Farmland In Poor Countries Increasingly Popular InvestmentVW Staff
Investors are continuing to purchase farmland, as decided trends emerge and the impact on the developing world doesn’t look so bright.
A 2013 study, Global land and water grabbing in the Proceedings of the National Academies of Sciences (PNAS) estimated that between 0.7 percent and 1.75 percent of the world’s agricultural land was now being transferred to foreign investors from local landholders. The geographic region this represents, a recent report noted, represented an area bigger than Germany and France combined.
Investors are found mostly in countries such as the U.S., China, the United Kingdom, Germany, Singapore and the Netherlands. These buyers are staking claims in many countries selling property, such as Ethiopia, the Philippines, Sudan, Madagascar, Mozambique and Tanzania.
What do investors look for when purchasing farmland?
Investors look for several things when purchasing farmland. The PNAS study revealed that foreign investors frequently buy large tracts of land based on the availability of ample supplies of freshwater, resulting from local rainfall or more significantly underground aquifers. Water can be a top decision and value consideration in purchasing farmland. Increasingly, water has become especially valuable, with supply coming under stress in China, India, and the United States. Nearly 70 percent of Chinese rivers and lakes are polluted, for instance. What might surprise people is that more than half of US rivers are unable to sustain life.
Investors purchase land in poor countries because it is underdeveloped. The opportunity is to add to the farm’s potential and increase the value. “This is often good agricultural land that isn’t yet fully utilized,” Paolo D’Odorico, one of the PNASstudy’s co-authors, was quoted as saying in the Vox article. “It was being used by local farmers without modern technology, without irrigation, without fertilizer.”
Indigenous farmers being taken from their by their governments
Increasingly, in poor countries indigenous farmers are being taken from their by their governments so they can either sell or rent the land to farmers from China, the Middle East and other parts of the world, the report noted. In his new book, “The Land Grabbers,” author Fred Pearce said that investors from wealthy countries purchasing land in poor countries is more of a threat to the world’s poor than climate change.
As the population continues to grow – stretching natural resources to their brink – those that own farmland on productive tracts could control an increasingly rare commodity.