the land that feeds us: growing scarcity and its … on demand and supply of cropland large-scale...
TRANSCRIPT
Derek Byerlee
Symposium on Natural Resources
Oct 11th, University of Adelaide
The Land that Feeds Us:
Growing Scarcity and its Implications
Outlook on demand and supply of
cropland
Large-scale investments in land
Is there a global land rush?
Types of investors
Opportunities and risks
Australia—Should it be concerned?
Policy and regulatory options
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OECD Transitional China South Asia SE Asia Brazil sub-Saharan
Africa
Gro
wth
%/
yr)
Decomposition of Agricultural Growth, 1961-2009
TFP
Inputs
Irrigation
Land
Yield
Area
Source: Fuglie, Pers comm
Current cropland use 1,533 M ha
Future demand to 2030
120-240 M ha increase for crops, biofuels by
2030 (World Bank)
Need to also add losses (Lambin and Meyfroidt, 2011)
Urbanization—48 -100 M ha
Degradation—30 – 87 M ha
Substantial demand despite uncertainties
Productivity, biofuels, trade
SUBSTANTIAL BUT EXCEPTIONS
Higher yields of food
staples from GR saved
significant land area
But also:
• Demand effects
• Yield effects
• Still 18-27 M ha saved
• Half of this would have
been from forests
Source: Stevenson, Byerlee et al.,
PNAS, 2012
Intensification on the forest
margins raises returns to
land
• Higher yields provide
incentives to expand
• e.g., oil palm oil in
Indonesia highly profitable
• Intensification must go with
better land and forest
governance
Also role of certification—
Brazil soy
0
100
200
300
400
500
600
700
SS Africa Latin America E. Europe &
CA
E and S Asia MENA Australia Rest of world
Mil
lio
n h
a
Potential additional area
Current area 2005
Brazil,
Argen
Sudan,
Congo, ,
Mozam
Madag,
Zambia
Russia
Australia
Based on land that is not forested
or protected and pop dens < 25/km
Total of 450 M ha (≈ demand (high)
Source: World Bank and IIASA
700 M ha (> 3 times
Brazilian Cerrado) • Medium to high potential
• But only 50 M ha cropped
At least 240 M ha in
low density areas
• Poor infrastructure
half > 6 hrs from a town
• Need for technology
• Issues of land rights
ANNUAL RENT FOR 3 T/HA
OILSEEDS, 2009
COST OF LAND TO
PRODUCE A TON OF WHEAT
Savills rates Australia as a top
destination for potential returns
from investing in farmland
0 200 400 600
Mozambique
Ukraine
Brazil (MG)
Argentina
USA (Iowa)
Rent ($US/ha)
Non-
market
Source: Deininger and Byerlee, 2011 Source: Savills, 2012
0
1,000
2,000
3,000
4,000
5,000
6,000
Flow of FDI in Farming ($US Million)
All low and middle income
countries
Source: UNCTAD, 2009
SS AFRICA—18 M HA SINCE
2005-11 (FLOW)
AUSTRALIA AND USA
(STOCK—2011/12)
Food
25%
Biofuels
43%
Integrate
d
food/fuel
20%
Wood
& fibre
10%
Other
2%
Source: Schoneveld, 2011
USA—Foreign10 M ha (2011)
• Timber, pasture
But
• Domestic TIAA-CREF > $2 b
• Nine states do not allow
corporate ownership
Australia—Foreign 44 M ha
(ABS 2010)
• My estimate ≈ 43 M ha is
pastoral
Type of investor Type of Land Market
Private land
markets
Government-mediated
land concessions
State-owned
• Governments - x
• Sovereign wealth funds x x
• State-owned companies x
Private
• Agribusiness xxx xxx
• Energy xx xx
• Portfolio (managed) xx xx
• Portfolio (rent out) xxx
• Other (timber, speculative) x xx
Latin America
Mostly regional (El Tejar, Los Grobos, Adecoagro, Cresud, SLC,
Brasilagro, Agricola, Cosar, Maggi)
Argentina: Top 30 companies total 2.4 M ha (mostly rented).
Russia, Ukraine, Kazakhstan
―Superfarms‖. Ukraine: Top 40 companies manage 4.5 M ha;
Russia: Top 30 companies 6.7 M ha
SE Asia
Palm oil: 8 of world’s 25 largest agric prod. companies
Africa
Much FDI but very heterogeneous (med. size 40,000 ha)
Average return Risk
(%/yr) SDev
Government bonds 7.2 5.9
S&P 500 (equities) 11.4 17.0
Farmland 11.1 7.6
Urban real estate 9.2 7.1
Ratio of farmland rental price to sales price has fallen from 6% in 1970 to 3% today
A MAJOR OPPORTUNITY
HIGHLY INNOVATIVE
COMPANIES
Capital needs
Transfer of technology
and know-how
Export development
New industries--
biofuels
Employment
generation
Opening of remote
regions
OPPORTUNITY
RISE OF OIL PALM IN SE
ASIA
Value of SE Asian exports of PO >
All agric exports Africa
• Africa imports $3.5 Billion!
Billions at stake
• Big Asian companies investing
in Africa (> $3 M ha)
• 200-300 jobs/1000 ha
• Much potential for
smallholders
Fair deals?
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01
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06
Mil
lio
ns
ha
Expansion of Oil Palm
Latin America
SE Asia
Africa
AGRI-HOLDINGS IN
UKRAINE AVERAGE SIZE 60-80 K HA
Legacy of collective farms
Filling big gaps in:
• Technology
• Capital
• Market logistics
Lack land sales markets
• Very low rental values
Significant inflows of FDI
• Agribusiness companies
• Portfolio investors
Jury is still out
• E.g., Morgan Stanley
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2007 2008 2009 2010 2011
Nu
mb
er
Mil
lio
n h
a
Total land area in agri-holdings Number of holdings
RISKS UPLAND RICE INVESTOR IN
LIBERIA, 2009
Lack of land markets—
rights of users
Enclaves with few local
benefits
Negative environmental
impacts (forests)
Risks of highly unequal
agrarian structure
Background • Huge potential: 34 M ha
arable land; only 4 M. ha cropped
• 1998 law recognizes community rights
Policy to attract investors • New applications for 13 M
ha in 18 months
• Many grants not implemented
• 1.4 M ha overlapping rights
… then backtracking • Identify available land first
Investments overlap community rights
(in red)
Semi-mechanized
farming schemes 1970s+
• Investors from Gulf and
state credit
Converted up to 11 M ha
to large farms
• some farms >200,000 ha
Problems well
documented
• Trampled on rights of local
pastoralists, land conflicts
• Created few jobs
• Soil degradation
-1.25% pa
0.76% pa
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
Yie
ld (to
ns p
er H
a)
Sorghum Sesame
Extremely low yields
AUSTRALIA AS A BEACON
OF FREE TRADE AND INV.
DO WE NEED AN OZ BRAND
ON THE LAND?
Not new
• Much FDI in pastoral areas
• Past investments in crops
Peak Downs in 1940s
Territory Rice, Tipperary,
NADC—failures in 60s, 70s
But cotton in NSW a success
Strong institutions and
regulations in place
Priorities
• Registry of transactions
• Avoid undermining ―Oz
brand‖ on free trade
INSTITUTIONS INVESTMENTS
Recognition and
demarcation of rights
• Low cost registries
Processes for land transfers
• Transparency
Land pricing/taxation
• Recognize income
generating potential
Level the playing field for
smallholders
Spatial analysis of land
availability
Coordination with
infrastructure investments
Strengthen investment
promotion agencies
• Screen projects
• Monitoring
Dispute resolution
Facilitate certification
State of markets Example Risks Policy needs
A Land and other
markets function well
Australia,
Argentina,
Sth Brazil
Few Transparency--registry
of foreign purchases
B Land and other
markets still
emerging
Ukraine,
Cent Brazil
Some Strengthen property
rights and information.
Level the playing field
for family farms
C Lack formal land
markets and rights
Africa,
parts of SE
Asia
Many Formalize property
rights, transparency.
Capacity to negotiate
and monitor investment
Tilt the playing field
toward smallholders
Principles for Responsible Agricultural
Investment (WB, FAO, IFAD)
Voluntary Guidelines on Land and
Natural Resources Tenure (FAO)
Private Sector Roundtables for
Certification
RTRS (Soy), RSPO (Palm Oil), BSI (Sugar) etc +
EU Biofuel standards
A land rush?
Yes—Sharp rise in investor interest (but area < than widely
reported)
Major drivers
Land scarcity with ―available‖ low cost land in some countries
High commodity prices (for now)
Low returns to alternative investments (for now)
What is to be done?
Intensification on existing land + forest governance
Everywhere including Australia--increase transparency and
monitor.
Africa and SE Asia--strengthen property rights of existing users and
work with investors to promote more inclusive outcomes.