Benzinga Radio: Goldman and JPMorgan Purchase Arable Land in Africa, 20-40% Returns Expected

Finance heavyweights like Goldman Sachs and JPMorgan are purchasing huge tracts of farmland in several African countries. The Oakland Institute, a California-based policy thinktank, is publishing a series of reports on the land grab. Benzinga Radio's Luke LaVanway and Matthew Boesler spoke with the Institute's director, Anuradha Mittal, to get the details on the acquisitions. “It is the most fertile land – close to transport, close to infrastructure, close to water – that is in demand. And the deals are amazing. You'll see a 99-year lease for $1.50 per hectare, with full water rights,” Mittal reports. The land is fertile, but farming has historically provided returns of only 5-6%, so crop-growing potential alone doesn't explain the interest here. According to Mittal, the banks anticipate a property bubble in Africa that will allow them to sell off their recent acquisitions in a few years' time for large gains. That may not seem like a particularly dodgy plan at first glace. But as Mittal explains, the land purchases are displacing significant sections of the local population. And since it is primarily farmland that foreign investors are interested in, countries like Mali, Sierra Leone and Ethiopia are losing their food security as they sell land tracts. Government officials are more than willing to look the other way, but will Africans take matters into their own hands when faced with the loss of homes, land, and food sovereignty? “People are not just packing up and moving – they're fighting back,” Mittal says.