Foreign investors acquire more and more farmland around the world

Most investing countries

According to this report, the top five investor countries that buy land under contract abroad come from countries such as Malaysia, the United States, the United Kingdom, Singapore and Saudi Arabia, which together account for 45% of the land under contract and the 37% of all offers. For example, in Malaysia there is a strong palm oil manufacturing sector and companies that seek to diversify their production by buying cheaper land in neighboring countries, with similar exploitation characteristics and political systems that are already known.

These are also followed by the Netherlands, India, Hong Kong, China, Argentina, Cyprus, the Virgin Islands, France and South Africa. Recently, the US investment pace has slowed, while, on the contrary, investments from tax havens such as Cyprus and the British Virgin Islands have increased.

Investors from Southern countries show a preference for investing in their own regions. The most important are Malaysian investors in Indonesia and the guidance of Argentines in acquiring land in Brazil.

Similarly, investors from high-GDP countries tend to target land acquisitions on the same continent, such as North America, as do investors active in South America and those from East Asia in other Asian countries, while that investors from Europe and the East are mostly active in Africa.

Greater competition

Land acquisition is often directed to highly populated areas, dominated by farmland. In more than 50% of the surface, the land cover was already there before and the population density is relatively high. This inevitably leads to increased competition for land and can lead to increased incidence of conflict and loss of livelihood opportunities for local communities.

A considerable number of land acquisitions affect forest land, with a low population density, although the land is often used by local communities. Ecological impacts are significant and populations in these areas are affected when the natural forest ecosystem is displaced by commercial plantations.

Another different context is the moderately populated areas, with bush lands and grasslands, which are considered by foreign investors as “marginal”. For example, tropical areas (savannas and forests) are disproportionately affected by land acquisitions in Asia and in West and Central Africa.

Only 15% of the acquisitions of agricultural land by foreigners have a local partner, focusing mainly on the industrial production of biofuels from agricultural raw materials, being more common in Africa, where the governments themselves intervene, and in America, but often local communities are ignored in the negotiation process and are affected in some cases with voluntary or forced displacement, involving large numbers of people, who lose their access to land.

Whether domestic or foreign agreements, there are not many differences in the results for the local population, who are losing their land and perhaps receiving compensation, but very little and limited in time. The socio-economic and ecological impacts in these processes are very important, despite the fact that in the short term – in the process of starting up the exploitation projects of the acquired lands – they may suppose a greater demand for the work for the construction and development of infrastructures and even suggest improvements in education and health services.

Despite this, in these projects there are very low intensities of labor demand, which suggests the prevalence of capital-intensive production methods and, therefore, with a limited capacity to create rural employment. Large-scale farms are often close to small farms and are likely to have some kind of side effect.

Long-term effects

If there is land for sale and investors with money to buy it, then it will be an ongoing process. In conclusion, as land acquisition operations by foreign investors increase, the long-term effects on local communities become clearer. One cannot be certain but to say that it will have very little adverse effects on the local population is an understatement.