June 03, 2010
Like a Rolling Stone
I picked up last week’s Rolling Stone for its cover story on the reissue and forthcoming documentary of Exile on Main St., but another story listed on the cover piqued my interest as well: “Capitalists of Chaos: Who’s Cashing in on Global Warming?”
As it turns out, this long piece is about the current wave of international investment in land that is or will continue to be arable and productive in the face of the effects of climate change. The thinking is that arable land is becoming squeezed by population and consumption trends, and that food and its production will become increasingly valuable. We’ve covered this a few times on the blog and in our publications, but not nearly to the depth this article presents – its author, McKenzie Funk, is writing an entire book on the subject.
Much of the article is focused on one man, Phil Heilberg, a former Wall Street commodities trader whose vision of future wealth centers on tracts of land he is purchasing in places such as southern Sudan. In style and content, it is not unlike reading about the international arms trade, and Funk focuses on Heilberg as one of the major forces in this growing industry much the way Viktor Bout was for his arms dealings. (While it is important to profile leaders within these often gray-market industries, like Bout, much of the Heilberg focus seems to derive from his openness in speaking with reporters rather than from him being the most important player.)
At first, the deal-making with African strongmen and tribal leaders for land seems shady. But as Heilberg explains, that’s the way things work in places like Sudan – you make deals with whomever you need to, or not at all. Heilberg operates within the existing system rather than requiring social or political change as a precondition for business. This is often one of the issues raised with China’s dealing in minerals, land and energy in Africa as well, but it is somehow less stark to read about it in the form of person-to-person transactions than in examining the issue at a country level. The article raises the question of whether modern ways of resource trading in the world are creating a new paradigm for international behavior at all levels that U.S. security analysts do not yet have a grasp on.
The corporate side of this world is also covered, though in brief. Funk identifies several major corporations in on the game of investing in the world’s farmland: Agcapita; Agrifirma; Landkom; Black Earth; and Pergam Finance. The investment levels, however, seem lower than one would expect - $250 million, $70 million, $20 million. Nor are they all in developing countries in Africa and Southeast Asia; the United Kingdom, Uruguay, Argentina, Brazil, Canada, Russia and Ukraine are all areas of land investment for profiting on food production in the climatically-changed future.
What does all of this mean for national security for the future? My money is on us not knowing, especially after reading this article. Land and agriculture were only mentioned 3 times in the new National Security Strategy, compared to 49 for energy and 28 for climate change, so it seems we have a ways to go in putting our finger on what this land-purchasing trend means for security. Heilberg (and corporations and countries behaving as he is in the global market) may turn out to benefit world food security better than UN programs and biotech firms combined. Maybe not. Either way, this article makes clear that we don’t yet have a good sense of the costs or benefits.