Re: OUTSOURCING'S THIRD WAVE AND LAOS IS IN THE MIX TOO.

HERE'S A QUICK SYNOPSIS OF THE ARTICLE.

OVER the past two years, as much as 20m hectares of farmland—an area
as big as France’s sprawling farmland and worth $20 billion-30 billion—
has been quietly handed over to capital-exporting countries such as
Saudi Arabia, Kuwait and China. They buy or lease millions of acres,
grow staple crops or biofuels on it, and ship them home. The countries
doing the selling are some of the world’s poorest and least stable
ones: Sudan, Ethiopia, Congo, Pakistan. Usually, when foreigners show
up in these places, it is with aid, pity and lectures (or, in one
instance, arrest warrants for war crimes). It must make a nice change
to find their farms, so often sources of failure and famine, objects
of commercial interest instead.

Yet while governments celebrate these investments, the rest of the
world might reasonably ask why, if the deals are so good, one of the
biggest of them helped cause the overthrow of the government that
signed it—the one in Madagascar. Will this new scramble for Africa and
Asia really reduce malnutrition, as its supporters say? Or are critics
right that these are “land grabs”, “neocolonialist” rip-offs,
different from 19th-century colonialism only because they involve
different land-grabbers and enrich different local elites (see
article)?

Protectionism or efficiency?
It would be graceless to write off in advance foreign investment in
some of the most miserable places on earth. The potential benefits of
new seeds, drip-feed irrigation and farm credit are vast. Most other
things seem to have failed African agriculture—domestic investment,
foreign aid, international loans—so it is worth trying something new.
Bear in mind, too, that worldwide economic efficiency will rise if (as
is happening) Saudi Arabia abandons mind-bogglingly expensive wheat
farms in the desert and buys up land in east Africa.

Yet these advantages cannot quell a nagging unease. For a start, most
deals are shrouded in mystery—rarely a good sign, especially in
countries riddled with corruption. One politician in Cambodia
complains that a contract to lease thousands of acres of rice contains
fewer details than you would find in a house-rental agreement. Secrecy
makes it impossible to know whether farms are really getting more
efficient or whether the deals are done mainly to line politicians’
pockets.

Next, most of these deals are government-to-government. This raises
awkward questions. Foreign investment helps countries not only by
applying new technology but also by reorganising the way people work
and by keeping an eye on costs. Few governments do this well, corrupt
ones least of all. One of the biggest problems of large-scale
commercial farming in poor countries is that well-connected farmers
find it more profitable to seek special favours than to farm. These
deals may exacerbate that problem. Worse, the impetus for many of them
has not been profit-seeking by those who want to turn around failing
farms. Rather, it has been alarm at rising food prices and export
bans. Protectionism, not efficiency, has been the driving force. It
would be better to liberalise food markets and boost trade than
encourage further land grabs.

Third, there are serious doubts about whether countries acquiring land
are paying the true cost of it. Host governments usually claim the
farmland they offer is vacant, state-owned property. That is often
untrue. It may well support smallholders who have farmed it for
generations. They have no title, only customary rights. Deals that
push them off their land or override customary rights cannot be
justified. International bodies, such as the African Union, are
drawing up codes of conduct to limit such abuses. They are sorely
needed.

Even then, land deals will never help the poor as much as freer trade
and stronger property rights. But if the deals eventually raised
yields, spread technology and created jobs, that would at least be
some cause for celebration. At the moment too many seem designed to
benefit local elites more than local farmers; they use foreign labour
and export most of their production, harming local food markets. Until
they show otherwise, a dose of scepticism should be mixed with the
premature hopes the land deals have engendered.
.

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