Foreign Land Investments in Developing Countries

In 2009, the government of Liberia leased 220,000 hectares (543,4000 acres) of land to a Malaysian company, Sime Darby, which intends to develop the land for palm oil and rubber production. While the company has promised that its operations will create jobs and comply with all environmental standards, local farmers have expressed concerns about environmental degradation and slow payments to workers (Siakor and Knight). In recent years land deals in low-income countries involving foreign firms and governments have increased substantially. The World Bank estimated that there were large scale land deals to purchase or lease 56 million hectares of land in developing countries in 2009. Note that total cultivated acreage in the United States is about 175 million hectares. Most observers suggest that the rising interest in foreign land investments is linked to recent commodity price increases. Between January 1990 and February 2011 the Food and Agriculture food price index increased 96 percent, before falling back somewhat toward the end of the year. Rising food prices may signal impending food shortages, and firms and governments in countries with limited land resources may be attempting to lock in supplies through foreign land investments