Food or fuel - the role of agrofuels in the rush for land

Abstract

The production of agrofuel crops is believed to be playing a decisive role in the so-called "land rush," the international scramble for arable land in developing and emerging countries. Reports of an alarming wave of land acquisitions due to "agrofuels hype" initiated by agrofuel investors have made headlines in recent years. The potential merits and dangers of agrofuel production are the subject of heavy debate, with food-security concerns and environmental impacts fueling the controversy. Analysis Based on data from the Land Matrix Global Observatory, our analysis assesses the role of agrofuel production in the "rush for land" and sheds light on the often-nontransparent investment process of agrofuel projects. We find that these projects account for an important share of the global demand for land. However, the "agrofuels hype" is over. Land deals with the intention of cultivating agrofuel crops are particularly prone to failure, especially early on in the projects. We expect that the investors that have survived this first period of investments are here to stay, and that "cowboy investors" have been turned off by difficult investment environments in low- and middle-income countries. Agrofuel production is one of the main drivers of the global rush for land. Twentythree percent of the concluded transnational deals currently recorded in the Land Matrix include plants intended for agrofuel production. Sub-Saharan Africa appears to be the most heavily favored region for agrofuel investments. European investors top the rankings of investor countries for agrofuel projects. Agrofuel crops require huge initial investments and take several years to yield returns. In difficult investment environments, agrofuel projects require experienced and serious investors in order to be successful. Jatropha projects have a particularly high record of failure.