World Grain - June 2009 - 32

FEATURE: FOREIGN CROPLAND DEALS

foreign farmland controlled by Chinese
firms around the world. Algeria has a
permanent revolving Chinese workforce of 100,000 that has branched
out from construction to agriculture.
In Zambia, at least a dozen Chineseowned layer farms now account for a
big share of the eggs sold in Lusaka,
the country's capital.
SOUTH KOREA'S AMBITIONS
In the case of South Korea, food security, and specifically a desire to diversify its maize supply, is clearly a driving
force in overseas land deals. The country is the world's number two importer
of maize after Japan, with the U.S. and
China accounting for almost 100% of
its supply. But neither country seems
like a reliable low-cost source for the
long term, given the U.S.'s emphasis on
maize-based ethanol and China's growing meat consumption, water shortages

and loss of farmland to urban development. So investment in maize production in developing countries makes
sense to South Korean leaders, who
hope for a backward vertical integration into maize production at costs that
will keep their domestic feed and meat
industries competitive.
However, the oversized ambition of
some South Korean companies has led
to the most infamous of the numerous
failed mega deals for overseas land.
An agreement last year between Daewoo Logistics and the government of
Madagascar granted 1.4 million hectares to the Korean company for planting maize and palm trees. The Koreans
would pay low land lease rates but be
committed to investing billions of dollars in infrastructure development. The
cash inflow would create employment
for tens of thousands of rural dwellers.
But popular opposition to the apparent

land giveaway was said to be a factor
in the political unrest that led to the fall
of Madagascar's government in January. Daewoo made public its withdrawal from the deal in February. Despite
this setback, other Korean investors
have signed an agreement to buy and
develop 620,000 hectares in Sudan for
grain. South Korean companies have
also been targeting investments in large
land tracts for maize in the Philippines,
Indonesia and other countries.
In the last few months, the announcement of canceled projects may be outnumbering new ones, especially for
large areas of land. Chinese investors
have seen agreements to establish plantations to grow 500,000 tonnes of rice
per year in Mozambique and to invest
in 1.4 million hectares for maize in the
Philippines fall apart in the face of popular protest.
Another high-profile government-to-

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World Grain - June 2009

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