Wealthy countries want to buy farmland abroad

Arab states invest their oil fortunes in the craziest things, from the proposed Mile-High Tower in Jiddah to the indoor ski resort in dry-as-dust Dubai. Perhaps the craziest idea yet is Saudi Arabian wheat. Some 30 years ago, the lake- and river-less kingdom decided it should be self-sufficient in wheat.
It worked. But the subsidies to farmers at times approached $1,000 a ton. Last year, the Saudis finally concluded that desert wheat made no more sense than Nunavut pineapples. The farms will disappear within a few years, after which the country will be entirely dependent on imports. But from where?
Answer: from any nation willing to sell or lease vast tracts of its farmland and allow the Saudis to export most or all of the food grown there back home, bypassing the international market. Such "offshore farms" are a quiet, though burgeoning, form of neo-colonialism. And they have the potential to unleash a new food crisis.
The Saudis are not alone in the global land grab. Any country that worries about long-term food security because of a shortage of fertile land, and has the wealth to do something about it, is on the hunt: United Arab Emirates, Jordan, Libya, India, China, Japan, plus a number of investment and private-equity funds. A report published in the autumn by the U.N. International Fund for Agricultural Development said that "public and private corporations and industrial groups are buying millions of hectares of land in Africa, Asia and Latin America to produce food or agrofuels."
At first, the United Nations and the World Bank either ignored or cautiously supported the trend. Food prices were rising and foreign investment in raising crop productivity in poor countries seemed like a fine idea. They changed their minds when they realized offshore farms were all about locking up food supplies, not boosting them for the markets. One of the countries apparently most eager to welcome farmland seekers is Sudan, where 5.6 million people are being fed by the U.N. World Food Program.
Watchdog groups such as Grain and the International Land Coalition also fear that poor farmers are being forced off productive land as the men with checks arrive. The authors of a recent Grain report said that some offshore farm deals amount to "the siphoning of fertile and probably contested agricultural lands to rich foreigners."
In some cases, the land deals might be win-win situations, in that farm jobs are created, crop technology is transferred and some food is left on local tables.
The food crisis that triggered riots in Africa and Haiti in 2008 has been tempered by falling commodity prices. It could return in an instant for any number of reasons, ranging from an oil-price reversal to a drought.
Canada, which has far more farmland than it needs for itself, has excess land in a politically stable jurisdiction and is incredibly cheap by developed-country standards. Calgary's Agcapita Farmland Investment Partnership, a fund that has been buying prairie farmland, has calculated that Saskatchewan's productive soil, in inflation-adjusted terms, fetches far lower prices now than it did in the early 1980s.
Agcapita partner Stephen Johnston says he's approached all the time by foreign interests seeking Canadian agricultural land. Foreign ownership restrictions on prairie farmland have blocked them so far, but that doesn't mean they're out of the picture. Foreigners might be able to lease farms or use loans or local partnerships to gain interests in the land. It's hard to imagine that Canada will not play a role as the global farmland rush gains momentum. Johnston is convinced it's just a matter of time.
Would it be in Canada's interest to turn big chunks of Saskatchewan or Manitoba into offshore farms for the UAE or China? In a country that believes in free trade, probably not. Farmers, food processors and politicians need to devise a policy before Canada becomes a target.

(Distributed by Scripps Howard News Service, www.scrippsnews.com.)
Canadian clients may not useMust credit Toronto Globe and Mail(All currency U.S.)Comment