Agriculture has proved a more resilient investment in the global economic crisis than other sectors as the international trend for buying large swathes of agricultural land across the developing world gains momentum.
The Organisation for Economic Co-operation and Development (OECD) and United Nation’s Agricultural Outlook 2009/18 report predicts average crop prices will be 10% to 20% higher in real terms for the next 10 years compared with the average for the period 1997 to 2006, showing that the current trend for crossborder investment in agriculture may continue.
It is estimated that 20 million hectares of farmland in the world’s poorest nations 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, as well as to private-sector companies, prompting criticism that investment may not ease food shortages.
But senior OECD economist Mike Gestrin says foreign ownership of agricultural land could lead to the introduction of technology, better irrigation and increased productivity. However, Mr Gestrin warns solid governance structures are needed to avoid the worst abuses by investors, adding that most multinational companies want to work within strong governance frameworks given the choice. “It’s a myth that multinationals want to work in environments without labour and environmental laws,” he said.
The UN Conference on Trade and Development’s Least Developed Countries Report issued in July warned that the world’s 49 least developed nations must increase agriculture investment if they are to prevent food crises. The report says the money is urgently needed to develop infrastructure and for technology to aid productivity.