Foreign investment by South Korean firm Daewoo in Madagascar’s agriculture sector has led to the ousting of the country’s president and called into question the growing trend for foreign acquisition of farming land in some of the world’s poorest countries.

Ousted president Marc Ravalomana’s plan to lease large tracts of Madagascar to Daewoo sparked protests that led to a military-backed takeover in May by Mr Ravalomana’s opponents.

In November 2008, Daewoo announced it had secured a 99-year lease on 1.3 million hectares of land, an area roughly half the size of Belgium, from the government of Madagascar. The $6bn investment was to produce 4 million tonnes of corn and 500,000 tonnes of palm oil a year.

Mr Ravalomana, a former dairy magnate, became president of Madagascar in 2001 when he began a plan of economic expansion which included attracting the island’s first significant foreign investment. Interim leader Andry Rajoelina has terminated contacts with Daewoo.

But Mr Ravalomanana continues to defend the deal. “It was in the interests of Madagascar because we didn’t have the money to develop,” he said. Only 7% of Africa’s arable land is irrigated – in sub-Saharan Africa the figure is 3.7% – compared with 42% of arable land in Asia.

Foreign investment may provide funds to improve infrastructure such as roads and ports, lowering the high transport costs which hinder the competitiveness of African exports.

The trend has been far more prevalent among governments than private companies buying land tracts. It is estimated that 20 million hectares of farmland worth between $20bn and $30bn has been sold or leased to capital-exporting countries over the past two years, including Saudi Arabia, Kuwait and China.

The World Bank plans to publish a code of conduct for investing in overseas farmland, which the organisation has identified as a significant new investment trend.

Malik Ahmad Jalal, executive director of fixed income, currency and commodities at investment bank Goldman Sachs, said despite the trend for government investment on a large scale over the past 18 months, there is also a significant amount of private-sector investment. “Buying agricultural land is definitely on the radar for private investors – any investment relating to agriculture is a long-term buy because you have demographics and food security on your side,” he said.