Financial Transparency Coalition

The G8 and World Bank argue that the recent huge wave of private sector investment in agriculture increases innovation, jobs and food output.

But is this correct?

Forensic new research from influential campaign group, GRAIN suggests the opposite is true.

GRAIN’s report, Feeding the 1 percent, produces evidence which indicates the avalanche of investment after the 2008 global food crisis is predatory and that investors have “little or no background in agriculture”.

It finds “a worrying picture emerges of what happens when speculative finance starts flowing into food production” when deals are scrutinised in detail.

Feeding the 1% also says a lot about the failure of governments to protect both their land and populations from this new class of investors who often seem more interested in maximising generous payouts to their directors and shareholders than increasing food production.

Disturbingly, many governments have granted an array of incentives to facilitate “dubious land deals and kick back schemes” that are resulting in undermining food production and pushing small farmers off their land without any debate.

In one such example a farmer in Sierra Leone who had his land taken tells GRAIN: “Only the chief, the member of parliament and ‘the white people’ knew that the agreement involved all of their land.”

GRAIN focuses on investments made by Indian billionaire Chinnakannan Sivasankaran – one of the world’s largest farmland holders.

His business strategy takes advantage of the so-called ‘commodities supercycle’ – taking advantage of rising populations and the resulting demand for resources.

Sivasankaran, like many investors, identifies Africa as the focus of all that demand and he is pouring his money in there now.

Through the Siva Group, the Indian tycoon is buying shipping lines, oil and gas reserves, mines and plantations. And he’s particularly big on palm oil. From Cameroon to Papua New Guinea, Indonesia and Sierra Leone, his ‘near term objective’ is apparently “to have control over a total of 200,000 hectares of plantable lands in each of at least four African countries and another 200,000 hectares in Papua New Guinea”.

A senior manager of Sivasankaran’s Siva Group is quoted in the report saying: “If you go to Liberia, the Liberian government issues you a concession, the local people don’t agree, the president of the country tells them that the government agrees so you must agree. If you go to Cameroon, again it is basically the government that gives you the land.”

According to GRAIN, many of these companies have failed to produce much food, yet curiously “have been very useful for shifting finance and debt around and paid their directors handsome salaries”.

GRAIN’s analysis suggests:

• Siva Group is structured around a web of tax havens and shell companies. The two centres of this empire are Singapore and the British Virgin Islands, numbers 5 and 20 on the Tax Justice Network’s Financial Secrecy Index respectively.

• Payment for major land concessions for oil palm development from Liberian companies equal to about 6% of the country’s entire land area was made to two offshore companies – where there is no record of who the beneficial owners are.

The report asks how the rights to such a large amount of land could have been acquired as Liberia was only just emerging from a brutal civil war and was still governed by a National Transition Government. Liberia’s Public Procurement and Concession Commission found the agreement in question contained “gross irregularities and non-compliance with the law” and the company involved had to renegotiate.

It appears that much of these complex land deals, acquisition rights and shares are more about gaining greater leverage in terms of credit and inter-company loans to expand and make even more land deals than solving the global food crisis.

Contrary to what glossy investor brochures may state, many of these ‘agricultural’ ventures have resulted in only a small fraction of its land concessions being brought into production. The company involved in the Liberia land deal has reported multi-million dollar losses year on year. So why did it pay its directors huge salaries over the same period?

GRAIN is a small international non-profit organisation that works to support small farmers and social movements in their struggles for community-controlled and biodiversity-based food systems.

Two of the report’s authors attended the Illicit Finance Journalism Programme – a four day training course combined with a pro-active mentoring service for participants run by the Tax Justice Network and supported by the FTC.

“I did a lot of digging through company reports that I probably wouldn’t have done or been able to do properly without having attended the IFJP and this is where a lot of really important info came out,” said GRAIN researcher, Devlin Kuyek.

This is a timely and excellent examination of ‘agricultural’ investors by GRAIN. It provokes a series of questions, not least: will today’s ‘agricultural’ investors improve the global food situation? And how long will it take the world to stop anonymous ownership and financial secrecy structures that are facilitating the sacking of nations in the name of addressing the global food crisis?

You can download their report Feeding the 1 percent here: http://www.grain.org/article/entries/5048-feeding-the-1-percent

Image used under Creative Commons License / Flickr User Lian Pin Koh