The Saudis are coming, and they’re buying your farmland.

Andrew Rice has an interesting article in the NYTimes Magazine, Is There Such a Thing as Agro-Imperialism? that reveals how wealthy, import dependent countries like Saudi Arabia are buying and leasing land abroad to hedge their food supply. These nations, which include other Gulf states, South Korea, and Japan, got spooked by the global commodity price spike last year.

The problems of being agriculturally import dependent in the global economy are fairly obvious. If you have no wheat or rice of your own, you’re at the complete mercy of both price swings and export cessations. Life starts to suck then. The immediate benefits to the wealthy nation of securing and farming otherwise unused arable land in distant climes is likewise obvious. Cheap land plus cheap labor plus modern farming technology equals win, win, win.

The payout for host countries looks pretty bright, too. It’s certainly appealing to start with: unfarmed arable land becomes productive; your people get jobs; you get some payment from the farming nation; and you even win the advantage of more agricultural output for the domestic market.

The less immediate problems are several, and left unchecked, serious.

First, the arrangement assumes that unfarmed land was left fallow for lack of enterprise. Secondly, it assumes that the fallow land can rightfully be transferred. From the article:

Decades ago, they said, during the rule of a Communist dictatorship in Ethiopia, the land was confiscated from them. After that dictatorship was overthrown, Al Amoudi took over the farm in a government privatization deal, over the futile objections of the displaced locals. The billionaire might consider the land his, but the villagers had long memories, and they angrily maintained that they were its rightful owners.

Third, all of this modern agriculture depends on irrigation. Irrigation is the transport of water from one location to another for the purpose of farming. That is a simple definition unless water is in short supply, poorly managed, or the rights to water resources are questionable. See “California” for an example.

Fourth, what happens when their is food scarcity at home and the domestic farms are underproducing the foreign controlled farms? Will the government allow continued export of food from those farms?

There is an underlying cause to these problems and a plausible scenario to expect in a few years, or perhaps a decade. The scenario is populist revolt. Whether or not foreign controlled farms are pareto optimal - that is, increasing benefits without additional costs or harm to other parties - they do have a colonialist tinge. Without government muscle, it’s difficult to imagine people peacefully watching rich nations farm their land and exporting the bounty. Resentment is more powerful than wages.

But the underlying cause of the problems these nations face - and will - is not technology, methods, or even water. It’s poor governance. Shitty government! You cannot heap investment into a country without predictable and accepted rule of law and expect miracles. It’s easy in the West to see the government as a drag on the economy and forget that without a rational bureaucracy, equal contract enforcement, and at least some accountability, the economy we know wouldn’t exist.

Improved governance in Ethiopia and Sudan wouldn’t help Saudi Arabia with its food security, but it will help those nations with their own food security in a way that foreign aid cannot match.