About 23 per cent of known land-acquisition deals involving international investors aim to cultivate crops to obtain agrofuels. This is the finding obtained by scientists of the German Institute of Global and Area Studies GIGA, investigating data from the online platform Land Matrix.
Land Matrix is an independent initiative which continuously collects and analyses information to monitor large-scale investments in land. The linked information is published on the open-data platform www.landmatrix.org.
As the GIGA scientists state, the platform serves to provide transparency and accountability in decisions over land acquisition. The initiative is coordinated by several international research institutes and organisations, including GIGA. Some 956 concluded land deals (36 million hectares of land) with international participation are currently listed in Land Matrix. The study states that 23 per cent of this area is used purely or partially to cultivate agrofuel crops. Areas in sub-Saharan Africa are a particular focus of international sponsors. Investors from Great Britain, with 1.5 million hectares worldwide, were holding the largest areas compared to contracting companies from other countries.
There has been a real hype recently concerning jatropha cropping, write the scientists. Jatropha has oil-rich seeds. It is touted as a sustainable alternative to agrofuel from soya, sugarcane and palm oil because it grows in dry savannahs where it does not compete with food crops. The Land Matrix data indicate, however, that jatropha projects have a comparatively high failure rate. Agrofuel projects need considerable start-up capital and a great deal of patience before they become profitable, report the GIGA experts. In recent years the market has brought in numerous investors hoping for early profits but having little experience in agrofuel production. Jatropha projects in particular seemed to attract very few experienced producers. 15 per cent of the projects were therefore discontinued.
New wave of agrofuel investments
Overall, the agrofuel production market seems to be stabilising. The authors write: "We assume that “cowboy investors” have been turned off by difficult investment environments in low- and middle-income countries and that those investors that have survived this first period of investments are here to stay. Since agrofuel policies still rank high on the national agendas, there may be continued demand for agrofuels or even a new wave of agrofuel investments. “
Kerstin Nolte, Martin Ostermeier, Kim Schultze, Food or fuel – The role of agrofuels in the rush for land, GIGA Focus International Edition English, 05/2014