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How the pandemic impacted rainforests in 2020: a year in review

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  • 2020 was supposed to be a make-or-break year for tropical forests. It was the year when global leaders were scheduled to come together to assess the past decade’s progress and set the climate and biodiversity agendas for the next decade. These included emissions reductions targets, government procurement policies and corporate zero-deforestation commitments, and goals to set aside protected areas and restore degraded lands.
  • COVID-19 upended everything: Nowhere — not even tropical rainforests — escaped the effects of the global pandemic. Conservation was particularly hard in tropical countries.
  • 2019’s worst trends for forests mostly continued through the pandemic including widespread forest fires, rising commodity prices, increasing repression and violence against environmental defenders, and new laws and policies in Brazil and Indonesia that undermine forest conservation.
  • We don’t yet have numbers on the degree to which the pandemic affected deforestation, because it generally takes several months to process that data. That being said, there are reasons to suspect that 2020’s forest loss will again be substantial.

Previous rainforest year-in-reviews:
The 2010s | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2009

Like virtually everything in 2020, COVID-19 defined the year for tropical rainforests.

2020 was supposed to be a make-or-break year for tropical forests. It was the year when global leaders were scheduled to come together to assess the past decade’s progress and set the climate and biodiversity agendas for the next decade. These included emissions reductions targets, government procurement policies and corporate zero-deforestation commitments, and goals to set aside protected areas and restore degraded lands. These meetings were to be set against a backdrop of a “lost decade” for tropical forests, where progress on arresting deforestation fell short of ambitions, violence against environmental defenders surged, the effects of deforestation and climate change on forests became more apparent, and outright hostility toward tropical forest conservation grew in some of the world’s largest countries. Yet there were reasons for cautious optimism for tropical forest conservation coming out of the 2010s. The impacts of climate change were becoming so apparent that they were finally starting to provoke a response from the public and private sector; recognition of the role Indigenous peoples play in stewarding forests was rising; technological advances were improving forest monitoring to the extent that ignorance was no longer an excuse for inaction; and interest in forest restoration was reaching new heights.

Sunrise over the Amazon rainforest
Sunrise over the Amazon rainforest. Photo by Rhett A. Butler

COVID-19 upended everything: Nowhere escaped the effects of the global pandemic. As COVID spread around the world between February and April, many governments responded with lockdowns, which brought travel, commerce, and industrial production to a halt. Stock markets plunged, the skies above some of the world’s most polluted cities cleared, and carbon emissions fell at a rate unprecedented since World War II. Governments in some countries pumped money into their financial systems, buoying stock markets and kick-starting a euphoric surge in asset values. The price of many commodities that are major drivers of tropical deforestation rebounded sharply. As the lockdowns yielded to pressure to reopen economies and societies, some governments put forth bailouts, economic stimulus packages, and other incentives for forest-destroying industries. Millions of people left cities for the countryside, reversing a long-term trend of migration to urban areas.

Conservation was particularly hard hit in tropical countries. Many NGOs pulled out of field projects, conservation livelihood models dependent on ecotourism and research evaporated, and governments in countries like Brazil and Indonesia relaxed environmental regulations and law enforcement, unleashing a spasm of illegal logging, mining, land invasions, and forest clearing. Deforestation in Brazil, which was already trending upward before COVID, hit the highest level since 2008.

2019’s worst trends for forests mostly continued through the pandemic. Fires in Australia that began in mid-2019 burned into March, while drier-than-normal conditions in the Amazon enabled another active fire season. Governments used COVID as an excuse to crush dissent and critical voices, or were too distracted by the crisis to address rising violence against environmental and human rights defenders, more than 300 of whom were killed in Colombia alone. Social media platforms like Facebook continued to be weaponized against environmental journalists and campaigners.

Flooded forest in the Amazon
Flooded forest in the Amazon. Photo by Rhett A. Butler

But as the losses mounted and the world descended into darkness, there were green shoots of hope for environmentalists. Lockdowns provided a tantalizing glimpse into a world with a diminished human footprint and the potential for humanity to come together around a common threat — the kind of unified action needed to address climate change, for example. Skies and rivers cleared, traffic disappeared, and wildlife reclaimed haunts long ago ceded to cars and people. Observers looking for a silver lining hoped that the pandemic would force humanity to reevaluate its relationship with nature, potentially driving a shift toward a more sustainable, resilient, and equitable economic system. Interest in renewable energy, regenerative agriculture, and the circular economy blossomed. A protest movement emanating from repeated extrajudicial killings of Black and Indigenous peoples in the United States and abroad resonated from Milwaukee to Merauke, spurring calls for change and pushing many conservation organizations, especially in Europe and the U.S., to take a hard look at issues of equity, justice, and inclusiveness.

The U.S. presidential election in November raised hopes that the world’s biggest economic power would reassert a leadership role on global affairs, including rejoining the Paris climate agreement. The rapid development of COVID-19 vaccines raised the prospect of the world returning to “normal” far faster than was envisioned at the start of the pandemic. But no one knows what would a return to normalcy would mean for the world’s rainforests.

The big picture

According to satellite data, deforestation of tropical primary forests has been trending upward since 2000, with the average loss in the 2010s nearly 30% higher than the 2000s, despite global efforts to curb deforestation. The second half of the 2010s had the highest rate of loss during the period, registering about 50% higher than 2010-2014. The three years with the highest extent of primary tropical forest loss in the past 20 years occurred in 2016, 2017, and 2019.

Tropical forests are declining around the world. Graphic by Mongabay; data from Global Forest Watch / Hansen 2020.
Tropical forests are declining around the world. Graphic by Mongabay; data from Global Forest Watch / Hansen 2020.

We don’t yet have numbers on the degree to which the pandemic affected deforestation, because it generally takes several months to process that data. A couple of studies attempted to quantify loss in the first few months of the pandemic using unconfirmed alert data from the University of Maryland and Global Forest Watch. But because the data are unconfirmed, the analyses cannot be used to compare loss to prior years, limiting their utility. We should expect updated data to be released in the first quarter of 2021.

That being said, there are reasons to suspect that 2020’s forest loss will again be substantial, not the least of which is because deforestation in the Brazilian Amazon — which accounts for more than 60% of Earth’s largest rainforest — has been pacing ahead of last year. The pandemic has resulted in several conditions that would be expected to favor a rise in deforestation. Prices for most major commodities that drive deforestation, including palm oil, soy, and timber, have increased since the start of the year. The exceptions are beef and fossil fuels, but fossil fuel extraction itself is not a major direct driver of deforestation; instead, it tends to be the roads and infrastructure associated with energy development that drive deforestation. The sharp rise in the price of minerals and agricultural commodities will incentivize infrastructure expansion, despite the decline in energy prices. Additionally, government stimulus in tropical countries, where it exists, has been oriented toward infrastructure and supporting existing industries. Stimulus may include direct financial transfers as well as policy interventions, like reducing environmental regulations and making it easier to secure new concessions. Government priorities have also shifted to health and social programs, diverting resources from environmental law enforcement. Another impact of COVID-19 has been to reverse the long-term rural-to-urban migration. This trend, which may not be sustained long after the pandemic, would be expected to increase pressure on forests for small-scale agriculture.

Price change between Jan and Dec 2020 for commodities that drive deforestation in the tropics. Data from the World Bank.
Price change between Jan and Dec 2020 for commodities that drive deforestation in the tropics. Data from the World Bank.

In ‘the Before Times’

While the pandemic set the tone for 2020 from March onward, there were some significant developments for tropical forests during first few months of the year.

2020 opened with bushfires continuing to rage across eastern Australia after breaking out in September 2019. By the time Australia’s “Black Summer” was over in March, about 18.6 million hectares (46 million acres) of land had burned, including 80% of the Blue Mountains near Sydney and 50% of Gondwana World Heritage rainforests in New South Wales and Queensland.

At the World Economic Forum in Davos in January, U.S. President Donald Trump jumped on the tree-planting bandwagon that gained traction in 2019, announcing that the U.S. would join the “One Trillion Trees Initiative,” an effort to combat climate change by planting trees. He followed that up by mentioning tree planting during his State of the Union address in January. Critics noted, however, that the Trump administration’s policies throughout his presidency have been strongly at odds with efforts to protect and restore forests.

In February, Pope Francis released “Querida Amazonia,” an apostolic exhortation calling for the protection of the Amazon rainforest and improving the quality of life for people in the region, among other points. The document won plaudits from some environmentalists and Indigenous rights advocates, but drew the ire of Brazilian President Jair Bolsonaro.

Chief Raoni presiding over debates in Piaraçu. Image by Rafael Forsetto.
Chief Raoni presiding over debates in Piaraçu. Image by Rafael Forsetto.

Concerns over Bolsonaro’s policies and heated rhetoric against Indigenous peoples brought together more than 600 leaders from 47 Amazonian tribes in February. The meeting, called by 89-year-old Kayapó Chief Raoni Metuktire, produced the Piaraçu Manifesto, which denounced the Brazilian government’s efforts to open the Amazon to more mining, logging, and industrial agriculture, and promote more roads, dams, and other large-scale infrastructure in the region.

The impact of coronavirus on rainforests

Coronavirus spread to the extent that by mid-March many governments around the world were issuing shelter-in-place orders, which peaked on April 7. Lockdowns triggered a global freeze on travel, collapsing conservation business models based on ecotourism or visits from researchers, and prompting international NGOs to retreat from many field sites. Law enforcement evaporated in some places, resulting in an increase in illegal activities, including logging, poaching, invasions of Indigenous lands and protected areas, and forest clearingaccording to some accounts. Panic buying of gold triggered a surge in the price of the precious metal, ushering in gold rushes in tropical forests around the world, especially in the Amazon.

Gold mining in the Peruvian Amazon. Photo by Rhett A. Butler.
Gold mining in the Peruvian Amazon. Photo by Rhett A. Butler.

Some governments responded to the economic crisis resulting from the pandemic by plowing stimulus money into industries that drive deforestation and forest degradation while also relaxing enforcement of environmental laws. For example, Indonesia passed sweeping deregulation legislation that benefited palm oil, timber, and mining companies, while in some places, companies that were suspected to have engaged in illegal forest activities secured stimulus money.

The pandemic derailed the high-level meetings on climate and biodiversity. But while the meetings were canceled or postponed, civil society and some governments were undeterred, proceeding with the release of publications and reports on the need to take urgent action to address climate change and the extinction crisis.

If there was any silver lining to be found in the carnage caused by the pandemic, it was that COVID forced the public to reckon with the fact that many zoonotic diseases emerge from human-livestock-wildlife interactions, which are often exacerbated by environmental degradation, industrialized farming, and the wildlife trade. A report from the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) evaluated humanity’s role in creating conditions that enable pandemics and warned that COVID-19 may just be a preview of what’s to come if our behavior doesn’t change. Some scientists cautioned that the next pandemic could emerge from the Amazon due to the extent of ecosystem disturbance and the scale of livestock production in the region. Conservationists urged governments to put conservation at the center of COVID-19 recovery efforts.

Open season on environmental defenders

COVID-19 enabled and emboldened crackdowns on environmental defenders, which were already worsening going into 2020. In July, Global Witness announced that 2019 was the deadliest year ever for environmental activists, with 212 deaths recorded. 2020 appears to have far surpassed that record, with 300 killings of environmentalist and human rights advocates reported in Colombia alone through mid-December. High-profile murders ranged from monarch butterfly defender Homero Gómez González in Mexico in February to a massacre of 12 wildlife rangers in DRC’s Virunga National Park in April.

Read more: Notable deaths in conservation in 2020

A difficult year for Indigenous communities in the Amazon and beyond

Beyond the apparent uptick in violence, Indigenous communities around the world struggled to deal with the impact of COVID-19. Early in the pandemic, there were cases of Indigenous peoples in the Amazon being stranded in cities like Iquitos and Manaus due to lockdowns. Deprived of the ability to return to their villages and without access to quality health care, many died alone, far from home. With the death of Indigenous elders from COVID, communities lamented the irreplaceable loss of traditional knowledge. Some Indigenous groups closed off access to their lands in an effort to protect themselves from infection. Isolated communities are particularly vulnerable to diseases like COVID-19.

On the other end of the spectrum, evangelical missionaries from Ethnos360, formerly known as the New Tribes Mission, and Frontier International responded to the pandemic by allegedly attempting to establish contact with isolated Indigenous groups in the Javari Indigenous Reserve in March. Such activity is prohibited by Brazil’s constitution. The Bolsonaro administration attempted to appoint Ethnos360 missionary Ricardo Lopes Dias to lead the department of isolated and recently contacted Indigenous tribes under Brazil’s federal Indigenous affairs agency, Funai.

Lack of law enforcement in Brazil reportedly emboldened speculators to invade Indigenous lands, including territories demarcated for the Karipuna, Guajajara, Aptereua, Ituna Itatá, and Apyterewa tribes, among others. A report from the Socioenvironmental Institute (ISA), a Brazilian NGO, said the Brazilian government was failing to protect the Yanomami from invasions by illegal gold miners.

Indigenous Tikuna man in the Amazon rainforest. Image by Rhett A. Butler
Indigenous Tikuna man in the Amazon rainforest. Image by Rhett A. Butler

Indigenous communities continued to report troubles getting their land officially demarcated. In April, Brazil’s Funai opened 98,000 square kilometers (38,000 square miles) of as-yet-unrecognized Indigenous areas to outsider land claims made within Indigenous territories that are still going through the demarcation process. Funai’s move was immediately countered in court, but an investigation by the news outlet Agência Pública found that 114 properties spanning more than 250,000 hectares (618,000 acres) have been certified inside Indigenous territories awaiting demarcation in the Brazilian Amazon. Some of the properties were authorized before Funai had finished its required review process. For example, the Indigenous Munduruku communities in Pará complained of forest clearing for industrial soy on their traditional land.

It wasn’t all setbacks for Indigenous peoples in Brazil in 2020. In March, a federal judge ordered government websites to publish a letter from the Kinja Indigenous people for 30 days as part of their right of response to a series of racist and incendiary remarks from the Bolsonaro administration. In April, a group of Ashaninka received an official apology and about $3 million for logging of their lands in the 1980s by the family of the current governor of Acre state. The settlement came after a 14-year legal battle that reached the federal Supreme Court in 2011. In July, a federal judge ordered the Brazilian government to remove 20,000 gold miners who had illegal invaded the Yanomami reserve.

Celebration of the Ashaninka people in the Kampa of the Amônia River Indigenous Reserve, by the Peruvian border. Image by Arison Jardim/The Ashaninka of the Amônia River Association.
Celebration of the Ashaninka people in the Kampa of the Amônia River Indigenous Reserve, by the Peruvian border. Image by Arison Jardim/The Ashaninka of the Amônia River Association.

Rieli Franciscato, a field expert with Funai, was killed in September on the edge of the Uru-Eu-Wau-Wau Indigenous Territory in Rondônia state. Franciscato, 56, worked to protect the rights and territory of Indigenous peoples living in voluntary isolation in the Amazon rainforest. He was thought to have been killed by a band of “uncontacted” Wau-Wau who, due to previous violent encounters with outsiders invading their lands, wouldn’t have known that he was working on their behalf.

Indigenous peoples’ advocates warned that the Piripkura Indigenous Territory may not survive beyond 2021 as the tribe’s population dwindles. Indigenous peoples themselves said COVID-19 represented an existential threat to some communities.

The Arns Commission, a human rights body, sent a petition to the International Criminal Court demanding an investigation into the Bolsonaro administration’s attacks on Indigenous rights, arguing that its policies could constitute “genocide” if they wipe out isolated tribes.

Indigenous peoples and conservation

Recognition of the role Indigenous peoples and local peoples play in stewarding forests has been growing in conservation circles over the past decade, leading NGOs, U.N. bodies, and other actors to become stronger advocates for Indigenous rights.

In 2020, several studies further bolstered the idea that empowering Indigenous peoples is an effective approach to combating climate change and achieving biodiversity conservation goals.  A paper published in Frontiers in Ecology and the Environment in January found that Indigenous lands hold 36% or more of remaining intact forest landscapes; while a Proceedings of the National Academy of Sciences study published the same month concluded that 90% of the Amazon rainforest’s carbon emissions between 2003 and 2016 came from outside Indigenous territories and protected areas. Another PNAS study, published in August, demonstrated the importance of secure land tenure, finding that forest cover was more effectively maintained in Indigenous territories that were officially demarcated. A study by the Center for International Forestry Research (CIFOR) found a similar result when evaluating community forest enterprises in Mexico, Guatemala, Nepal and Namibia.

Papuan girl swims in Kali Biru in the Knasaimos landscape in Teminabuan, South Sorong, West Papua. Credit line: © Jurnasyanto Sukarno / Greenpeace
Papuan girl swims in Kali Biru in the Knasaimos landscape in Teminabuan, South Sorong, West Papua. Credit line: © Jurnasyanto Sukarno / Greenpeace

In November, the Rights and Resources Initiative published a paper arguing that it won’t be possible to stave off the collapse of biodiversity without respecting the tenure and human rights of Indigenous peoples, local communities, and Afro-descendants.

Time magazine named Waorani leader Nemonte Nenquimo one of its 100 most influential people of 2020 for her efforts to defend her people’s territory in the Ecuadoran Amazon.

Community forest enterprises in Mexico were hard hit by the pandemic.

Recognizing social and racial injustice

Protests over police brutality in the U.S. spread well beyond its borders, forcing a reckoning on systemic racism, social injustice, and colonial legacy in a wide range of sectors, including conservation organizations, environmental NGOs and academic institutions. The #BlackLivesMatter movement in the U.S. resonated with communities from the Amazon to Indonesian Papua, sparking solidarity movements and actions.

In November, WWF released the results of a review conducted by an independent panel into long-running allegations that the conservation giant failed to address human rights abuses by rangers in Central Africa and South Asia. The report revealed that WWF knew of the allegations but “decided not to publish commissioned reports, to downplay information received, or to overstate the effectiveness of its proposed responses.”

Destabilization of the Amazon

The pandemic did not provide a reprieve for Earth’s largest rainforest, where deforestation continued its upward trend through 2020. In November, the Brazilian government announced that deforestation for the 2019/2020 year topped 11,000 square kilometers (4,200 square miles), reaching a 12-year high. There were indications that deforestation was also rising in Peru, Venezuela, and Bolivia.

Annual deforestation in the Brazilian Amazon from 2008-2020 according to INPE.
Annual deforestation in the Brazilian Amazon from 2008-2020 according to INPE.

There were plenty of signs that the increase in deforestation in Brazil was not an aberration or a trend that was likely to reverse in the near term. The Bolsonaro administration pushed new infrastructure projects that could lock in pressure on forests for decades, like the Ferrovia Paraense (FEPASA) railwayAmazon river ports to facilitate increased trade with China, the reconstruction of the BR-319 highway, which would open up the largest block of the Brazilian Amazon to deforestation; the Trans-Purus road, which would cut through heavily forested areas including the Apurinã do Igarapé São João Indigenous Territory; and extending the BR-13 highway 1,000 kilometers (600 miles) to Suriname through the Trombetas State Forest. The Bolsonaro administration also took steps to open large areas to extractive industries, including oil and gas extraction and mining. A study by the World Resources Institute (WRI) and the Amazon Geo-Referenced Socio-Environmental Information Network (RAISG) found that more than a fifth of Indigenous territory in the Amazon is already affected by mining. Mining companies, including Vale, continue to bid to mine on more Indigenous lands.

With cabinet ministers suggesting the administration use the pandemic as a way to distract public attention from sweeping deregulation efforts, Bolsonaro dismantled environmental regulationsrelaxed enforcement of environmental laws, moved to hand over deforestation and fire monitoring from civilian agencies to the military, and continued to replace civil servants and scientists in government positions with cronies, who in some cases had a history of working against the agencies they would be managing. Bolsonaro also continued to use heated rhetoric against critics of his environmental policy, even appearing to threaten the use of force against the United States if the incoming administration of president-elect Joe Biden tried to impose sanctions for ongoing deforestation. Bolsonaro proved hesitant to address violence against environmental defenders that followed in the wake of his heated rhetoric against activists, contributing to a sense of impunity among land invaders and illegal loggers.

Bolsonaro’s efforts often faced headwinds from independent public prosecutors, state-level governments, and the courts. For example, several lawsuits were filed to reverse the administration’s actions to ease exports of illegally logged timber and restart the suspended Amazon Fund, while a judge blocked the appointment of a controversial missionary to head Funai’s department for isolated and recently contacted Indigenous tribesPublic outcry generated from press reporting on controversial decisions was also at times an obstacle for the administration. Officials from prior administrations also put up resistance: 17 former Brazilian finance ministers and central bank presidents in July signed a letter criticizing Bolsonaro’s policies in the Amazon.

After worldwide condemnation of the Bolsonaro administration’s handling of fires in 2019, which tarnished the reputation of Brazilian business and produced threats of international sanctions against Brazilian exports, there was hope among environmentalists this year’s fire season would be better managed. But that didn’t prove to be the case, with hundreds of fires burning through forests, including protected areas, Indigenous territories, and areas set aside for “uncontacted” tribes. Progressively drier conditions across vast swaths of the Amazon means that the use of small-scale fires for slash-and-burn agriculture now risks igniting forest fires.

Heat spots in areas with Prodes warnings (2017-2019). Area next to the borders of the Kaxarari Indigenous territory, in Lábrea, Amazonas state. Taken 17 Aug, 2020. CREDIT: © Christian Braga / Greenpeace
Fires on the border of the Kaxarari Indigenous territory, in Lábrea, Amazonas state. Taken 17 Aug, 2020. CREDIT: © Christian Braga / Greenpeace

Again under pressure from the international community, investors, and some Brazilian companies for failing to curtail the burning, Bolsonaro decreed a 120-day Amazon fire ban early in the dry season and called in the military to help combat the burning. While the fire ban criminalized burning, by the end of November, 2,250 major fires had been detected by the Amazon Conservation Association’s MAAP Initiative. Forty percent of these were classified as forest fires, burning more than 2 million hectares (5 million acres) of forest. Twelve percent of the fires occurred within Indigenous territories and protected areas.

The rise in deforestation in the Brazilian Amazon meant Brazil would miss its 2020 goals under the Paris climate agreement. Greenhouse gas emissions rose 9.6% in 2019, the first year of Bolsonaro’s presidency.

Scientists have been warning for more than 20 years that the combination of deforestation, forest degradation, and climate change could trigger a rapid shift of large swaths of the Amazon from rainforest to dry woodland akin to the neighboring Cerrado savanna. While various thresholds and time frames have been proposed for when the tipping point would occur, there were growing signs that a transition may already be underway. The evidence includes diminished moisture in parts of the Amazon, rising temperaturesincreased die-off of trees, and the appearance of dry-forest species in rainforests in the southern Amazon. Several studies and reports warned of the potential impact of such a transition, including drying in other parts of Brazil with knock-on effects for agriculture and energy production, and the Amazon shifting from a net carbon sink to a carbon source. And what’s happening in the Amazon seems to also be occurring in other tropical forests, from Borneo to the Congo.

Fire near the Branco river in the Jaci-Paraná Extractive Reserve, in Porto Velho, Rondônia state. Taken 16 Aug, 2020. CREDIT: © Christian Braga / Greenpeace
Fire near the Branco river in the Jaci-Paraná Extractive Reserve, in Porto Velho, Rondônia state. Taken 16 Aug, 2020. CREDIT: © Christian Braga / Greenpeace

Against the backdrop of fires, rising forest loss, and increasingly dire warnings from scientists about the fate of the Amazon, journalists and NGOs continued to investigate and expose the actors driving deforestation in the region. The cattle, soy, and timber sectors were also subject to numerous reports and articles, which showed their culpability in driving the Amazon’s destruction as well as alleged illegal activity in some cases. The focus also widened in 2020 to look more at the banks, asset managers, and financial institutions that provide the funding to enable deforestation. A study published in the journal Science found that only about 2% of producers are responsible for the majority of illegal deforestation in the Amazon rainforest and Cerrado savanna.

Indonesia

2020 may come to be seen as a pivotal year for Indonesia’s forests. Deforestation in Indonesia has slowed since 2016, but the Indonesian government pressed forward on policies and projects that could become major drivers of deforestation for decades to come.

The year started off on a hopeful front from a forest conservation standpoint, building off a December 2019 decision by Indonesia’s Supreme Court to strike down a legal provision that effectively allowed plantation companies to operate illegally inside protected forests; the Indonesian government filing suit against plantation companies linked to peat fires in 2019; and President Joko Widodo, or “Jokowi,” calling for stronger action to address fires. In February, a state administrative court ruled that Indonesia’s agrarian ministry had to release detailed maps of oil palm plantations, including information about ownership, for concessions in the provinces of West Papua and Papua, which are viewed as the last frontier for large-scale deforestation in Indonesia. Such data is typically shielded from public view. Shortly thereafter, Luhut Pandjaitan, the coordinating minister for maritime affairs and investment, declared there would be no new permits approved for oil palm plantations in the region. That was followed by South Korea’s POSCO, which has been linked to large-scale deforestation in Papua for oil palm between 2012 and 2018, committing to a “no deforestation, no peatland, no exploitation” (NDPE) policy for its Papua operations.

Annual tree cover loss in Indonesia since 2001, according to Hansen / WRI 2020.
Annual tree cover loss in Indonesia since 2001, according to Hansen / WRI 2020.

At the same time as these developments however, there was a darker undercurrent in Indonesia: the creeping authoritarianism of the state, including rising militarization, weakening of oversight bodies like the anticorruption agency, crackdown on dissent, and targeting of civil society organizations and journalists. On this latter front, 2020 opened with Indonesia’s environment ministry terminating its forest conservation partnership with WWF (it later allowed WWF to continue working with endangered rhinos); Mongabay editor Phil Jacobson being detained in Central Kalimantan province; and environmental defenders in North Sumatra fearing for their lives for their efforts to protect the habitat of the Tapanuli orangutan from a hydropower project. The situation would worsen with the arrival of COVID-19.

Officially recorded COVID-19 cases in Indonesia grew gradually, but the government moved quickly on a sweeping deregulation bill that fast-tracked infrastructure and industrial agricultural projects. The “omnibus bill,” officially called the Job Creation Act, was contentious out of the gates, both due to conflict of interests — lawmakers who drafted the legislation had direct links to the companies that stood to benefit most from it — and the accelerated process by which it was deliberated and passed into law. Mining and plantation companies in particular gained from the weakening of environmental regulations, which environmentalists said would lead to increased deforestation and incidence of fire. The government arrested more than 6,000 people who protested the new law.

In parallel with the omnibus bill, the Indonesian government launched a push to expand a national “food estate” program by establishing millions of hectares of new plantations in Sumatra, Borneo, and Papua. The plans included reviving a failed mega rice project in a peat swamp in Indonesian Borneo, a scheme that in the 1990s caused an ecological, financial, and social disaster by unleashing large-scale deforestation and peat fires, undermining domestic food security, and exacerbating social unrest. President Jokowi appointed Prabowo Subianto, a former Special Forces commander who is now defense minister, to run the program, sparking fears that the military would be enlisted to advance agribusiness projects in a return to the approach under former dictator Suharto. In support of this objective, Indonesia’s environment ministry issued a new regulation allowing protected forest areas to be cleared for industrial plantations.

Deforestation for palm oil production in Sumatra, Indonesia. Photo by Rhett A. Butler.
Deforestation for palm oil production in Sumatra, Indonesia. Photo by Rhett A. Butler.

The new “food estate” regulations are expected to give a long-term boost to agribusiness giants in Indonesia, some of whom have been actively expanding in 2020. Digoel Agri Group, for example, has been clearing rainforest in what could become the world’s largest oil palm plantation. The Tanah Merah project could generate an estimated $6 billion in timber revenue alone from the forest that it threatens to clear. In its place would be a 280,000-hectare (692,000-acre) plantation, almost twice the size of London, in southern Papua on the Indonesia half of the island of New Guinea. Palm oil giant Korindo continued to find itself mired in controversy for unusual financial transactionslogging of forests, and illegal use of fire in its Papuan operation.

Indonesia advanced a plan to more the double its current oil palm estate to produce biodiesel. The scheme, which runs counter to its proclaimed ambition to become a global production hub for electric vehicles, would require establishing new oil palm plantations a fifth the size of Borneo. The biodiesel mandate would create a huge source of demand for palm oil that doesn’t need to meet international standards for avoiding deforestation or human rights abuses, countering corporate zero-deforestation policies and import restrictions imposed by the European Union. The energy ministry said it will have to meet the government’s sustainability standard, however.

Infrastructure remained a priority for the Jokowi administration. Work moved forward on major road projects in Papua and Sumatra despite social and environmental concerns. But the proposed move of the country’s capital to Borneo’s East Kalimantan province was postponed due the pandemic.

The Batang Toru dam was delayed by three years due to financing issues after major lenders pulled out of the project due to concerns the project is seismically unsound and could drive the critically endangered Tapanuli orangutan to extinction. But project developer PT North Sumatra Hydro Energy rejected calls for an independent environmental impact assessment of the project. The IUCN primate specialists’ section on great apes noted that “No robust studies have yet assessed” the impact of the project on the species.

Indonesia’s two main pulp and paper companies continued to flout their “zero deforestation” commitments, with APRIL linked to new deforestation in Borneo and Sumatra, and Asia Pulp & Paper (APP) sourcing fiber from a concession involved in peat forest destruction in SumatraThe Forest Stewardship Council found itself under fire for what NGOs said was an inadequate effort to investigate reports of “alleged deforestation” by companies linked to Robert Budi Hartono, Indonesia’s wealthiest individual.

Deforestation for pulp and paper production in Sumatra. Photo by Rhett A. Butler.
Deforestation for pulp and paper production in Sumatra. Photo by Rhett A. Butler.

After initially planning to end its timber legality verification system (SVLK) for the export of timber productsIndonesia reversed itself and kept the program in place. The move would have blocked Indonesian wood products from some international markets, including the E.U.

A study published in Science Advances found that the Indonesia government’s poverty-alleviation program was as successful in reducing deforestation as dedicated conservation programs. Another study, published in PNAS, found that providing high-quality health care can be a strong incentive to avoid deforestation. The study concluded that deforestation in West Kalimantan’s Gunung Palung National Park fell 70% after a health clinic opened nearby.

A wetter than normal dry season meant that the fires and haze that have often affected Indonesia in recent years were less widespread in 2020, easing fears that air pollution could make COVID-19 especially deadly.

Congo Basin

Central Africa is experiencing the highest acceleration in deforestation of any major forest region on Earth. The forests of the Congo Basin face myriad threats: increased interest from industrial agriculture, proliferating road networks, new oil and gas exploration, and a regional drying trend. But foreign governments have also recently pledged more aid to Congo forest conservation.

The Democratic Republic of Congo (DRC) accounts for about 60% of the Congo Basin’s primary forest cover and nearly 80% of its loss. As such, it is seen by some as a bellwether for the region. In 2020 there were signs that forest disturbance may still be on an upward trend. In January, DRC granted nine forest concessions, covering more than 2 million hectares (5 million acres), to two Chinese companies, which environmental NGOs said violated a national moratorium on new concessions. NGOs have said COVID-19 has not slowed rampant illegal logging in the country.

DRC’s northern neighbor, the Republic of the Congo, has the third-largest extent of primary forest in the Congo Basin, but a much lower rate of loss. Accordingly, when the country last year announced a huge oil discovery in its enormous forested peatland, there were considerable concerns that oil extraction could become a major driver of degradation and carbon emissions. Responding to that worry, France and Germany offered up 60 million euros ($73 million) in aid to reduce the potential impact. However, a 2020 investigation by Der Spiegel and Mediapart suggest that the “alleged oil-field discovery was a bluff” or “an audacious exaggeration” to attract aid money from European governments. In other words, the deforestation threat from the supposed oil find remains low.

Likouala Aux Herbes, Ubangi, Congo, and Lulonga Rivers. Courtesy of Microsoft Zoom.Earth
Likouala Aux Herbes, Ubangi, Congo, and Lulonga Rivers. Courtesy of Microsoft Zoom.Earth

Gabon ranks just ahead of the Republic of the Congo in terms of forest cover in the Congo Basin. The country has historically had a very low deforestation rate, but loss has been rising as industrial agriculture expands in the country. In 2020 the biggest news on the deforestation front in Gabon was around an FSC investigation into whether Olam, a Singapore-based agribusiness company, deforested more than 25,000 hectares (62,000 acres).

Cameroon approved a 68,385-hectare (168,983-acre) logging concession in Ebo Forest, more than one-third of southwestern Cameroon’s largest intact forest. The area, which in the early 2010s was poised to be protected as a national park, is home chimpanzees, drills, and lowland gorillas. Meanwhile, an investigation by the Environmental Investigation Agency found evidence of illegal logging in the buffer zone of the Dja Fauna Reserve, a designated UNESCO World Heritage Site and a Biosphere Reserve.

Other regional developments

With deforestation trending upward in recent years, Peru cracked down on illegal gold mining, investigated large-scale deforestation linked to Mennonite communities, and took action against illegal logging. But new road projects, ongoing illegal logging and mining, and corporate efforts to undermine public prosecutors continued to post threats to Peruvian forests.

Read more: Peru news feed | Top stories in 2020 (Spanish)

More than 1.4 million hectares of Bolivia burned in 2020. Most of the forest fires occurred in the country’s dry Chaco forests. Protected areas were affected.

Colombia secured £64 million from the U.K. to protect forests, but still struggled to get a handle on rising deforestation. In January, Colombian President Iván Duque announced a goal to plant 180 million trees to restore some 300,000 hectares of degraded land, but National Nature Parks of Colombia has been forced to abandon 10 Amazonian parks that cover nearly 9 million hectares due to violence and threats from narcotraffickers, former FARC rebels, and other armed groups. These parks include Indigenous territories. Killings of environmental defenders and human rights advocates topped 300 people.

Read more: Colombia news feed | Top stories in 2020 (Spanish)

Sugarcane companies began clearing land within Bugoma Forest in Uganda after the environment authority approved an environmental impact assessment. The effort to clear Bugoma Forest for sugarcane has been a flashpoint since 2014.

Rainforest creek in the Colombian Amazon
Rainforest creek in the Colombian Amazon. Photo by Rhett A. Butler

Ongoing deforestation in Cambodia, including clearing of Keo Seima and Prey Lang wildlife sanctuaries continued to attract attention. A proposed reform of the country’s environment code remained stalled.

Deforestation for timber production and the establishment of plantations—including oil palm plantations—continued in Myanmar in 2020, despite regional crackdowns last year, including raids by Chinese authorities on stockpiles on China’s side of the borderSome of the illegally logged timber makes its way into E.U. markets despite the European Union Timber Regulation (EUTR), found an investigation by the Environmental Investigation Agency (EIA). On the conservation front, ethnic minorities in Myanmar raised concerns about lack of consultation on proposed conservation projects. Paul Sein Twa, a member of the Karen Indigenous group, won the Goldman Environmental Prize for his efforts to establish the 546,000-hectare Salween Peace Park, which encompasses 27 community forests and three wildlife sanctuaries.

Drivers of deforestation

2020 was a year when civil society focused more attention on “financed emissions,” the emissions released by companies in which financial institutions invest. In a tropical forest context, that means environmentalists targeted the banks, investment funds, asset managers, and other institutions that fund commodity production and infrastructure in tropical forests. Accordingly, a spate of reports were released in 2020, tying companies like Morgan StanleyBlackRockCitigroup, JPMorgan Chase, Goldman Sachs, and HSBC to deforestation in the Amazon and beyond.

Chart showing tree cover loss by region, according to WRI 2019
Chart showing tree cover loss by region, according to WRI 2019

From fires to deforestation, researchers continued to document the outsized impact cattle ranching in the Amazon, which accounts for more forest loss in the tropics than any other driver, has on planetary health. And activists continued to target Brazil’s biggest cattle producers and the actors who source from them, including a major beef supplier to the U.K. military and the fashion industry. Investigations showed that despite promises to clean up their supply chains, lack of transparency and accountability remains a problem for the Brazilian cattle industry.

“Forest risk” commodities like palm oil, timber and wood pulp production, and soy were also priorities for campaigners in 2020. Companies continued to establish and strengthen zero-deforestation commitments, sometimes in response to shareholder pressure. For example, Tyson Foods committed to a no-deforestation policy after activist investors led by Green Century Capital Management pressured the world’s second-biggest meat processor to do so. Two-thirds of Proctor & Gamble (P&G) shareholders voted to approve a resolution to address deforestation and forest degradation in the consumer product company’s supply chain. Ceres, a nonprofit that helps investors and companies adopt sustainability policies and practices, published an Investor Guide to Deforestation and Climate Change for institutional investors that covered the material risks of deforestation, forest risk commodities and countries, and how to evaluate corporate forest policies.

Palm oil

After dipping sharply in March and April due to the spread of COVID-19, the price of palm oil surged, reaching the highest level in more than six years by the end of 2020. Growers may see the rising price, coupled with relaxed regulations and a massive buying program from the Indonesian government in the form of a biodiesel mandate, as a signal to ramp up expansion.

The price of palm oil, according to World Bank data.
The price of palm oil, according to World Bank data.

Concerns over the environmental impact of converting rainforests and peatlands to oil palm plantations has spawned the rise of the corporate “no deforestation, no peat, no exploitation” (NDPE) policy over the past decade. Hundreds of companies across the palm oil supply chain, from producers to traders to food and cosmetics manufacturers, have established such policies and pledged to significantly reduce or eliminate deforestation for palm oil production in their supply chains by the end of 2020. Yet the Zoological Society of London’s (ZSL) annual assessment of 100 of the world’s largest palm oil players suggests that many companies will fail to meet these commitments by their self-imposed deadlines.

The most conspicuous palm oil company, Wilmar, unsurprisingly continued to be a focal point for advocacy groups trying to effect change in the palm oil sector. Notably, Wilmar attracted criticism when it exited the the steering group of the High Carbon Stock Approach (HCSA), which helps set the rules that underpin NDPE policies. That decision was immediately relevant to a case in Papua, where a Wilmar supplier was found to be clearing primary rainforest for oil palm.

PepsiCo, another long-time target of environmental groups, updated its NDPE policy for palm oil to extend to all subsidiaries and third-party suppliers. The move was notable because PepsiCo’s Indonesian joint-venture partner, Indofood, has been found in breach of such policies by the Roundtable on Sustainable Palm Oil (RSPO), the dominant certification body for the palm oil sector.

A comprehensive study based on socioeconomic data found that oil palm development has had mixed impacts on local peoples’ livelihoods in Indonesia. Communities that are more dependent on forests tend to fare worse when oil palm expansion occurs, whether or not those plantations are certified by the RSPO.

 Read more: Top Indonesian palm oil developments in 2020

Amazon soy

A number of studies looked at the environmental footprint of soy from the Amazon rainforest and the Cerrado, a neighboring woody savanna. One study, published in the journal Global Environmental Change, estimated that China accounted for 51% of carbon dioxide emissions associated with Brazil soy exports, while the European Union is responsible for about 30%. That study also found that EU imports were also more likely to cause new deforestation compared to imports from China. These concerns contributed to France’s announcement on Dec. 1 that it would eventually eliminate soy imports from Brazil.

Soy and Chaco forest in Bolivia. Photo by Rhett A. Butler
Soy and Chaco forest in Bolivia. Photo by Rhett A. Butler

While research and NGO reports found the impact of soy on the Amazon and Cerrado to be significant, another study argued the impact of soy production in Brazil would have been far worse had a group of companies not signed the Amazon soy moratorium in 2006. That research, published in the journal Nature Food, concludes that deforestation in the Brazilian Amazon between 2006 and 2016 was 35% lower than it would have been without the moratorium, avoiding deforestation of some 18,000 square kilometers (7,000 square miles) of Amazon forest. The moratorium, which was established after a Greenpeace campaign, eventually became the blueprint for zero-deforestation policies that came to be applied to other tropical commodities like palm oil, rubber, cacao, and wood pulp.

Technology

By restricting access to the field, the pandemic amplified the importance of remote-sensing technologies at a time when advances in monitoring tropical forests were already accelerating. One of the biggest news stories is this space was the Norwegian government’s decision to pay three satellite monitoring technology groups — Kongsberg Satellite Services, Planet, and Airbus — to provide free access to high-resolution satellite imagery of the tropics, which will help researchers, governments, and civil society improve forest monitoring, emissions tracking, and the use of AI to anticipate land use change.

After last year’s headline-grabbing fire season in the Amazon, researchers applied new tools and methodologies to fire mapping in the region. For example, NASA rolled out an automated near-real-time fire monitoring system that differentiates between land use history and fire type. The Amazon Conservation Association’s MAAP Initiative deployed its own fire tracking effort, which was the first to publicly distinguish agricultural fires and forest fires at scale in the Amazon.

But just like how the pandemic amplified the digital divide between the haves and have nots across society as a whole, human rights advocates warned that the same issue is affecting the digitization of land registries. A report from human rights group GRAIN said that communities that lack familiarity with technological tools are finding themselves at a disadvantage as governments move toward digital land registries.

The boom in renewable energy also brought greater scrutiny to the impact of production of the metals and other materials that go into battery technologies. Elon Musk raised eyebrows when he tweeted “We will coup whoever we want! Deal with it,” in response to the ouster of the president of lithium-rich Bolivia — suggesting that the Telsa CEO would back coups that benefit his companies. After sharp criticism, Musk deleted the Tweet and said Tesla gets its lithium from Australia.

Action by consuming countries

Rich-world governments continued to consider how their population’s consumption of commodities drives deforestation in the tropics. The U.K. put forth a new law that would make it illegal to for large companies operating in the country to use products grown on land that was illegally deforested. That law, if passed, would effectively require big companies to carry out due diligence on their supply chains.

In October, the governments of Switzerland and Peru reached a carbon offsetting deal under Article 6 of the Paris climate agreement. Switzerland will get carbon credits generated by financing sustainable development projects that reduce greenhouse gas emissions in the South American nation. That deal could become a model for other bilateral agreements.

Aerial view of the Amazon rainforest canopy. Photo by Rhett A. Butler for Mongabay.
Aerial view of the Amazon rainforest canopy. Photo by Rhett A. Butler for Mongabay.

The French government, which pledged in 2019 to stop “deforestation imports” by 2030, continued to move forward on its National Strategy to Combat Imported Deforestation, announcing it aimed to stop importing soy from Brazil.

Norway increased the rate it pays tropical countries to protect rainforests and made its first payment to Indonesia under a REDD+ agreement signed in 2010.

China’s revision to its forest law, which bars companies from buying or processing illegal timber, came into effect July 1, 2020. On paper, the law could be a “game changer” for the world’s largest importer of tropical timber, according to the Environmental Investigation Agency (EIA), but it is unclear how it will be interpreted and enforced.

Forest research

While there was plenty of important tropical forest research published in 2020, here is a small set of noteworthy studies that didn’t fit into the sections above.

Only 47% of the world’s tropical rainforests have high “ecological integrity”, meaning they have tall, closed canopies and limited human activity. Less than 7% of these forests are legally protected. (Nature Ecology and Evolution)

Between 1992 and 2014 forest degradation outpaced deforestation in the Brazilian Amazon. During that period, 308,311 square kilometers were cleared outright, while 337,427 square kilometers were merely degraded, primarily by logging and fires. (Science)

Warmer temperatures shorten the lifespans of tropical trees, especially when mean annual temperatures exceed 25.4° Celsius. With climate change expected to increase temperatures significantly across the tropics, the capacity of rainforests to sequester carbon may be diminished. (Proceedings of the National Academy of Sciences)

Only 47% of the world’s tropical rainforests have high “ecological integrity”, meaning they have tall, closed canopies and limited human activity. Less than 7% of these forests are legally protected. (Nature Ecology and Evolution)

Long-lived pioneer trees account for a disproportionate amount of carbon stored in tropical forests, making them especially important in sequestering atmospheric carbon dioxide. (Science)

Defaunation of large-bodied animals in tropical forests is degrading the capacity of such forests to store carbon and afford other important ecosystem services. (Nature Communications)

Clouds reflected in a blackwater oxbow lake in the Peruvian Amazon.
Clouds reflected in a blackwater oxbow lake in the Peruvian Amazon.

China, Brazil, and Indonesia have the greatest potential for sequestering carbon via reforestation projects. Russia, the U.S., India, and the Democratic Republic of Congo are other strong candidates. (Nature)

Less than 10% of the world’s protected areas are connected by land that’s considered intact, making it difficult for some species to move from one refuge to another and hurting the ability of these ecological “islands” to adapt to environmental change. (Nature Communications)

Planned road projects in the Amazon could unleash 2.4 million hectares of deforestation in the next 20 years. (Proceedings of the National Academy of Sciences)

12 REDD+ (Reduced Emissions from Deforestation and forest Degradation) projects in the Brazilian Amazon have tended to overstate their climate benefits, concluded a study which looked at 12 voluntary projects. The research found the exaggerated emissions savings tended to result from deforestation baselines that failed to account for broader reductions in deforestation that occurred independently. (Proceedings of the National Academy of Sciences)

Deforestation typically accelerates once 50% of an area’s forest is loss, suggesting the halfway point represents a critical tipping point or threshold. (Geophysical Research Letters)

Deforestation in Indonesian Borneo. Photo by Rhett A. Butler.
Deforestation in Indonesian Borneo. Photo by Rhett A. Butler.

Humans have contributed to 56% decline in species in mammal assemblages across the American tropics since European colonization began around 1500. (Nature Scientific Reports)

Climate change may be driving a sharp decline in fruit production in Gabon, making life more challenging for resident megafauna. (Science)

What’s in store for 2021?

Next week, Mongabay will took at look at some of the tropical forest trends and potential developments to watch in 2021.

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DEFENDING LAND AND ENVIRONMENTAL RIGHTS

Statement: The Energy Sector Strategy 2024–2028 Must Mark the End of the EBRD’s Support to Fossil Fuels

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The European Bank for Reconstruction and Development (EBRD) is due to publish a new Energy Sector Strategy before the end of 2023. A total of 130 civil society organizations from over 40 countries have released a statement calling on the EBRD to end finance for all fossil fuels, including gas.

From 2018 to 2021, the EBRD invested EUR 2.9 billion in the fossil energy sector, with the majority of this support going to gas. This makes it the third biggest funder of fossil fuels among all multilateral development banks, behind the World Bank Group and the Islamic Development Bank.

The EBRD has already excluded coal and upstream oil and gas fields from its financing. The draft Energy Sector Strategy further excludes oil transportation and oil-fired electricity generation. However, the draft strategy would continue to allow some investment in new fossil gas pipelines and other transportation infrastructure, as well as gas power generation and heating.

In the statement, the civil society organizations point out that any new support to gas risks locking in outdated energy infrastructure in places that need investments in clean energy the most. At the same time, they highlight, ending support to fossil gas is necessary, not only for climate security, but also for ensuring energy security, since continued investment in gas exposes countries of operation to high and volatile energy prices that can have a severe impact on their ability to reach development targets. Moreover, they underscore that supporting new gas transportation infrastructure is not a solution to the current energy crisis, given that new infrastructure would not come online for several years, well after the crisis has passed.

The signatories of the statement call on the EBRD to amend the Energy Sector Strategy to

  • fully exclude new investments in midstream and downstream gas projects;
  • avoid loopholes involving the use of unproven or uneconomic technologies, as well as aspirational but meaningless mitigation measures such as “CCS-readiness”; and
  • strengthen the requirements for financial intermediaries where the intended nature of the sub-transactions is not known to exclude fossil fuel finance across the entire value chain.

Source: iisd.org

Download the statement: https://www.iisd.org/system/files/2023-09/ngo-statement-on-energy-sector-strategy-2024-2028.pdf

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SPECIAL REPORTS AND PROJECTS

Will more sovereign wealth funds mean less food sovereignty?

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In November 2022, word got out that Ferdinand Marcos Jr, the freshly minted president of the Philippines, wanted to set up a sovereign wealth fund. People scratched their heads. What wealth? The Philippines is mired in debt! It was quickly understood that this was a kind of vanity project, meant to improve the image of a man who came to power because of his family name.
Marcos’ father ruled the Philippines from the mid-1960s to the mid-1980s with an iron fist. Known more for kleptocracy and the brutality of martial law, the Marcos name needed a face-lift, local media put it. Marcos boasted that a sovereign wealth fund would boost investor confidence and attract resources to fund big projects in infrastructure or agriculture. He even dubbed it “Maharlika Fund”, a nod to the mythical warrior figure that his father claimed to personify during World War II.
Vanity aside, Marcos’ proposal raised fears of graft and corruption. After all, not long ago, Malaysia’s sovereign wealth fund (known as 1MDB) was exposed as a multi-billion dollar money laundering scheme for the personal benefit of Prime Minister Najib Razak, who now sits in jail. Yet, Marcos managed to get his proposal onto his country’s legislative agenda in a matter of weeks, and brought it to international investors in Davos and Tokyo for their approval as well.
What are these “sovereign wealth funds”? How are they being used? What link, if any, do they have with people’s struggles around food sovereignty, land grabbing and today’s deepening climate crisis?
Rise of sovereign wealth funds
The first sovereign wealth funds were set up in the 19th century, and grew slowly throughout the 20th. The idea, at first, was rather simple. If a state has excess resources – perhaps mineral wealth or a sudden boom in foreign exchange from exports – these should be tucked away for future use for the benefit of society.
Norway is the classic example. In the late 1960s, oil was discovered off its coast. Overnight, the country become unfathomably rich. After much debate, the government decided to set up a wealth fund – basically a piggy-bank belonging to all Norwegians. It is fed by a tax levied on the oil and gas extracted from Norway’s seabed, plus the revenues of Norway’s state-owned oil and gas companies.
This wealth is meant to be used “for present and future generations”. To ensure this, no one is allowed to touch the underlying pot of money itself, but the interest it earns each year goes into the national budget to pay for things like public health care, generous parental leaves, retirement pensions and public infrastructure. In concrete terms, Norway’s wealth fund contains $1.1 trillion. That money is invested in 9,000 publicly-listed companies across 70 countries around the world. The investments generate a return of about 3% a year, which is what goes into the national budget to provide everyone in Norway with those public services. It has become a source of national pride and unity across the political spectrum.
Many sovereign wealth funds were set up with a similar logic. The “wealth” may come from diamonds (Botswana) or copper (Chile), foreign currency reserves (China) or export earnings (Saudi Arabia). Even the state of Texas in the United States wrote into its constitution back in the 1850s that “available public lands” should be used to finance public schools. To do this, lands were either sold outright or were leased with the proceeds feeding a Permanent School Fund (a sovereign wealth fund) run by a trio of local civil servants. In all of these cases, the funds are created with resources that arguably belong to everyone and serve a public interest objective such as guaranteeing social rights (e.g. retirement for all in Norway) or covering national budget deficits in times of crisis (e.g. as happened with Covid-19 in Peru) or providing children with access to education (Texas).
Recently, however, governments have started diverging from this logic. Increasingly, sovereign wealth funds are being set up with no resources or wealth or sovereign character to speak of. Indonesia’s sovereign wealth fund, which was set up in 2021, is more like a “development” fund. It aims to secure foreign investment from companies, banks and funds in order to build local infrastructure and energy projects. Not much different from what the government already does. The Philippines’ proposal is more like a “public-private partnership” fund, as foreign investors will be asked to do joint ventures with the state or with local businesses. At one point, the government was proposing that the fund should be handed over to the private sector and listed on the stock market! Quite a number of small countries with no surpluses to speak of have set up sovereign wealth funds by offering citizenship to wealthy individuals (leading to corruption scandals as well).
Over the past two decades, the number of sovereign wealth funds has surged (see graph) and there are now more than 100 sovereign wealth funds around the world.[1] Collectively, they hold $10 trillion – which makes them the third largest economy, after the US and China, if they were a country. That figure is expected to reach $17 trillion by 2030. While most sovereign funds are national in scope, some are sub-national. The state of Queensland, in Australia, has one. Palestine has one. Even the city of Milan has one.
Some of these funds invest only abroad, some invest only at home and some do both. Key sectors they put their money in, to capture earnings, include energy, technology, health, finance and real estate. All told, sovereign funds are so massive that most people have probably had some connection to them, as they own bits of Alibaba, Flipkart, Uber, Slack, Grab, major airports, the world’s top football teams and social media like Twitter. Anyone paying for these is actually helping sovereign wealth funds take money home.
And while it seems to be a trend among political elites these days to think that setting up such structures can bring funds into the global South, 80% of sovereign wealth fund assets is currently parked in Europe and North America. In fact, one-third is in the US alone.
Agriculture: a critical concern
In dollar terms, food and agriculture represent just 2-3% of all sovereign wealth fund investments. While that sounds small, it is a politically sensitive and strategic sector for many governments. Contributing to national food security has been a historic role for sovereign funds, and it is a vital one for those of Singapore and the Gulf states.
At least 42 sovereign funds are currently invested in food and agriculture (see table). Some are major players, but many are less visible (see box). Their investments may be in largescale farmland acquisitions and production, such as orange groves in Brazil, cattle ranches in Australia or vertical pig farms in China. Some take the form of ownership stakes in global food commodity traders that ship grains, oilseeds and coffee across our oceans, like Bunge, COFCO or Louis Dreyfus. Yet others are positions in food retail systems like supermarket chains or delivery services, and the digital technologies that these operations increasingly rely on.
A handful of actors form the centre of gravity of global agricultural investing by sovereign funds. They are Temasek and GIC in Singapore; PIF in Saudi Arabia; Mubadala and ADQ in UAE; QIA in Qatar; RDIF in Russia; and COFIDES in Spain (see map). The Singaporeans and the Gulf states invest with their own food needs as a priority. RDIF brings big investors into Russia to help finance its export-oriented agribusiness sector. And COFIDES funds food projects around the world with one catch: a Spanish company must be directly involved in and profit from it, such as Borges with almond production in Europe or Pescanova with fish farming in Latin America. (Actually, there is a second catch: all of COFIDES’ overseas food and agriculture investments are loans.[2])
Quite a number of sovereign wealth fund ventures in agriculture are linked to concerns about land and water grabbing, whether directly and indirectly. In December 2022, Abu Dhabi’s government-owned ADQ, which has $110 billion in assets, got hold of 167,00 hectares of farmland in northeast Sudan.[3] It plans to grow sesame, wheat, cotton and alfalfa there, while it builds a massive new port nearby to ship the goods out. ADQ already owns:
  • 45% of Louis Dreyfus Company, with its massive land holdings in Latin America, growing sugarcane, citrus, rice and coffee;
  • a majority stake in Unifrutti, with 15,000 ha of fruit farms in Chile, Ecuador, Argentina, Philippines, Spain, Italy and South Africa; and
  • Al Dahra, a large agribusiness conglomerate controlling and cultivating 118,315 ha of farmland in Romania, Spain, Serbia, Morocco, Egypt, Namibia and the US.
Therefore, the concerns are quite serious. Al Dahra stands accused of draining aquifers in Arizona, just so that it can produce hay to transport back to UAE to feed local dairy herds.[4]
Saudi Arabia’s Public Investment Fund (PIF), one of the world’s top ten sovereign wealth funds in terms of assets, has $13.7 billion invested in agriculture. It owns several massive agribusiness conglomerates focused on livestock, dairy and fisheries. In 2021, it took 100% control of the Saudi Agricultural and Livestock Company (SALIC) which is engaged in meat and cereal production in Canada, Ukraine, India, Brazil, Australia and the UK.[5] The scale is enormous. In India, PIF produces its staple, basmati rice.
From Brazil, it gets its beef. In Australia, it operates 200,000 ha for sheep grazing and also buys lamb and mutton directly from producers. In Ukraine, it has 195,000 ha growing wheat, barley, maize and rice. PIF also owns 35% of Olam Agri, a major palm oil producer, and is building the largest vertical farm in the entire Middle East and North Africa region.[6] It is very strange, then, to learn that PIF’s new green financing instrument will explicitly exclude funding for any projects or expenditures associated with industrial agriculture or livestock![7] It shows the doublespeak of investors that expand intensive industrial food systems while needing to flash climate credentials.
Another very big player is Qatar. Its sovereign wealth fund has massive land holdings in Australia, through a stake in the 4.4 million ha Paraway Pastoral Company dedicated to livestock production. The fund allows Qatar to source its organic food supplies through Canada’s Sunrise Foods, which operates in Turkey, Netherlands, Russia, Ukraine and US. It owns poultry and seafood companies in Oman, and is now developing agriculture supply chains in East Africa. The Qatari wealth fund is connected to a Russian oil company which owns 50% of Agrokultura, which operates 200,000 ha of farmland in Russia. It also owns 14% of AdecoAgro with its 472,862 ha hectares under production in Argentina, Brazil and Uruguay. It is now going into Kazakhstan for the same purposes – and in direct competition with the UAE.[8]
It is important to note that many of these arrangements between sovereign wealth funds and global agribusiness involve political guarantees. Qatar is one of the biggest investors in Glencore, with whom it has a deal to ensure its access to grains and shipping services in case of need. The same is true with Qatar and Turkey’s Tiryaki Agro Group. The fund’s agricultural arm, Hassad Food, has its own agreement with Sunrise Foods which ensures that in the event of any shortage in the Qatari market, the country’s need for grain, oilseeds and wheat will be met on a priority basis.[9] Similarly, when Abu Dhabi’s ADQ bought 45% of Louis Dreyfus – the world’s third largest commodity trader – it signed a side deal giving it priority access to food shipments in times of global crisis, as the world experienced recently during both Covid-19 and the Russian invasion of Ukraine.[10]
It is fair to say that the political strategy of leveraging sovereign wealth to get access to global food supplies works. What is never mentioned is at what cost. For many of these big investment projects expand and entrench largescale corporate agribusiness, with its contingent slew of land conflicts, water pollution, indigenous rights abuses, labour violations and spiralling climate emissions. And when it comes to the Gulf states or Singapore, these are very small populations draining the resources of much bigger ones. With sovereign funds, scale is baked in. Even when they do try to reckon with social and environmental contingencies, as in the case of PIF, their attempts at making investments green or socially responsible are shallow at best. Only Norway’s stands out as making strong commitments to scrutinise and withdraw from agribusiness companies associated with social and ecological crimes, as it has done with meat packers and soy producers in Brazil (Minerva, Marfrig, SLC Agricola and JBS) as well as rubber giant Halcyon Agri.[11]
So, to answer the question: what do these funds have to do with food sovereignty? The answer is: it’s twisted. They do provide food security for a few countries. And political elites increasingly like to use the term food sovereignty to characterise these missions, as it serves their nationalist, territorial and militarist frameworks.[12] But sovereign wealth funds crush real visions of food sovereignty as they take resources away from local communities and push a capitalist, industrialist food system – be it green or not.
Putting the public interest first
Sovereign wealth funds can be a good idea if they really are sovereign (run by the people), if the resources they harness are democratically sourced and organised, and if they have a genuine public welfare mandate. We actually need more commitment to public approaches to reverse the growing inequality and privatisation that is undermining people’s rights to healthcare, housing, transportation, food, education and retirement in most countries around the world.
But there is a danger. There are increasing calls to set up sovereign wealth funds to solve government problems – from building a new capital city in Indonesia to plugging an alleged deficit in France’s pension system. But these newer funds are just tools to channel money into government coffers or private enterprises. They are not built on any collective resource or aimed at protecting a public wealth for the benefit of future generations. They seem to have little to do with traditional sovereign wealth funds, apart from the name. For that reason, they should be scrutinised and if they don’t genuinely serve the public interest they should be stopped. Similarly, those that contribute to land or water grabbing should be challenged and stopped, too.
Agriculture may not be the number one sector that these funds gravitate towards to generate wealth. But politically, geopolitically and strategically, food security is a core concern of theirs and will continue to be, requiring our critical scrutiny as well.
We need good public services that provide for public well-being. Sovereign wealth funds – despite their name – need to be put to a more scrupulous test to see if they have a role to play in that agenda.
Less visible players: Big players aside, many sovereign wealth funds participate in financing the direction of food and agriculture.[13]
• Angola’s sovereign wealth fund is investing in food and agriculture in Africa through a private equity fund that is targetting the production of maize, beans, soybeans, rice and cattle.
• Australia’s sovereign wealth fund has a Future Drought Fund since 2019. Currently holding A$4.5 billion, its sole aim is to “provide secure, continuous funding to support initiatives that enhance the drought resilience of Australian farms and communities.” Its investments must deliver returns of 2-3% above the consumer price index.
• Bolivia has a sovereign wealth fund that was set up in 2012 with state surplus funds and a loan from the central bank. It invests domestically in both public and private enterprises involved in honey production, fruit processing, aquaculture, dairy, quinoa and stevia.
• Brunei’s new sovereign wealth fund is considering investing in agriculture, in partnership with the Malaysian Investment Development Authority.
• Not much is known about how China’s sovereign wealth funds invest. The China Investment Corporation has $1.3 trillion, making it the largest in the world. It invests in agriculture overseas and reported a remarkable return of 14.27% on its overseas holdings in 2021. Equally remarkable, alternative investments, which include private equity and farmland, are said to account for 47% of its overseas portfolio. China’s National Social Security Fund is also a sovereign wealth fund and is invested domestically in agriculture through its private equity portfolio.
• France’s sovereign fund is known to be a big investor in agriculture and food, both domestically and abroad. One very controversial foreign project it is connected to is led by Arise IIP, a subsidiary of Olam, in Chad.[14]
• Gabon’s sovereign wealth fund, built from oil revenues, runs a private equity fund that invests in the food and agriculture sector. It also invests directly in agriculture and farmland projects at home.
• The National Development Fund of Iran has some $24 billion, most of it from oil and gas revenues and all of it invested domestically. According to some sources, 1% is invested in water and agriculture, including farmland ownership, a sector the fund wants to invest more in.
• Ithmar Capital, a state investment company, serves as Morocco’s sovereign wealth fund. Details are lacking but their strategy is to co-invest in Moroccan agribusiness operations with foreigners such as Spain’s COFIDES or Gulf state investors.
• Nigeria, like Abu Dabhi and Spain, has its sovereign wealth fund investing in fertiliser production. This is a very strategic concern.
• Palestine’s sovereign wealth fund is a public company that does local impact investing. Its initial funds came from the Palestinian Authority. It is invested in a 50 hectares seedless grape farm, looking into investing in animal feed production and helping set up a National Agriculture Investment Company.
• Türkiye Wealth Fund has 2% of its investments in food and agriculture, as of 2019.
• In the US, the states of Texas, New Mexico and Alaska have sovereign wealth funds that are heavily invested in farmland, whether directly or through private equity funds. The agribusiness operations they fund are in some cases domestic and in others overseas (usually in the Southern Cone of Latin America or Australia).
• Vietnam’s State Capital Investment Corporation is invested in agriculture/farmland through a joint venture with the State General Reserve Fund of Oman, showing how co-investing is a common strategy of sovereign funds.
Sovereign wealth funds invested in farmland/food/agriculture (2023)
Country
Fund
Est.
AUM (US$bn)
China
CIC
2007
1351
Norway
NBIM
1997
1145
UAE – Abu Dhabi
ADIA
1967
993
Kuwait
KIA
1953
769
Saudi Arabia
PIF
1971
620
China
NSSF
2000
474
Qatar
QIA
2005
450
UAE – Dubai
ICD
2006
300
Singapore
Temasek
1974
298
UAE – Abu Dhabi
Mubadala
2002
284
UAE – Abu Dhabi
ADQ
2018
157
Australia
Future Fund
2006
157
Iran
NDFI
2011
139
UAE
EIA
2007
91
USA – AK
Alaska PFC
1976
73
Australia – QLD
QIC
1991
67
USA – TX
UTIMCO
1876
64
USA – TX
Texas PSF
1854
56
Brunei
BIA
1983
55
France
Bpifrance
2008
50
UAE – Dubai
Dubai World
2005
42
Oman
OIA
2020
42
USA – NM
New Mexico SIC
1958
37
Malaysia
Khazanah
1993
31
Russia
RDIF
2011
28
Turkey
TVF
2017
22
Bahrain
Mumtalakat
2006
19
Ireland
ISIF
2014
16
Canada – SK
SK CIC
1947
16
Italy
CDP Equity
2011
13
China
CADF
2007
10
Indonesia
INA
2020
6
India
NIIF
2015
4
Spain
COFIDES
1988
4
Nigeria
NSIA
2011
3
Angola
FSDEA
2012
3
Egypt
TSFE
2018
2
Vietnam
SCIC
2006
2
Gabon
FGIS
2012
2
Morocco
Ithmar Capital
2011
2
Palestine
PIF
2003
1
Bolivia
FINPRO
2015
0,4
AUM (assets under management) figures from Global SWF, January 2023
Engagement in food/farmland/agriculture assessed by GRAIN
[1] Important sources used for this report include: Javier Capapé (ed), “Sovereign wealth funds 2021”, IE University, Madrid, Oct 2022, https://docs.ie.edu/cgc/SWF%202021%20IE%20SWR%20CGC%20-%20ICEX-Invest%20in%20Spain.pdf; Global SWF, “2023 Annual report”, New York, Jan 2023, https://globalswf.com/reports/2023annual; the websites of Global SWF (https://globalswf.com) and SWF Institute (https://www.swfinstitute.org/) as well as Preqin Ltd.
[3] Reuters, “Sudan to develop Red Sea port in $6-bln initial pact with Emirati group”, 13 Dec 2022, https://www.farmlandgrab.org/31347.
[4] Ella Nilsen, “Wells are running dry in drought-weary Southwest as foreign-owned farms guzzle water to feed cattle overseas“, CNN, 27 Nov 2022, https://edition.cnn.com/2022/11/05/us/arizona-water-foreign-owned-farms-climate/index.html
[5] See SALIC website: https://salic.com/
[6] AeroFarms, “PIF and AeroFarms sign joint venture agreement to build indoor vertical farms in Saudi Arabia and the wider MENA region”, 1 Feb 2023, https://www.aerofarms.com/2023/02/01/pif-and-aerofarms-sign-joint-venture-agreement-to-build-indoor-vertical-farms-in-saudi-arabia-and-the-wider-mena-region/
[7] Public Investment Fund, “Public Investment Fund Green Finance Framework”, February 2022, https://www.pif.gov.sa/Investors%20Files%20EN/PIF%20Green%20Finance%20Framework.pdf
[8] See Hassad Food, “Hassad signs MoU with Baiterek to discuss investment projects that supports food security”, 12 Oct 2022, https://www.hassad.com/2022/10/12/hassad-signs-mou-with-baiterek-to-discuss-investment-projects-that-supports-food-security/ and Global Sovereign Wealth Fund, “Gulf funds drawn into soft power battle over Kazakhstan”, 25 Aug 2021, https://globalswf.com/news/gulf-funds-drawn-into-soft-power-battle-over-kazakhstan
[9] See Hassad Food, “Strategic local and international investments along with global partnerships to satisfy the market needs from grains and wheat”, 28 Mar 2022, https://www.hassad.com/2022/03/28/strategic-local-and-international-investments-along-with-global-partnerships-to-satisfy-the-market-needs-from-grains-and-wheat/
[10] Reuters, “Commodity group Louis Dreyfus completes stake sale to ADQ”, 10 Sep 2021, https://www.reuters.com/world/middle-east/commodity-group-louis-dreyfus-completes-stake-sale-adq-2021-09-10/.
[11] See Fabiano Maisonnave, “Norway oil fund omits meatpacker JBS from deforestation watch list “, Climate Fund News, 4 Apr 2018, https://www.climatechangenews.com/2018/04/04/norway-oil-fund-omits-meatpacker-jbs-deforestation-watch-list/, Earthsight, “World’s largest pension fund dumps shares in beef firm in wake of corruption scandal”, 24 July 2018, https://www.earthsight.org.uk/news/idm/worlds-largest-pension-fund-dumps-shares-beef-firm-wake-corruption-scandal and Paulina Pielichata, “Norway sovereign wealth fund divests Halcyon over environmental concerns”, Pensions & Investments, 27 Mar 2019, https://www.pionline.com/article/20190327/ONLINE/190329915/norway-sovereign-wealth-fund-divests-halcyon-over-environmental-concerns
[12] “L’Afrique sur le chemin de l’autosuffisance alimentaire”, Seneplus, 27 Feb 2023, https://www.seneplus.com/developpement/lafrique-sur-le-chemin-de-lautosuffisance-alimentaire
[13] Main sources for this box are each fund’s respective website, news clippings and Preqin Ltd.
[14] Arise, “Bpifrance and Arise IIP establish a partnership to foster agricultural materials processing and co-industrialisation projects on a pan-African scale”, 15 February 2023, https://www.ariseiip.com/bpifrance-and-arise-iip-establish-pan-african-partnership/ , and Benjamin König, “Arise IIP, la firme qui dépouille les paysans africains”, L’Humanité, 4 April 2023, https://www.humanite.fr/monde/tchad/arise-iip-la-firme-qui-depouille-les-paysans-africains-789407
Source: Grain

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Farmland values hit record highs, pricing out farmers

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Joel Gindo thought he could finally own and operate the farm of his dreams when a neighbor put up 160 acres of cropland for sale in Brookings County, S.D., two years ago. Five thousand or six thousand dollars an acre should do the trick, Mr. Gindo estimated.
But at auction, Mr. Gindo watched helplessly as the price continued to climb until it hit $11,000 an acre, double what he had budgeted for.
“I just couldn’t compete with how much people are paying, with people paying 10 grand,” he said. “And for someone like me who doesn’t have an inheritance somewhere sitting around, a lump sum of money sitting around, everything has to be financed.”
What is happening in South Dakota is playing out in farming communities across the nation as the value of farmland soars, hitting record highs this year and often pricing out small or beginning farmers. In the state, farmland values surged by 18.7 percent from 2021 to 2022, one of the highest increases in the country, according to the most recent figures from the Agriculture Department. Nationwide, values increased by 12.4 percent and reached $3,800 an acre, the highest on record since 1970, with cropland at $5,050 an acre and pastureland at $1,650 an acre.
A series of economic forces — high prices for commodity crops like corn, soybeans and wheat; a robust housing market; low interest rates until recently; and an abundance of government subsidies — have converged to create a “perfect storm” for farmland values, said Jason Henderson, a dean at the College of Agriculture at Purdue University and a former official at the Federal Reserve Bank of Kansas City.
As a result, small farmers like Mr. Gindo are now going up against deep-pocketed investors, including private equity firms and real estate developers, prompting some experts to warn of far-reaching consequences for the farming sector.
Young farmers named finding affordable land for purchase the top challenge in 2022 in a September survey by the National Young Farmers Coalition, a nonprofit group.
Already, the supply of land is limited. About 40 percent of farmland in the United States is rented, most of it owned by landlords who are not actively involved in farming. And the amount of land available for purchase is extremely scant, with less than 1 percent of farmland sold on the open market annually.
The booming housing market, among a number of factors, has bolstered the value of farmland, particularly in areas close to growing city centers.
“What we have seen over the past year or two was, when housing starts to go up with new building construction, that puts pressure on farmland, especially on those urban fringes,” Professor Henderson explained. “And that leads to a cascading ripple effect into land values even farther and farther away.”
Government subsidies to farmers have also soared in recent years, amounting to nearly 39 percent of net farm income in 2020. On top of traditional programs like crop insurance payments, the Agriculture Department distributed $23 billion to farmers hurt by President Donald J. Trump’s trade war from 2018 to 2020 and $45.3 billion in pandemic-related assistance in 2020 and 2021. (The government’s contribution to farm income decreased to 20 percent in 2021 and is forecast to be about 8 percent in 2022.)
Those payments, or even the very promise of additional assistance, increase farmland values as they create a safety net and signal that agricultural land is a safe bet, research shows.
“There’s an expectation in the market that the government’s going to play a role when farm incomes drop, so that definitely affects investment behavior,” said Jennifer Ifft, a professor of agricultural economics at Kansas State University.
Eager investors are increasingly turning to farmland in the face of volatility in the stock and real estate markets. Bill Gates, the Microsoft co-founder and a billionaire, is the biggest private farmland owner in the country and recently won approval to buy 2,100 acres in North Dakota for $13.5 million.
The number of private equity funds seeking to buy stakes in farmland has ticked higher, said Tim Koch, a vice president at an agricultural financial cooperative in the Midwest, Farm Credit Services of America. Pension funds also consider farmland a stable investment, Professor Ifft said.
Farmers, too, have witnessed an influx of outside interest. Nathaniel Bankhead, who runs a farm and garden consulting business in Chattanooga, Tenn., has banded with a group of other agricultural workers to save up to $500,000 to buy about 60 acres of land. For months, the collective has been repeatedly outbid by real estate developers, investors looking to diversify their portfolios and urban transplants with “delusional agrarian dreams,” he said.
“Places that I have looked at as potential farmland are being bought up in cash before I can even go through the process that a working-class person has to do to access land,” he said. “And the ironic thing is, those are my clients, like I get hired by them to do as a hobby what I’m trying to do as a livelihood. So it’s tough to watch.”
Mr. Bankhead characterized the current landscape as a form of “digital feudalism” for aspiring working farmers. Wealthy landowners drive up land prices, contract with agricultural designers like himself to enact their vision and then hire a caretaker to work the land — pricing out those very employees from becoming owners themselves.
“They kind of lock that person to this new flavor of serfdom where it’s, you might be decently paid, you’ve got access to it, but it will never be yours,” he said.
Unable to afford land in her native Florida, Tasha Trujillo recently moved her flower farm to South Carolina. Ms. Trujillo had grown cut flowers and kept bees on a parcel of her brother-in-law’s five-acre plant nursery in Redland, a historically agricultural region in the Miami area, about 20 miles south of downtown.
When she sought to expand her farm and buy her own land, she quickly found that prices were out of reach, with real estate developers driving up land values and pushing out agriculture producers.
A five-acre property in the Redlands now costs $500,000 to $700,000, Ms. Trujillo said. “So I essentially didn’t have a choice but to leave Miami and Florida as a whole.”
“Farming is a very stressful profession,” she added. “When you throw in land insecurity, it makes it 20 times worse. So there were many, many times where I thought: ‘Oh my God. I’m not going to be able to do this. This isn’t feasible.’”
As small and beginning farmers are shut out — the latest agricultural census said that the average age of farmers inched up to 57.5 — the prohibitively high land values may have ripple effects on the sector at large.
Brian Philpot, the chief executive of AgAmerica, an agricultural lending institution, said his firm’s average loan size had increased as farms consolidated, squeezing out family farms. This, he argued, could lead to a farm crisis.
“Do we have the skills and the next generation of people to farm it? And two, if the answer is going to be, we’re going to have passive owners own this land and lease it out, is that very sustainable?” he said.
Professor Henderson also warned that current farmers may face increased financial risk as they seek to leverage their high farmland values, essentially betting the farm to expand it.
“They’ll buy more land but they’ll use debt to do it,” he said. “They’ll stretch themselves out.”
Economists and lenders said farmland values appeared to have plateaued in recent months, as the Federal Reserve raised interest rates and the cost of fertilizer and diesel soared. But with high commodity prices forecast for next year, some believe values will remain high.
A native of Tanzania who moved to South Dakota about a decade ago, Mr. Gindo bought seven acres of land to raise livestock in 2019 and currently rents an additional 40 acres to grow corn and soybeans — all the while working full time as a comptroller to make ends meet.
For now, he has cooled off his search for a farm of his own even as he dreams of passing on that land to his son. The more immediate concern, he said, was whether his landlord would raise his rent. So far, the landlord has refrained because Mr. Gindo helps him out around the farm.
“He really doesn’t have to lend me his land,” Mr. Gindo said. “He can make double that with someone else.”
In Florida, Ms. Trujillo said, the owner of the land where her brother-in-law’s nursery sits has spoken of selling the plot while prices remain high, so he too has begun looking for his own property.
“That’s a big fear for a lot of these farmers and nursery owners who are renting land, because you just never know when the owner’s just going to say: ‘You know what? This year, I’m selling and you’ve got to go,’” she said.
In Tennessee, Mr. Bankhead said he considered giving up on owning a farm “multiple times a day” as friends who have been longtime farmers leave the profession.
But so far, he remains committed to staying in the field and doing “the work of trying to keep land in families’ hands and showing there’s more to do with this land than to sell it to real estate developers,” he said. “But the pain of not having my own garden and not being able to have my animals where I live, it never stings any less.”
Original Source: Farmlandgrab

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