Risky overseas investments lecture

Dr. Mary Ann Tetreault, author and professor emeritus from Trinity University, held a lecture on “Risky Overseas Investments.” This title advertised for a lecture on food security. Tetreault proceeded to give an overview of how food security directly relates to risky overseas investments. In 2008, world markets saw a dramatic decrease in the supply of grains available, which dealt a heavy blow to countries that did not produce their own grain.

This was not the first time people suffered due to the unavailability of grains on the global market. Tetrault reminded attendees that the “bread basket,” the United States, used grain embargoes against Russia and Middle Eastern countries such as Saudi Arabia and Iraq. To point out the significance of such an embargo, Tetrault explained that an estimated 500,000 people died in Iraq from 1990 to 2003 as a consequence of the US grain embargo.

Grain embargoes present a significant threat to Middle Eastern countries because they do not have the water or climate to cheaply produce grains. In an attempt to remove their dependence on the United States for grain, Saudi Arabia and Qatar have recently made attempts to obtain land in Ethiopia and Cambodia for farming grains.

The production profiles of Ethiopia and Cambodia are perfect for farming. The soil is rich and there is plenty of water, however, there is an extreme lack of infrastructure and great political risk in obtaining land and farming there due to corrupt governments in both Cambodia and Ethiopia.

In Ethiopia, control of the government frequently shifts from one political party to the next. Those in power reward their supporters by giving them land that has been confiscated from those who opposed the winning party. This land is then offered for sale internationally with great incentives such as tax benefits, low prices, and no additional fees for imports. The problem arises when government control changes again and the new leaders confiscate the property, claiming that the land was not being used according to contract. Essentially, there are no legal standards and no rule of law. Due to large population displacements, there is a great lack of agricultural labor. Another big concern for international investors is that Ethiopia is landlocked and every country surrounding Ethiopia requires a substantial tax to allow goods to be transported across their borders.

The government in Cambodia is more corrupt than in Ethiopia. Property rights are not protected by the law enforcement due to this corruption. Cambodian officials extract tolls every time produce moves. The land offered for sale in Cambodia was confiscated from farmers who have lived and farmed on the property for dozens of generations. These displaced people are moved far away from the property and, due to the absence of infrastructure, cannot be considered an available source of labor for farms owned by international parties. Also, the often indignant locals around the confiscated land retaliate by destroying produce at night. The Cambodian government’s response to the international landowners’ complaints about the lack of property security has been to offer the landowners the “opportunity” to take part in “public-private partnerships,” by which landowners can “adopt a security force” just as Americans can “adopt a highway.” This “opportunity” is not realistically a choice for international landowners. If they do not invest in these public-private partnerships, the government will make their involvement in Cambodia as difficult and expensive as possible.

Faced with the great increase in cost from their initial anticipated cost, these international parties are leaving Ethiopia and Cambodia in search of alternative solutions to their grain dependence. Although some countries have failed in their efforts to farm internationally, other countries have had some success. Vietnam has had some success farming in Cambodia because they deal directly with the farmers and are able to transport goods at a low cost. The main benefit for Vietnam to farm in neighboring land is that water, a very precious resource, is imported in the food. Tetrault advises that there needs to be renewed securitization of land, increased regulation in the national markets, increased market transparency in international land acquisition, and increased numbers of business propositions directly with farmers instead of governments.