Files
Abstract
Recent strong commodity prices have led to rising
demand for farmland and this is projected to continue
for the medium term because of increasing populations
and incomes and growing use of biofuels. Global analysis
indicates that about 450 Mha of suitable land may be
available to bring into cultivation, much of it in sub-Saharan
Africa, Latin America and Russia. Improved returns in
farming and relatively cheap land in some countries
have translated into a sharp rise in domestic and foreign
investment into farmland, largely focused on these same
countries with uncultivated land. Investors have been
very heterogeneous, with many from emerging countries
and some with little track record in agriculture, but supported by rising
portfolio investor interest in agriculture. Despite perceptions, governments
and sovereign wealth funds make up a relatively small share of such
investments. A surprising development, given the long tradition of family
farming almost everywhere, has been the rise of corporate ‘superfarms’
often managing over 100,000 ha of prime cropland. Where land and other
markets work well, strong investor interest in agriculture represents an
opportunity to tap capital, technology and new markets. However, where
land governance is poor and institutional capacity weak, there have been
many failures, whether measured in economic, social or environmental
terms, especially in Africa and South-East Asia. In Australia, given skilled
farmers and strong institutions, there seems little reason for concern about
recent reports of foreign investment in farmland. Australia has led the world
in arguing for freer agricultural trade and investment and should continue
to do so. Increased transparency through a register of such investments
could alleviate fears in some circles of a foreign ‘land grab’ in Australia.