China’s desire to buy up farmland makes Brazil uneasy:
China has become Brazil’s biggest trading partner, buying ever increasing volumes of soybeans and iron ore, while investing billions in Brazil’s energy sector. The demand has helped fuel an economic boom here that has lifted more than 20 million Brazilians from extreme poverty and brought economic stability to a country accustomed to periodic crises.
Yet some experts say the partnership has devolved into a classic neo-colonial relationship in which China has the upper hand. Nearly 84 percent of Brazil’s exports to China last year were raw materials, up from 68 percent in 2000. But about 98 percent of China’s exports to Brazil are manufactured products — including the latest, low-priced cars for Brazil’s emerging middle class — that are beating down Brazil’s industrial sector.
Yglesias is flummoxed:
If China wants to reduce its “growing reliance on crops from the United States” why doesn’t it just buy crops from Latin America? Why buy cropland? Purchasing title to the land doesn’t physically transfer it to inside the sovereign territory of the People’s Republic of China. Indeed, if the Chinese government wants my advice it seems to me that large-scale purchases of foreign land are a uniquely unsound investment since it would be so easy for some future Brazilian or Argentine government to expropriate the land. Indeed, maybe the Sino-American War of 2021 will be specifically sparked by Argentina nationalizing Chinese land-holdings on a large scale, prompting the dispatch of the People’s Liberation Army Navy on its first real blue water mission which, in turn, prompts President Jeb Bush to invoke the Monroe Doctrine and come to Argentina’s defense.
Lester Brown, president of the Earth Policy Institute, is author of World on the Edge: How to Prevent Environmental and Economic Collapse, says that’s not so far-fetched:
Welcome to the new food economics of 2011: Prices are climbing, but the impact is not at all being felt equally. For Americans, who spend less than one-tenth of their income in the supermarket, the soaring food prices we’ve seen so far this year are an annoyance, not a calamity. But for the planet’s poorest 2 billion people, who spend 50 to 70 percent of their income on food, these soaring prices may mean going from two meals a day to one. Those who are barely hanging on to the lower rungs of the global economic ladder risk losing their grip entirely. This can contribute — and it has — to revolutions and upheaval.
Already in 2011, the U.N. Food Price Index has eclipsed its previous all-time global high; as of March it had climbed for eight consecutive months. With this year’s harvest predicted to fall short, with governments in the Middle East and Africa teetering as a result of the price spikes, and with anxious markets sustaining one shock after another, food has quickly become the hidden driver of world politics. And crises like these are going to become increasingly common. The new geopolitics of food looks a whole lot more volatile — and a whole lot more contentious — than it used to. Scarcity is the new norm.
The richer people get, the more meat, milk, and eggs they eat. And as global consumption of grain-intensive livestock products climbs, so does the demand for the extra corn and soybeans needed to feed all that livestock. Meanwhile in the U.S. we’re converting massive quantities of grain into fuel for cars. (Brazil is the second largest ethanol producer and the EU is ramping up.)
Other factors driving the new scarcity include climate change, running our wells dry, mismanaging our soils and a decline in our ability to use technology to raise yields. So countries that are net importers of grain set out to buy or lease land in other countries on which they intend to grow grain for themselves:
By the end of 2009, hundreds of land acquisition deals had been negotiated, some of them exceeding a million acres. A 2010 World Bank analysis of these “land grabs” reported that a total of nearly 140 million acres were involved — an area that exceeds the cropland devoted to corn and wheat combined in the United States. Such acquisitions also typically involve water rights, meaning that land grabs potentially affect all downstream countries as well. Any water extracted from the upper Nile River basin to irrigate crops in Ethiopia or Sudan, for instance, will now not reach Egypt, upending the delicate water politics of the Nile by adding new countries with which Egypt must negotiate.
The potential for conflict — and not just over water — is high…
Not only are these deals risky, but foreign investors producing food in a country full of hungry people face another political question of how to get the grain out. Will villagers permit trucks laden with grain headed for port cities to proceed when they themselves may be on the verge of starvation? The potential for political instability in countries where villagers have lost their land and their livelihoods is high. Conflicts could easily develop between investor and host countries.
Brown was a recent guest on Fresh Air. There, Terry Gross observed that the situation sounded a lot like oil:
GROSS: …where countries or oil companies go in and develop the oil, and the people who live there don’t necessarily profit from it, and their land is basically not theirs anymore.
Mr. BROWN: Yes. I think more and more people are beginning to realize that food is sort of the new oil in the sense that there’s a real struggle now to control sources of food and food supplies. And the exporting countries are obviously in a strong position now.
And one of the most interesting recent developments has actually taken this to another stage, and this has happened just in the last several months. But in January, the South Koreans announced that they were creating a new public-private entity to acquire grain for import into South Korea. Now, South Korea is self-sufficient in rice, but it imports all of its wheat and all of its feed grains, virtually, which is about 70 percent of the total.
So what they have done, what this new entity has done, is open an office in Chicago, and their plan is to either buy or lease grain elevators and then buy grain directly from U.S. farmers to put in their grain elevators, and they will then ship the grain to South Korea.
So what they’re trying to do, in effect, is to corner part of the U.S. exportable grain supply before it gets to market, and this represents an entirely new stage in the effort to try to secure food supplies by individual countries.
And what is so interesting about this is it’s hard to imagine China or Japan or Saudi Arabia or any of many other countries just sitting by and watching the South Koreans tie up part of the U.S. exportable grain supply before it even gets to market.
And so I would expect the other countries to start doing the same thing, and the bottom line here is we may wake up one morning and realize there’s not enough grain left for us.