Now consider these.
There are four countries A, B, C and D.
Country A has a sparse population, lots of arable land but no growth in economy or productivity is seen.
Country B is over populated, it cannot feed its domestic market the food grain it produces.
Country C is neither over populated, nor does it use its land for agriculture, but for oil.
Country D is mildly populated, and uses its land to reserve resources, not only for agriculture.
Country A leases its land to Country B.
Country B has a trade treaty of Oil for food with Country C.
Country D supplies the necessary technology to Country B for agriculture and high yielding products.
Country A can be represented by African nations and Latin American nations, Country B as China and India, Country C as the OPEC countries, Country D as the developed nations.
Now does solve the world hunger problem? Mildly so, you may think.
The Saudi Arabian investors have spent more than 100 Million USD for getting barley, wheat and rice from a leased land in Ethiopia. China has similarly invested in larger land deals in the African nations. Probably this in our new future!
But to underestimate bureaucratic hassles of the host country, it would be over confidence, Venezuela recently banned outsourcing deals of land, and similarly some other African nations too.
Land deals are in fact not new.
In fact, the economist recently said that around 15-20 million hectare of farmland is under talks or lease for an amount of deals worth 20-30 billion USD.
What has the host country have in benefit? Here are some of the pointers:
- Consider this an opportunity to align it as a lease for growth concept. The host country should take this as a means to use the foreign country to invest in infrastructure, industries, and economic growth.
- Leasing agreements should not be of 99 years or more than 10 years, after which the lease would be renewed again for the growth Vs. Lease strategy.
- Around 20-35% of the food grains made in the host country must be kept within the host country. This would solve malnutrition of the some of the poor countries. Also, the rest should be allowed only to go back.
- Ban on the exports of such crops produced by the foreign country. This would lead to further escalation of issues regarding trade barriers.
- G-8 should lay down a definite structure to the land outsourcing deals in the next meeting.
- More transparency is required to deal with such issues for deals between two governments by taking people into consideration, so that when it comes to actual deploy of the strategy, implementation would be smooth. Because people should see the advantages for working and growing crops for a foreign country.
- No bio-fuel should be considered growing in the host country. This would again address the need for the issue of trade imbalance.
- Farm land price arbitrage should be taken into account for the foreign countries while seeking a host country. Also productivity of land, availability of natural resources, access to water, country population, country population density, easy entry exit trade treaty, stability in polity should be taken into account for the host country for investments.
All is well that ends well. Hope this article can shed some light on the growing world food crisis.