The global search for land

Indian edible oil companies are said to be scouting around internationally for buying or leasing farms to grow oilseeds. This is an innovative way to deal with India's perennial need for imports, and as a way of both reducing costs and ensuring regular supplies. India happens to be one of the world's largest edible oil importers, and is likely to remain so for the foreseeable future. With the country's laws on land holdings making it difficult, if not impossible, for business houses to acquire land for captive cultivation, companies have necessarily to look for land elsewhere. And if they can manage to do so in the countries from where they are already sourcing imports and where land is abundant and cheap, it helps them to cut costs as well. This should explain why some edible oil firms have either bought or are negotiating to acquire oil palm plantations in Indonesia, a key exporter of palm oil to India. The same motive of ensuring supplies at competitive prices has spurred the Solvent Extractors' Association to visit the South American region and explore the possibility of producing other oilseeds, notably soyabean, either directly or through contract farming.

Indian companies engaged in this are in fact late-comers to the party, following in the footsteps of their counterparts from other countries, such as the United States, Japan, China and the European Union. As such, they have merely joined the global trend to move out to greener pastures in the pursuit of captive cultivation. The others' interest, of course, is largely in raising crops like sugarcane, for conversion into ethanol and for doping vehicular fuels. Not to be left behind, some Indian oil majors have also chalked out strategies to either set up new ethanol factories or acquire existing ones in order to source alcohol supplies for mixing with petrol, as mandated by the government. Countries like Brazil, Argentina, Uruguay and Paraguay, among others, have become the favourites for investing in farming because of their plentiful availability of land, water and sunshine. That land prices are far lower in these countries than in the industrialised or more populous developing countries is an additional factor in their favour. The resource-rich Amazon region in Brazil has already witnessed a heavy inflow of foreign investment into farms and farming. Governments are usually not thrilled by outsiders coming and buying up farmland, and so curbs have been put on land acquisition by outsiders, but many foreign companies have discovered ways to circumvent these attempts by using local firms as a front.

In India, the per capita availability of cultivable land, always low because of the large rural population, has shrunk dramatically from 0.48 hectare in 1950 to just 0.15 hectare in 2000, the latest year for which authentic data are available. Matters would have got worse since then, because of the extent of land taken out of cultivation in recent years for setting up special economic zones, real estate projects, industries of all kinds, and other purposes, including bio-fuel (jatropha) plantations. Getting hold of land in other countries is therefore a matter that has gained rapidly in importance.