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Thursday, September 24, 2009

S Korea agrees Tanzania land deal, but who losses?

Farmers planting crops in Kenya
Seoul has vowed to pass on expertise in food processing

South Korea says it has agreed to develop farmland in Tanzania - the latest in a series of such deals between rich and poor nations.

Korean officials say 1,000 sq km (386 sq miles) will be developed - half for local farmers, half to produce processed goods for South Korea.

Seoul also signed a deal last year to lease a vast area of Madagascar.

Rich countries have increasingly sought farmland in poorer nations to help shore up food supplies.

Countries such as China, Saudi Arabia, South Korea and Kuwait are short of arable land and have been seeking agricultural investments in Africa.

But South Korea's deal in Madagascar - which would have seen it lease an area the size of Belgium from the island nation - has been thrown into uncertainty.

Madagascar's government was overthrown in a coup earlier this year and the new leaders said they would scrap the deal, which was cited as one reason for the unrest.

'Colonialists' gibe

The state-run Korea Rural Community Corporation says a memorandum of understanding will be signed with Tanzania next month.

The corporation says it will produce processed foods like cooking oil, wine and starch on the land.

Lee Ki-Churl, a corporation official, said he expected Tanzanians to benefit from the deal.

"Some African countries export fruit and import fruit juice, or export olives and import olive oil, simply because their past colonialists did not teach them how to process food," he told the AFP news agency.

"We plan to set up an education centre for Tanzanian farmers in the food-processing zone in order to transfer agricultural know-how and irrigation expertise to them."

He said about 100bn won ($83m) would be spent to develop an initial 100 sq km of land over the next few years.

South Korea's Yonhap news agency reported that the corporation hoped to exploit deposits of iron ore, gold and copper in other parts of the Tanzania to help fund its project.

The deal comes weeks after Tanzanian Prime Minister Mizengo Pinda visited Seoul, when the two nations promised closer ties.

In another development:

Madagascar leader axes land deal

Madagascar opposition leader Andry Rajoelina (c) parades through Antananarivo on 17 March 2009
Andry Rajoelina had been highly critical of the land deal

Madagascar's new leader has cancelled a controversial deal for a South Korean firm to lease a vast tract of land to grow food crops.

Andry Rajoelina said he was axing the deal because the people should be consulted. Daewoo Logistics has reportedly expressed its frustration.

The plan had helped fuel popular anger against President Marc Ravalomanana, who was forced from office on Tuesday.

Mr Rajoelina has also suspended parliament and held a cabinet meeting.

The BBC's Christina Corbett in the capital Antananarivo says he is trying to legitimise himself ahead of his inauguration as transitional leader on Saturday.

Land rights

After annulling parliament, he set up two transitional bodies to run the country.

There is no word on the whereabouts of Mr Ravalomanana, who resigned on Tuesday when a group within the army backed his rival.

Correspondents say Malagasy people have deep ties to their land and some had condemned the deal as "neo-colonialism".

Widespread protests had already slowed down progress on the deal, which would have used about half of Madagascar's arable land.

The South Korean industrial giant had sought to produce corn and palm oil on 1.3m hectares (3.2m acres), in one of the biggest deals involving foreign firms seeking to secure African farmland since food prices soared last year.

Madagascar President Marc Ravalomanana on 15 March 2009
President Marc Ravalomanana 's whereabouts are currently unknown

"In the constitution, it is stipulated that Madagascar's land is neither for sale nor for rent, so the agreement with Daewoo is cancelled," Mr Rajoelina told reporters.

"We are not against the idea of working with investors, but if we want to sell or rent out land, we have to change the constitution, you have to consult the people. So at this hour the deal is cancelled."

Daewoo's long-term aim was to replace more than half the corn that South Korea, the world's third-largest corn buyer, imports, mainly from the US and South America.

Expressing frustration, Shin Dong-Hyun, who oversees the deal for Daewoo Logistics, told Yonhap news agency: "Already we have invested not a small amount in Madagascar.

"We are just waiting and watching this situation to see whether to retreat."

That is not done yet:

Africa investment sparks land grab fear

Employees dig up sweet potatoes in a farm near Pretoria, South Africa

By Katie Hunt
Business reporter, BBC News

Long of little interest to outsiders, African land has rarely been associated with financial reward.

But for investors like Susan Payne, chief executive of Emergent Asset Management, farmland in sub-Saharan Africa is a hot bet.

Population increase, changes in eating habits and demand for bio-fuels are putting farmland at a premium worldwide.

"And African farmland prices are the lowest in the world," she says.

Her fund is in the process of buying or leasing a total 50,000 hectares, equal to roughly 80,000 football pitches, in several African countries including Mozambique, South Africa, Botswana, Zambia, Angola, Swaziland and the Democratic Republic of Congo.

Ms Payne says the investment leads to better harvests and creates jobs.

But some land deals have sparked accusations that foreign investors, corporations and countries are engaged in a damaging "land grab" in Africa and a new form of colonialism.

Food security

Last year's food price crisis, which triggered riots in a dozen countries, has made governments more focused on the security of their food supplies.

Susan Payne
We are not bringing in our own farm workers and then taking the food and exporting it
Susan Payne, chief executive Emergent Asset Management

Countries short of arable land, such as China, Saudi Arabia, South Korea and Kuwait, have been seeking agricultural investments in Africa.

"This has woken people up to political issues surrounding food and agricultural land ownership," says Ms Payne.

"As an investor you can take advantage of that," she says.

Ms Payne says the investments made by her company are welcomed and is confident that charges of land grabbing won't stick.

"Frankly we are seeing amenable terms because local groups, including governments, want us there," she says.

"We are not bringing in our own farm workers and then taking the food and exporting it."

She says local communities benefit from access to new farming techniques, new seeds and technologies, as well as the above-average wages paid by Emergent's local partner.

For now, the vast majority of the food produced stays in the country in which it is produced although it can be exported.

"There is a lot of enthusiasm for this and there should be," she says.

"Without private pools of capital like we are providing, there will not be the jump-start to get Africa growing rapidly in agriculture - or frankly - any other sector."


Nonetheless, it is a highly politicised arena to invest in.

Man works on land in Niger
The poor run the risk of being pushed off the plot in favour of the investor
International Food Policy Research Institute

South Korean firm Daewoo Logistics was forced to abandon a project to lease one million acres of land in Madagascar to produce corn earlier this year.

The country's new president scrapped the deal following criticism that local people had not been consulted, and Daewoo was unsettled by unrest in the island state

But Ms Payne says the risks to investors are overplayed and such views are based on an outdated view of African governments.

She says that 70% of African governments are democratically led and their economies are much better regulated than in the past.

"We only operate in counties where we can have clear land title. If we can't get this, or we don't have a 99-year lease from the government then we won't operate in that country," she says.

Land rights hazy

However, the UN and other agencies warn that smallholders, who often don't have formal rights to the land they farm, can end up being short-changed.

African soya farm at sunrise
Sub-Saharan Africa - $800 to $1000
Poland - $6000
Argentina/Brazil - $5,000 - $,6000
US - $7000
UK - $18,000
Germany - $22,000
Source: Emergent Asset Managment

They say that, while on paper many countries have progressive laws that seek to take local voices into account, there are big gaps between statute books and the reality on the ground.

Furthermore, the International Food Policy Research Institute (IFPRI), a Washington-based think tank, says bargaining power is often on the side of the foreign firm, especially when it is supported by the host government or local elite.

"Since the state often formally owns the land, the poor run the risk of being pushed off the plot in favour of the investor, without consultation or compensation," the IFPRI says in a recent report.

Code of conduct

Development agencies say more transparency is needed as land deals are often shrouded in secrecy.

July's meeting of the G8 group of rich countries pledged to develop a proposal on principles and best practices on purchases of land in developing countries.

But anti-poverty campaigners Action Aid said this did not go far enough and have called for an independent UN commission to establish an enforceable code of conduct.

"Given the huge land grabs that are taking place across Africa at the moment this just isn't good enough," Action Aid says.

And as Africa's land becomes more sought after by international investors, the risk only grows that a continent that has often needed to extend a begging bowl to the world could instead find itself feeding richer neighbours.

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