After the cold, wet and now frosty spring we’re experiencing, if foreign buyers came along and approached the federal government about buying up farmland on the Canadian Prairies, there’s a few farmers who’d be inclined to say, “Take it. Please.”
That’s not likely to happen, at least not in Manitoba and Saskatchewan, because of legislation designed to keep agricultural land in the hands of Canadian citizens or those well on their way to becoming so.
The Farm Land Ownership Act of 1984 was passed in the wake of the heady 1970s when farmland became seen as a speculative investment. Foreign investors were contacting farm families and offering several times their land’s productive value – sight unseen.
Purchases by non-residents and non-Canadians must now be reviewed by the Farm Lands Ownership Board to determine whether the criteria for exemptions has been met.
This is not the case elsewhere. The Washington-based International Food Policy Research Institute has estimated that between 15 million and 20 million hectares of farmland – an area that approximates a third of the Prairie agricultural land base – worth between $20 billion and $30 billion has been traded globally since 2006.
Some are calling this the “great land grab,” while others, notably, Nestlé chairman Peter Brabeck-Letmathe, have characterized it as the “great water grab.” Local legislation aside, farmers here aren’t immune to its effects.
Aside from the ethical and social considerations raised by this latest twist on colonialism, these transactions have the potential to fundamentally change the nature of global trade in many food commodities.
Food-insecure countries such as Saudi Arabia, South Korea, Kuwait, and Egypt have lost confidence in the international trading system since 2007-08. It wasn’t the spike in commodity prices that scared them; it was the decision by several exporting nations to stop selling at any price.
Their fears, at least theoretically, could be resolved by going back to the days of global grain reserves. While there is talk of that, there isn’t much momentum toward making it happen.
So food-importing countries that have the means have served notice they are no longer content to buy commodities; they want the farm.
Whereas in the past, underdeveloped countries became the target of entrepreneurs looking for a cheap place to harvest resources or grow export commodities such as coffee, pineapples or flowers, the land purchases and leases of late are taking place government to government, and involve land that will be used to produce staple foods like rice or wheat.
They take various forms, ranging from outright purchases to leasing to what the Chinese are calling “agricultural co-operation deals,” which according to The Economist that country has signed covering more than two million hectares since 2007.
Of all countries, Saudi Arabia is perhaps the one with the truest understanding of the true costs of food security.
It set out in the 1970s to make itself self-sufficient in wheat. Farmers there were paid the equivalent of US$933 per tonne, although those prices were later scaled back to less than a third of that. It achieved its goal of producing enough wheat and durum to supply its needs.
But it began to phase out the program in 2008. In the end, it wasn’t the financial cost that prompted the program’s abandonment, it was because of something much more precious – water. Every tonne of wheat produced was removing 1,300 to 1,500 cubic metres from the underground aquifer that is that country’s main source of fresh water. It couldn’t sustain that rate of consumption.
News earlier this year that the country expected to start importing as much as 800,000 tonnes of milling wheat would seem to be good news for Canadian farmers. But the country has also embarked on an aggressive land acquisition drive in other countries with the specific purpose of producing its own import supply. This is grain that will never be traded globally.
The Economist estimates the land transactions to date could result in between 30 million to 40 million tonnes of cereals, which is a significant proportion of the 220 or so tonnes traded globally. This is global trade potential that is lost to export-dependent nations like Canada.
This assumes that the land will be more productive under foreign control, which presumably brings additional investment to countries where governments lack the resources. There are also fears of people being uprooted from traditional lands, the loss of natural capital, and the very real risk of corrupt government officials using these transactions to line their own pockets.
Given its own history of colonization, Canada is hardly in a position to condemn this latest global land and water grab. But it needs to be involved establishing fair land trading rules, and helping its own farmers understand how this will change their export environment. [email protected]