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Brazil And China Scramble For Agricultural Influence In Africa
Agriculture is central to Chinese and Brazilian development efforts – how trailblazing are their methods? Agricultural experts from China offer tips on rice planting to farmers in Dakar, Senegal. Photograph: Zheng Zheng/Xinhua[/color] China and Brazil have identified agriculture as central to their development efforts in Africa, confident in the belief that they can make valuable contributions based on their own agricultural success. China trumpets its ability to feed 20% of the world’s population on roughly 10% of the world’s arable land, while Brazil can boast of agribusiness-led commercial production of soya bean and ethanol as well as its promotion of smaller-scale farming. Last month, José Graziano da Silva, the director general of the UN’s Food and Agriculture Organisation, stressed the importance of south-south co-operation in advancing agricultural development in developing countries. “It is time for Latin America to increase its contribution to African development,” Graziano told African and Argentinian agriculture ministers in Buenos Aires, Argentina. What has been the experience of Brazil and China in agriculture in Africa; do they offer a new paradigm of south-south development co-operation? A collection of essays published last month by the Institute of Development Studies concludes that there is no single Chinese, Brazilian or African position. “China and Brazil have very different interests and priorities, and within these countries there are intense contests between different approaches, reflecting domestic political dynamics,” says the IDS bulletin China and Brazil in African Agriculture . “On the other hand, Africa’s 55 countries are hugely diverse, and any new development encounter arrives on the back of a very complex agrarian history and political economy.” The case of Brazil is particularly interesting, since it offers two distinct models. The first consists of large-scale farming for the production of soya and ethanol, backed by the ministry of agriculture, livestock and food supply, which describes itself as the ministry for agribusiness. The second emphasises integrated rural and social development in Brazil’s poorest regions through programmes designed to ensure the provision of technical support and credit for family farmers. Both approaches are evident in Africa. The ministry of agrarian development (MDA), a supporter of the family farm sector, has drawn on Brazil’s More Food programme, focusing on improving farmers’ access to equipment, machinery and agricultural technologies, including tractors, through the provision of concessional credit. Ghana, Zimbabwe and Mozambique have been given credit and signed a technical co-operation agreement. Shipping of machines and equipment will begin this year. The challenge, says the study, is to avoid subsidised technologies that end up benefiting wealthier farmers. At the other end of the spectrum is the involvement of agribusiness. In Ghana, for example, the Brazilian company Constran is building an ethanol plant, designated for export to Sweden, partly to get round European tariffs on Brazilian ethanol imports. So the $306m (£196m) project involves Brazilian technology and European investment in an African country. Competing visions such as these mirror Brazil’s complex agrarian economy, says the study, and the outcomes will depend on how African governments, farmers, entrepreneurs and civil society organisations absorb, shape and apply the models on offer. While Brazil is a new player in Africa, China has been involved in African agriculture for more than 40 years. Lila Buckley, senior researcher on China at the International Institute for Environment and Development in London, writes that Chinese agriculture co-operation tends to be heavily technocratic, reflecting China’s own experience. It has established more than 40 agricultural demonstration centres on the continent and provides agricultural assistance combined with infrastructure development. The latter includes dam construction with technical training, the provision of inputs and storage facilities, and facilitating links between agricultural ministries and communities. While the Chinese official line is that China’s agricultural experience can be of benefit to Africa, Chinese NGOs have offered more critical perspectives. A project officer at a Chinese NGO told Buckley: ” Aid is supposed to help local people develop by introducing China’s experience. But people forget to ask whether this is appropriate or not. Chinese people don’t understand African history or the development situation.” There is also concern about the suitability of China’s intensive agriculture model, which has achieved increased food production but only at the cost of the heavy depletion of water and soil, intense fertiliser use – which causes high pollution – and heavy energy consumption. The emphasis on technology transfer above other factors also worries some experts. “The Gates foundation is spending $1bn on agriculture technology,” an agriculture policy adviser at the Chinese Academy of Science told Buckley. “But not all technology is necessarily useful for Africa. In China, rural development started with land tenure reform, not with technology.” Buckley notes that, despite rhetoric of mutual benefit, China has generally taken the lead in designing and implementing agriculture projects, with only passive participation from African partners. This has led to frustration on both sides and project failures, as in the case of the Xai-Xai irrigation scheme in Gaza province in Mozambique. When the scheme failed, one Chinese participant complained: “We are here to help farmers, but the farmers are not interested in agriculture.” Kojo Sebastian Amanor concludes that south-south co-operation – though frequently framed as path-breaking – builds upon pre-existing forms of international development, neoliberal frameworks, and the expansion of capital in Africa.[/font][/color] Continue reading
European Residential Property Investment Attracts Global Rich
25 August 2013, 07:16 PM Greek, Nigerian and French buyers are joining wealthy Chinese, Russian and Middle Easterners targeting European residential property, in particular new luxury developments in central London. In southern Europe meanwhile, the offer of residency permits is attracting new capital, particularly from Asia, to support suffering housing markets and economies. Foreign investors have snapped up 65-70% of new homes in prime London locations over the last two years, according to property consultancy Chesterton Humberts. That appetite, primarily from China, Russia and Mid East – drawn by the capital’s shopping and rich lifestyle – has helped push new-build home prices up by 56.3% since the start of 2009. The buyers are however increasingly targeting the homes for investment, and are now being joined by buyers from Greece, Nigeria and France looking to protect their wealth from taxes and political uncertainty in their home countries. International buyers spent £2.2bn on new luxury London residential last year, a figure that Samuel Warren, Chesterton Humberts’ head of international residential developments, expects will be exceeded this year. Large new projects, such as the redevelopment of Battersea power station, are helping drive the market. “With demand for prime new build properties set to remain robust and new supply struggling to keep up, we expect investment volumes will be higher this year than last. The relative weakness of sterling means that many overseas buyers can achieve discounts on purchase price whilst acquiring an asset that will almost certainly appreciate considerably .. and which they will have little difficulty in selling.” However, political opposition to London ‘buy-to-leave’ properties is growing, amid fears that workers on lower wages will be pushed out of central districts, and local economies will suffer. Barbara Grahame, Labour’s planning spokesperson for Westminster borough council, said parts of Westminster are turning in to a ghost town. “More ‘buy-to-leave’ luxury apartments are being built and sold as investments for overseas buyers who rarely live there, sucking the life out the West End and contributing nothing to the local community or local economy.” Around Europe, the focus on London as a safe haven comes as some troubled nations ease residency requirements to attract wealthy foreigners to buy property and re-stimulate their housing markets and economies. Spain changed legislation in July to grant residency visas to non-EU nationals spending more than €500,000 on property, a move that grants them free access across the European Union. It follows Portugal, which has also set the same threshold, and Greece and Cyprus at a minimum €250,000 and €300,000 respectively. International investment in Spanish property grew to almost €5.5bn in 2012, according to the Bank of Spain, driven by buyers from Scandinavia and Russia. The change in legislation is expected to drive more interest from Asia and push investment levels past 2012. But some commentators offer stark predictions for the country’s housing market. Angel Serrano, the head of Madrid-based property consultancy Aguirre Newman, said recently residential property prices need to fall by another 20%-25% for housing to become affordable for Spanish workers. pie Continue reading
Emerging Market Rout Threatens Wider Global Economy
The $9 trillion (£5.8 trillion) accumulation of foreign bonds by the rising powers of Asia, Latin America and the emerging world risks going into reverse as one country after another is forced to liquidate holdings to shore up its currency, threatening to inflict a credit shock on the global economy. Fears of Fed tightening have pushed borrowing costs worldwide to levels that could threaten global recovery Photo: AFP By Ambrose Evans-Pritchard 8:38PM BST 22 Aug 2013 India’s rupee and Turkey’s lira both crashed to record lows on Thursday following the US Federal Reserve releasing minutes which signalled a wind-down of quantitative easing as soon as next month. Dilma Rousseff, Brazil’s president, held an emergency meeting on Thursday with her top economic officials to halt the real’s slide after it hit a five-year low against the dollar. The central bank chief, Alexandre Tombini, cancelled his trip to the Fed’s Jackson Hole conclave in order “to monitor market activity” amid reports Brazil is preparing direct intervention to stem capital flight. The country has so far relied on futures contracts to defend the real – disguising the erosion of Brazil’s $374bn reserves – but this has failed to deter speculators. “They are moving currency intervention off balance sheet, but the net position is deteriorating all the time,” said Danske Bank’s Lars Christensen. A string of countries have been burning foreign reserves to defend exchange rates, with holdings down 8pc in Ecuador, 6pc in Kazakhstan and Kuwait, and 5.5pc in Indonesia in July alone. Turkey’s reserves have dropped 15pc this year. “Emerging markets are in the eye of the storm,” said Stephen Jen at SLJ Macro Partners. “Their currencies are in grave danger. These things always overshoot.” It was Fed tightening and a rising dollar that set off Latin America’s crisis in the early 1980s and East Asia’s crisis in the mid-1990s. Both episodes were contained, though not easily. Emerging markets have stronger shock absorbers today and largely borrow in their own currencies, making them less vulnerable to a dollar squeeze. However, they now make up half the world economy and are big enough to set off a crisis in the West. Fears of Fed tightening have pushed borrowing costs worldwide to levels that could threaten global recovery. Yields on 10-year bonds jumped 47 basis points to 12.29pc in Brazil on Thursday, 33 points to 9.72pc in Turkey, and 12 points to 8.4pc in South Africa. There had been hopes that the Fed might delay its tapering of bond purchases, chastened by the jump in long-term rates in the US itself. Ten-year US yields – the world’s benchmark price of money – have soared from 1.6pc to 2.9pc since early May. Hans Redeker from Morgan Stanley said a “negative feedback loop” is taking hold as emerging markets are forced to impose austerity and sell reserves to shore up their currencies, the exact opposite of what happened over the past decade as they built up a vast war chest of US and European bonds. The effect of the reserve build-up by China and others was to compress global bond yields, leading to property bubbles and equity booms in the West. The reversal of this process could be painful. “China sold $20bn of US Treasuries in June and others are doing the same thing. We think this is driving up US yields, and German yields are rising even faster,” said Mr Redeker. “This has major implications for the world. The US may be strong to enough to withstand higher rates, but we are not sure about Europe. Our worry is that a sell-off in reserves may push rates to levels that are unjustified for the global economy as a whole, if it has not happened already.” Sovereign bond strategist Nicolas Spiro said India is “caught between the Scylla of faltering growth and the Charybdis of currency depreciation” as hostile markets start to pick off any country with a large current account deficit. He said India’s central bank is playing with fire by reversing its tightening measures to fend off recession. It has instead set off a full-blown currency crisis that is crippling for companies with dollar debts. India is not alone. A string of countries across the world are grappling with variants of the same problem, forced to pick their poison. Continue reading
