China to buy Kansas

And the award for best April Fool’s I’ve seen goes to... Chris Clayton of DTN:

In a move to help alleviate U.S. debt obligations, China announced a formal offer has been made to the Obama administration to buy Kansas for $2 trillion.

Sources within the administration say negotiations have been going on for weeks with Chinese officials first proposing to buy Iowa. But politically Obama was unwilling to sacrifice the state where he won his first presidential battle in early 2008. Obama was, however, encouraged to part with Kansas even though his mother was from the Sunflower state. A 16-point loss in Kansas in the 2008 general election, coupled with the Kansas Jayhawks and Kansas State Wildcats screwing up the president's NCAA brackets made Kansas a more attractive parcel to sell.

Chinese officials cited Kansas' agricultural output in staples such as wheat and beef, as well as the vast expanse of largely unpopulated and unsettled land.

"This is a (expletive) big deal," Biden said. "Not only can we balance the budget, but we can get Pat Roberts out of the Senate too."

Bravo. The comments are also good.

World Bank seems off on land grab

The World Bank has picked up the land grab issue, but taken a slightly bizarre tack:

Yet little attention has been paid to how these transactions are happening and whether the investors are following the same processes and procedures as normal land lease deals involving foreign individuals or companies.

It seems almost as if they are more worried about Westerners not getting equal access than about the welfare of the citizens of the landed countries. They get back toward this a little bit at the end, but as the World Bank I feel like the effect on country development should be their lead thought on this particular issue.

"Land grab" specifics

FP Passport picks up the IFPRI report on “Land Grabbing” by foreign investors in developing countries and asks the right question:

Is the investment good or bad for the recipient countries?

I think the FAO gets it broadly right in their own recent report ("Land Grab or Development Opportunity", published June 2009):

Increased investment may bring macro-level benefits (such as GDP growth and improved government revenues), and may create opportunities for economic development and livelihood improvement in rural areas.

But as governments or markets make land available to prospecting investors, large-scale land acquisitions may result in local people losing access to the resources on which they depend for their food security – particularly as some key recipient countries are themselves faced with food security challenges.

My only push is, can we make this more specific? (They probably do in their report - it is 130 pages long - but I haven't read it yet.)

Off the top of my head, one huge positive outcome would be major investment in transportation infrastructure like roads and rail to remote areas of Africa - transportation is a huge friction in the value chain and takes a big chunk out of the value many rural farmers can realize for their products. Private sector infrastructure investment would be nice, but most of these regions are not seen as stable enough to attract it in the short term; country governments lack the money, political will, and/or capability; and the new international food aid paradigm appears more focused on agricultural productivity and seems unlikely to devote major dollars to infrastructure. So if Saudi Arabia or China can build and pay for roads and rails, it will benefit many.

On the other hand, the food security concern is well-founded, particularly because it will bite at the exact same time the "land grabbers" are most determined to export the production (i.e., a food price crisis and market breakdown like 2007/8). Saudi Arabia did not buy 500,000 hectares in Tanzania for the 95% of the time when the grain they desire is readily available on the world food market; they bought the land for the 5% of the time when prices have spiked and trade barriers have risen. Unfortunately, this will be exactly when Tanzanians themselves have food security issues; in this sense, food security is a zero-sum game and the "land grab" investments are neo-colonial in the sense that they appropriate local resources for rich-country consumption in the circumstances where it matters most.