Cambodia: If you don't want to buy it, rent it! For info, call Dr. Hun Xen

The Rent-A-Country

Thursday, Mar. 12, 2009
By Krista Mahr
Time Magazine (USA)

"When farmers in food-insecure countries like Laos and Cambodia are scrambling to feed their children, does it make sense to lease out vast tracts to grow rice for foreign governments?"

Take a moment to consider breakfast, the most important meal of the day. Maybe you grabbed a banana or ate a bowl of granola. Whatever it was, chances are that some — if not all — of your morning meal came from a country you don't live in.

Food isolationism is dead. It collapsed in a messy, public heap last year when oil hit $100-plus per bbl. and the world's crush on biofuels pushed food prices to unprecedented highs. Thirty-six nations needed food aid. Twenty-five imposed export bans or restrictions to keep staple crops like rice and wheat at home. As prices shot up 50%, food riots erupted in Haiti, killing at least five, and eventually brought down the government. (Read about Russia's "recession diet".)

And then something else happened. A few diplomats and business leaders quietly boarded their jets and got to work. Countries like Saudi Arabia, Kuwait, Qatar and South Korea — well-off states without enough good land or water to feed their people — started to look outside their borders. "It's economically not viable to grow food in the desert," says David Hallam, deputy director of trade and markets for the U.N.'s Food and Agriculture Organization. "They said, 'If we can't grow our own food, we'll grow it somewhere else.'"

Their words did not fall on deaf ears. In April, diplomatic relations between Cambodia and Qatar were officially established. In May, the Presidents of South Korea and Sudan discussed food cooperation at the launch of the Korea-Arab Society in Seoul. The Saudi Binladin Group penned nonbinding agreements with Indonesia to plant rice on some 1.5 million acres (607,000 hectares) of island paradise, and millions more have reportedly been earmarked, from Pakistan and Kazakhstan to Burma and the Philippines. Alwi Shihab, a special economic adviser on the Middle East to the President of Indonesia, sees this new investment as a boon to the nation's agricultural sector. "We have large, sizable, fertile -land and good water," says Shihab.

Growing crops for strangers, of course, is nothing new. The long, grim march of colonialism was driven by Europe's penchant for sugar, tea, tobacco and other crops that don't flourish in northern climes. But as climate change and growing populations put ever more pressure on the earth, state-backed searches for land and food contracts as part of a national food-security strategy strike many as fundamentally new. "We're talking about a whole different logic," says Renée Vellvé, a researcher for Grain, an organization that has been compiling media reports of these deals. Vellvé's group sees a downside. When farmers in food-insecure countries like Laos and Cambodia are scrambling to feed their children, does it make sense to lease out vast tracts to grow rice for foreign governments? "These are not fallow fields," says Paul Risley, a World Food Program spokesman based in Thailand. "These are villages where families have farmed for centuries."

And for investors, moving into regions where so many depend so fiercely on the land can translate into risk. "You see a backlash," says Rajesh Behal, a principal investment officer for International Finance Corp., which has just put $75 million into an emerging-market agribusiness fund. "People say, 'Who are these people, and how long will they be there?'" In July, South Korea's Daewoo Logistics signed contracts to lease more than 2.2 million acres (900,000 hectares) in Madagascar — more than a third of the island nation's arable land — to grow corn and oil palms. A violent political dispute erupted in the capital soon after, complicating the deal. "Farming is a pretty dirty business," says Behal. "You have to know the nuances and withstand the volatility."

But in countries where governments can't afford — or don't prioritize — significant domestic agricultural investment, foreign money has the power to deliver better roads, irrigation, technology and training. "One thousand times we say yes on private and public agricultural investment, but done in a certain way," says Jean-Philippe Audinet, acting director of the policy division at the U.N.'s International Fund for Agricultural Development. "It's very important not to look negatively at this trend. We have to try to look at the win-win."

After all, is there a choice? Some of these deals are probably doomed to fall under the ax of the global credit crunch, if they haven't already. But for land-poor countries, the underlying problem of relying heavily on imports will remain. Encouraging a new generation of deals to come out of the diplomatic closet may be the best chance we have to make sure that people on both ends of the bargain end up with food on their plate.

—With reporting by Jennifer Veale in Seoul