Buying the cow...

While I agree the outlook for ag exports looks good into the future, we need to remember our customers have their own agendae. After our biofuel enhanced price jump in 2007-8, those with the cash have decided to skip the middleman.

That would be me. [I know, I know. I just cannot bring myself to use "I" in that sentence]

In Africa they are calling it the land grab, or the new colonialism. Countries hungry to secure their food supplies—including Saudi Arabia, the Emirates, South Korea (the world's third biggest importer of corn) China, India, Libya and Egypt—are at the forefront of a frantic rush to gobble up farmland all around the world, but mainly cash-starved Africa.

Over the past few months, Saudi Arabian investors have paid $100m for an Ethiopian farm where they hope to grow wheat and barley, adding to the millions of acres they already own in the war-ravaged country, as well as in neighbouring Sudan. The Saudis also have land in Indonesia and Thailand for growing rice. China owns vast tracts of overseas land, mainly in Algeria and Zimbabwe, and one estimate suggests that more than a million ethnic Chinese farm workers will be living on the continent this year. Kenya and Tanzania have leased land while the Ugandans have been big sellers, allocating two million acres of land to Egypt for wheat and corn. [More]

One fascinating aspect of this forward-thinking strategy is the idea of ethnic Chinese becoming farmers all over the world. Or maybe the farm managers.  It reminds me of Dutch dairy farmers.

Yet for nearly every critique of “outsourcing ag,” there is an equally compelling argument in favor. Experts point out that most land contracts will result in the employment of indigenous labor: Even as China flies in thousands of its own farmers and scientists to begin production on its African farms, those workers are training locals to grow rice “the Chinese way.” Many of the Arab states, upholding Islamic traditions of helping the poor, have promised a share of the food crop to local markets. And countries like Pakistan and Sudan currently lack the resources to make their own farms productive; by improving infrastructure, foreign investment could boost the overall economy of the host nation. Josh Ruxin — director of the Millennium Villages Program in Rwanda, co-founder of Rwanda Works, a new organization that invests in Rwandan agribusiness ventures, and an assistant professor of public health at Columbia University — acknowledges the potential for colonial-like exploitation, but believes that renewed international interest in African land could also be a powerful springboard for smart development. “Show us how you’re going to do it in a way that’s environmentally sustainable and that provides opportunities for local talent,” he says. Land-hungry nations could be leveraged for investments in African health and education, to ensure, he says, that “ultimately the cycle of poverty is broken.” [More]

This is a free-market solution that also allows for many good things to be possuble for the participants. It is also a rational response for nations still smarting from our diversion of grain to mandated markets. Still, I think our faux-capitalistic farm establishment will point to sovereign farmland acquisition and see a reason for another subsidy.  In the process of legislating good deals and risk shifting for ourselves we create more and stronger competition.