Agrofuel production is one of the main drivers of the global rush for land, shows a new study by the GIGA.
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Agrofuel production is playing a key role in the purchasing and leasing of large agricultural areas in developing and emerging countries. Approximately 23 per cent of all known land acquisitions in which international investors have holdings are geared towards the cultivation of plants used for the production of agrofuels. This, according to an investigation conducted by researchers at the German Institute for Global and Area Studies (GIGA). The study’s results are based on data from the "Land Matrix" online platform, which also shows there has been a particular hype recently about the oilseed-bearing plant jatropha.
The Land Matrix is an independent initiative that observes, and continuously collects and assesses data on, large-scale land acquisitions. The information gained is linked to and published on the open data platform at www.landmatrix.org. The platform contributes to increasing the transparency and accountability of land acquisitions. The initiative is coordinated by several international research institutes and organisations, among them the GIGA.
Currently, 956 finalised land deals (covering 36 million hectares of land) with international holdings are listed in the Land Matrix. Projects that include plants intended for agrofuel production are set to cover approximately 23 per cent of this land. With 1.5 million hectares, companies from Great Britain lead the way with the largest area acquired by firms of any state. Areas of sub-Saharan Africa, in particular, are attracting the interest of international investors.
Jatropha: From Blessing to Curse
There has recently been a palatable hype surrounding the planting of jatropha. Jatropha is a plant whose seeds contain significant amounts of oil. It has been lauded as a sustainable alternative to agrofuels made of soy, cane sugar and palm oil because it also grows in dry savannahs. In those areas it should present no competition for food cultivation.
The Land Matrix data show that jatropha projects nevertheless fail relatively often. Agrofuel projects require a lot of start-up capital and a degree of endurance to achieve high profits. In the past several years, the market has attracted many investors who had hoped for quick returns but probably lacked key experience in agrofuel production. Particularly in the case of jatropha there seem to be only very few experienced producers.
New Wave of Agrofuel Investment
All in all, the market around the manufacture of agrofuels seems to be stabilising: "We believe that 'cowboy investors' are turning their back on the market because of difficult investment conditions. But investors who have weathered the dry spell will stay on a more permanent basis", say the study’s authors. "The advancement of renewable energies remains a priority in many countries. The demand for agrofuels is expected to stay on course, perhaps even leading to a new wave of agrofuel investment."
Download the study:
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
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