Large-scale land based investments, globally and in Africa

(1)

Large-Scale Land Based Investments,

Globally and in Africa

Ward Anseeuw

Cirad / University of Pretoria

AFMA conference

Cape Town

19/11/2014

PP&G PP&G

(2)

Outline

1) Large-scale land based investments

globally and in Africa – State and features

Quantitative, based on the Land Matrix and other

available data

2) Implications, trends, practices…

(3)

Large-scale land based

investments,

globally and in Africa

– State and features

(4)

LSLBI globally

Oral agreement

66

3.7

1.1 Contract signed

804

50.8

30.6 concluded deals

870

54.5

31.8 Expression of interest

42

5.5 n.a.

Under negotiation

144

9.1 n.a.

Intended deals

186

14.6 n.a.

Negotiations failed

50

5.3 n.a.

Contract cancelled

24

1.6

1.5 Failed deals

74

6.9

1.5

(5)

LSLBI globally

Oral agreement

66

3.7

1.1 Contract signed

804

50.8

30.6 concluded deals

870

54.5

31.8 Expression of interest

42

5.5 n.a.

Under negotiation

144

9.1 n.a.

Intended deals

186

14.6 n.a.

Negotiations failed

50

5.3 n.a.

Contract cancelled

24

1.6

1.5 Failed deals

74

6.9

1.5

(6)

LSLBI globally

Oral agreement

66

3.7

1.1 Contract signed

804

50.8

30.6 concluded deals

870

54.5

31.8 Expression of interest

42

5.5 n.a.

Under negotiation

144

9.1 n.a.

Intended deals

186

14.6 n.a.

Negotiations failed

50

5.3 n.a.

Contract cancelled

24

1.6

1.5 Failed deals

74

6.9

1.5

(7)

African countries are among the most

focused on in the world

0 100 200 300 400 500 600 700 0 5 000 000 10 000 000 15 000 000 20 000 000 25 000 000 30 000 000 35 000 000 40 000 000

Africa Asia Latin Oceania Europe

size (ha) # deals 0 50 100 150 200 250 300 350 400 - 5 000 000 10 000 000 15 000 000 20 000 000 25 000 000

Africa Asia Oceania Latin Europe

Conluded

All

(8)

• Important concentration – top 20 countries, 74%

deals, 80% size

• Top 20 – 9 African countries

African countries are among the most

focused on

0 1000000 2000000 3000000 4000000 5000000 6000000 7000000 0 20 40 60 80 100 120 # cases Size (ha)

(9)

African countries – in particular east African

ones - are among the most focused on

0 20 40 60 80 100 120 0 500000 1000000 1500000 2000000 2500000 3000000 3500000 4000000 4500000 5000000

Operational cases in Africa - top 20

Project not started Startup phase (no production) In operation (production) Project abandoned Unknown # cases

(10)

(11)

Western countries are still the main

investors in Africa, Emerging and Middle

Eastern countries are upcoming

0 10 20 30 40 50 60 0 1000000 2000000 3000000 4000000 5000000 6000000 Size # Cases

North

West

Central

East

Southern

Saudi Arabia

UK

USA

Egypt

South Korea

UAE

India

Malaysia

UAE

South Africa

Italy

Canada

USA

UK

Japan

Liberia

Singapore

Jordan

Brazil

-

France

Belgium

Saudi Arabia

India

(12)

The rush for land is triggered by a wide

range of drivers, food becoming a main

driver

0 50 100 150 200 250 300 350 0 2 000 4 000 6 000 8 000 10 000

Concluded deals (In 1000 ha) Concluded deals (# of deals)

(13)

The rush for land is triggered by a wide

range of drivers, food becoming a main

driver

Jatropha hype for

pure and mixed

biofuel deals - Data

as of 1 November,

2013

(14)

The rush for land is triggered by a wide

range of drivers, food becoming a main

driver

0 2000000 4000000 6000000 8000000 10000000 12000000 14000000 16000000

East West Southern Central North

Unknown

Tourism

Renewable Energy

Livestock

Industry

Forestry

Conservation

Agriculture

AFRICA

(15)

Little effective production

0 20 40 60 80 100 120 140 160 180 200

Central East North South West

Unknown

Project abandoned

In operation (production)

Project not started

Startup phase (no production)

11%

20%

50%

17% Failed Intended

Concluded not operational Concluded operational, no producing yet Concluded, operational, producing

1.7%

AFRICA

(16)

Slowing down overall, but evidence of

long-term trend of growing commercial

interest in land

Reasons: Credit crunch, high failures, less media focus,

civil awareness, countries are getting better preapred

0 10 20 30 40 50 60 70 80 90 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 North West Central East Southern Total Africa

(17)

LSLBI trends

Oral agreement

66

3.7

1.1 Contract signed

804

50.8

30.6 concluded deals

870

54.5

31.8 Expression of interest

42

5.5 n.a.

Under negotiation

144

9.1 n.a.

Intended deals

186

14.6 n.a.

Negotiations failed

50

5.3 n.a.

Contract cancelled

24

1.6

1.5 Failed deals

74

6.9

1.5 # deals

ha intended

_{ha under contract}

+115

+41

(18)

Implications, investment models

and agrarian change – Towards

(19)

Different LSLBI with different

outcomes

Independent

farmer

model

Associative

farmer

model

Cooperative

farmer model

Speculative

1000-day

model

Asset

management

and

Investment

funds model

Nucleus

estate model

Agribusiness

Estate model

(20)

Different LSLBI with different

outcomes

o

Uncertain institutional environments and the

difficulty of doing business

o

Technicality of the projects

o

The lack of markets

o

Lack of financial services

o

High settling and transaction costs

Independent

farmer model

Associative

farmer model

Cooperative

farmer model

Speculative

1000-day

model

Asset

management

and

Investment

funds model

Nucleus estate

model

Agribusiness

Estate model

High failures

(21)

New strategies 1

o

To overcome high risks related to settlement in less developed agrarian

economies

o

Focus on core business

Independent

farmer model

Associative

farmer model

Cooperative

farmer model

Speculative

1000-day

model

Asset

management

and

Investment

funds model

Nucleus estate

model

Agribusiness

Estate model

High failures

Increased integration

(22)

New strategies 2

Independent

farmer model

Associative

farmer model

Cooperative

farmer model

Speculative

1000-day

model

Asset

management

and

Investment

funds model

Nucleus estate

model

Agribusiness

Estate model

High failures

Less risky activities

- Increased focus on stable countries, with well-developed

property rights

- Other investment strategies (equity)

Less visible but at least as important in terms of volume

and impact on agrarian structures in host countries

(23)

New strategies 3

Independent

farmer model

Associative

farmer model

Cooperative

farmer model

Speculative

1000-day

model

Asset

management

and

Investment

funds model

Nucleus estate

model

Agribusiness

Estate model

High failures

A more organised second generation of investments

- Going beyond individual settlements

- More coherent/structured support

- Private sector (service providers, …)

- Governments (one stop shops, …)

- International community (VGs, RAIs, F&Gs)

- Broader agricultural environments are developing

(24)

Concluding thoughts

• A need for investment in African agriculture

• Agrarian change in Africa?

o

Yes - but slow

o

Very little # - With very few ‘positive’ results

• For farmers/investors

• For local populations/host countries

o

Far-going integration and closed value-chains

• Corporization of agriculture

• Concentration and dualization within the agricultural sector

• Change not always there where

expected/announced, by the promotors of

LSLBI

o

Lack of LT reflection on development trajectories

o

Need for more Inclusive Development

(25)

Thank you

Ward ANSEEUW

CIRAD Researcher

Post Graduate School of Agriculture and Rural Development

University of Pretoria

Pretoria 0002

South Africa