tom’s Shoes) — people in North America and Europe could directly invest in those community-led agriculture/forestry ventures (and actually achieve returns)? Or if they still would rather donate, to directly donate instead of through a go-between NGO?

What if the end-users for foreign-sourced agriculture/forestry products like soy, beef, palm oil, sugar and cocoa had more choices for what they bought, i.e. what if there was an acceptable product/price alternative to “land grab” supply chains?

The crux is that economic development isn’t “a switch you can turn on or off” (to quote economist Angelos Angelou). We have to make the plans and invest accordingly over years, starting about 300 years ago.

So let’s make up for lost time.