Q&A: Seven Questions on the Globalization of Farmland

• Author: Christian Bogmans
• Pages: 8-10

Fall 2017

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A forthcoming IMF working paper, entitled

“The Globalization of Farmland: Theoretical

and Empirical Evidence ,” co-authored by

Rabah Arezki, Christian Bogmans , and

Harris Selod , analyzes the drivers behind

the surge in transnational acquisitions of

farmland in the after math of the Great Recession. The paper

finds, for the fir st time, statistical evidence that land de als were

directed at isolated devel oping countries that until recently

participated little in gl obal agricultural trade and that are in

dire need of agricultural investme nt.

Question 1. Can you explain what globalization

of farmland entails?

It describes a relatively new situation in wh ich farmland

is sold or leased to international investors . In other words,

farmland has b ecome an international commodity. Against

the backdrop of increasing dema nd for food, there has b een

a growing interest by governments, ag ribusinesses, and

investment funds in acqu iring long-term property rights

or leases over large areas of far mland, mostly in developing

countries. The phenomenon rose to prominence in the

aftermath of t he food crisis of 2007–2008, when substantial

increases in food prices r aised farmland value and the opt ion

value of securing la nd for food production.

Question 2. How are large-scale land acquisitions

related to other trends in agriculture?

The increased interest in fa rmland is part of a broader

set of developments that are changing t he nature of the

agricultu ral sector. Not only have multinational companies

and foreign direct invest ment become more importa nt in

promoting sectoral grow th, the role of global value chains

in expanding food supply ha s become more prominent

(Maertens and Swinnen, 2015). In this ongoing process of

agricultu ral globalization, the volume of internationa l trade

in agricult ural commodities increased al most five-fold, from

approximately $200 billion in 1980 to a lmost $1100 billion in

2010, the largest growth recorded by any sec tor.

Question 3. What does the data tell us?

According to the Land Matr ix, an online database of

large-scale land acqu isitions that are verified by non-

governmental organizat ions (NGOs), more than 2100 deals

were negotiated between 2000 a nd 2016, with a cumulat ive

size of almost 59 mil lion hectares in 88 countries

worldwide. This expans e corresponds to an area the size

of the Ukrai ne, which is equal to roughly 15 percent of the

remaining globa l stock of unused and non-forested arable

land. Sub-Saha ran Africa (~900 deals) and east Asia (~600

deals) have been the most importa nt target regions, fol lowed

by Latin America (~350 deals).

Question 4. What explains the concentration

of land deals in Africa and Asia?

Obviously, these continents govern comparatively large a reas

of unused arable land. In e arlier work, my co-authors found

that investors were targeting cou ntries with weak tenure

security for exi sting land users, supposedly because t his

would allow investors to obtain la nd without compensating

existing user s (see Arezki a nd others, 2013). Indeed, in many

countries in Af rica and Asia land ownership rights are mostly

informal, wit h little possibility for existing u sers to take legal

action if their la nd holdings are appropriated by the s tate or

powerfu l investors.

Not surprisingly, many NGOs and polic ymakers have

classified t hese land deals as outr ight land grabs. With

the demand for food increasing bec ause of rising i ncomes

and ballooning popu lations, private investors and

agribusinesses were buy ing land to reap substantia l profits.

Moreover, many governments—such as several Gulf States

and China—have acquired vas t areas of farmla nd abroad

for offshore food production to reduce their dependency

on imports to feed their people. Invest ments that are

motivated by food independence may improve food

security in m iddle- and hig h-income countries at t he

expense of food securit y of low-income areas.

Seven Questions on the Globalization of Farmland

By Christian Bogmans

Q&A

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