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After Offshoring, Obama Needs To Crack Down On Farmland Grab

By Devinder Sharma

13 September, 2010
Ground Reality

US President Obama continues cracking down the whip on offshoring firms. "For years, our tax code has given billions of dollars in tax breaks that encourage companies to create jobs and profits in other countries, I want to change that," Obama said in a speech at Ohio. And then goes on to add: "I'm proposing a more generous, permanent extension of the tax credit that goes to companies for all the research and innovation they do right here in Ohio, right here in the United States of America."

Obama has certainly exhibited exemplary political courage to take the bull by the horn. Sooner or later, the G-8 country leadership will understand the importance and long-term impact of President Obama's initiative. I am sure they will have to follow suite, once they realise the folly of financial jugglery that goes on in the name of economic growth.

At the same time, global leadership has to come to grips with the grave and disastrous consequences that awaits ahead from another dastardly offshore outsourcing that is going on with impunity. Yes, you guess it right. I am talking of the farmland grab that goes on unchecked. President Obama needs to focus his attention on the 're-colonisation' that is taking place. I know you will think why should President Obama meddle in the affairs of other countries. I agree, but at least he can stop the American agribiz and finance companies from indulging in offshore farmland grab.

A delegation of Punjab farmers led by India's Agriculture Minister Sharad Pawar is currently (from Sept 3-13) on a visit to Brazil and Argentina looking for buying or leasing large tracts of land. According to news reports, Sukhbir Singh Badal deputy chief minister of Punjab is also part of the delegation. A farmer, who is cultivating over 30,000 hectares in Argentina, has already given a presentation to the members of the delegation.

Ironically, a recent report by the International Institute for Environment and Development (IIED) has brought out how small farmers in Brazil, for instance, are abandoning farming and swarming in to the urban centres. So on the one hand Brazil is driving away its own farmers, on the other it is inviting Indian farmers to come and cultivate the land left behind. What a flawed model of development? Your own farmers go landless while you handover farming to imported farmers.

Africa too is aggressively promoting farm land grab. With the support of the African governments, Indian farmers are likely to grab extensive tracts of land. Africa therefore has become an easy target. I draw your attention to one of my earlier blog posting on land grab in Africa (http://devinder-sharma.blogspot.com/2009/06/food-pirates-are-extending-their-reach.html).

In another news report 'Indian firms gung ho on LatAm agri biz', the Economic Times (Sept 8, 2010) says: "Indian company Shree Renuka Sugars recently made it to the club of top five sugar producers in Brazil, South America’s largest country and the world’s biggest sugarcane producer." This is happening in a country which has recently decided to turn back foreign investors in agriculture. I am sure when President Lula's nominee wins the October elections, this rule will be all but forgotten. That's what a lot of people fear.

When I mentioned this to an economic journalist in New Delhi, I was told that Agriculture Minister Sharad Pawar has stakes in Renuka Sugar, and that makes the jigsaw puzzle simple knowing the interest the minister has been taking to protect the sugar industry. I have no way of verifying Sharad Pawar's involvement with Renuka Sugar, but I think the journalist is better informed than me. Many believe his travel to Brazil is actually to draw tie-ups with Brazilian sugar companies in the light of his proposed de-control of sugar sector in India.

Meanwhile, here is the IANS news report from the Economic Times:

Indian firms gung ho on LatAm agri biz

IANS, New Delhi

INDIAN companies are increasingly getting a foothold into South America, acquiring assets and land not just to get entry into its lucrative agricultural market but also to export commodities such as sugar, pulses and edible oils back to India.

According to Latin American diplomats serving here, Indian company Shree Renuka Sugars recently made it to the club of top five sugar producers in Brazil, South America’s largest country and the world’s biggest sugarcane producer.

India’s largest sugar refiner, Shree Renuka Sugars, had first bought a sugar and ethanol producer, Vale Do Ivai S.A. Acucar E Alcool, in November 2009 for $240 million, including its 18,000 hectares of land and cane crushing capacity of 3.1 million tonnes annually. A few months later, in February, it invested another $329 million for a 51% stake in Equipav SA Acucar e Alcool, that owns two sugar mills with 10.5 million tonnes annual capacity, as well as, 115,000 hectares of cane growing land in southeastern Brazil. The diplomats said other Indian companies are also vying to get into the lucrative sugar industry. These include a consortium led by state-run Bharat Petroleum Corp, as well as private sugar companies like Rajashree and Godavari.

Mumbai-based Bajaj Hindusthan already has a subsidiary in Brazil, Bajaj Internacional Participators Ltd, to scout for investment opportunities in the country. But, it’s not just sugar and Brazil, which are attracting Indian corporate groups.

“It is a natural synergy for Indian companies to look at South America for agriculture. Cultivable land is at a premium in India and growing food overseas to import it back to the country is winwin for both sides,” said a senior diplomat, requesting anonymity. “Frankly, there is also not much sensitivity about the issue of land in South America due to the low population, unlike, say, in Africa where it is often a political hot potato,” the diplomat added.

Interests in sugar and ethanol aside, Sterling Group has a 2,000 hectare olive farm in Argentina, while Solvent Extractors Associations of India — made up of 16 member companies — plans to invest $50 million to grow oilseeds in Uruguay.

Similarly, Olam, a company owned by a non-resident Indian with headquarters in Brazil, cultivates 30,000 hectares of peanut production in Argentina. Indian companies are also increasingly looking for farm assets in Latin America for import of pulses, edible oils and sugar. In 2009, India imported over $1 billion worth of edible oils from Brazil.