Subject: Privatising Land in Timor Leste
Privatising Land in Timor
by Prof. Tim Anderson
Global Research, September
This article was first published in the Tetun language, in Timor
Leste's Kla'ak (The Flame) newspaper
In July 2008 Timor Leste?s Agriculture Minister Mariano Sabino spoke at
seminars about agricultural sustainability and food security in Dili and
Dare. Yet a few months earlier the Minister had signed a document which
could deliver the most devastating blow to Timor Leste?s sustainability
and food security since independence.
In a January 2008 Memorandum of Understanding (MOU) with
Indonesian-based GT Leste Biotech, Minister Sabino agreed to hand over
100,000 hectares of Timor?s scarce agricultural land to be used as a
Similarly, in February, Secretary of State Avelinho da Silva signed a
contract with the Australian-based biofuel company Enviroenergy
Developments Australia for Jatropha development on 59 hectares of land
at Baucau. It is rumoured that even larger tracts of land are under
discussion for rubber plantations.
These documents signal a move underway in the AMP Government to
privatise large tracts of Timor Leste?s land. Yet the country?s
Constitution says that ?only national citizens have the right to
ownership of land? (s.54). This means neither foreigners nor
corporations can own land. However the recent agreements would
effectively alienate prime agricultural land to foreign corporations
through long term leases.
When Minister Sabino?s MOU and the Enviroenergy contract were made
public, they attracted widespread condemnation. Demetrio de Carvalho,
Director of the Haburas Foundation, said a sugarcane monoculture would
threaten East Timor?s biodiversity and that the chemicals used would
pollute the country?s water. Fretilin MPs warned this land ?give away?
was corrupt and would threaten the country?s food supply. NGO
representatives argued that large plantations would destroy the soil and
that participation in the biofuel industry would push food prices even
The AMP Government responded with counter-claims that biofuel
plantations would generate thousands of jobs, provide cash opportunities
for neighbouring farmers and add to the country?s infrastructure and
training capacity. Minister Sabino claimed the plantations would not
compete with food crops and argued the benefits of biofuels.
The big powers, through AusAID, USAID and the World Bank, have pushed
for commercialisation of land in Timor Leste. They would like to see
Timor Leste?s constitution amended, to allow foreign corporations to own
land. Yet they too were unhappy, because of the way in which contracts
seem to have been awarded. The corruption claims are serious, but will
not be discussed here.
In this article I want to highlight the serious food security and
sustainability consequences of land privatisation for Timor Leste, with
reference to the experience of other developing countries in land
alienation, agricultural liberalisation and large monoculture cash
crops. I also present some reasons why Timor Leste?s constitutional ban
on foreign ownership of land is worth defending.
The problems come from three linked processes: the likely undervaluation
of land, poor accounting of the costs and benefits of large
monocultures, and the instability introduced through agricultural
Undervaluation of land Agricultural land in developing countries is
seriously undervalued when it is alienated, either by long-term lease or
sale. The AMP Government has suggested the land to be handed over to GT
Leste is unused and ?unproductive?. But with one of the fastest growing
populations on earth, Timor Leste will certainly have to expand its food
crop lands, in the very near future.
Reference to land being ?unused? is one factor that contributes to
undervaluation. Another is the uncertainty over title. Whose land is
this that is to be leased? Many disputes over title remain in Timor
Leste, a product of colonial history. A third factor is that most land
has never been commercialised and there is no market for land. With no
experience in valuing land, and short of cash, Timorese communities are
highly vulnerable to ?bad deals?.
The undervaluation of land is widespread. Studies I have carried out in
Papua New Guinea, show that local communities there have leased their
land to oil palm plantations for as little as $10 per hectare per year,
plus minimal royalties. Yet the subsistence production value of one
hectare of good land in PNG (the local market value of one family?s
food, grown and consumed) will often reach $5,000 per year, or five
times the minimum wage. Companion planted cash crops can add between
several hundred and several thousand dollars to this amount. Imagine the
total value of those thousands of dollars per year, over many
generations. This capacity of land to deliver sustainable yields, year
after year, is never fully reflected in rents or sale prices.
When PNG communities realise a company is making thousands of dollars
from their land, they want a share of that money ? but long term leases
creates legal barriers to their claims. Land is a people?s most precious
and enduring asset ? far more valuable than minerals, oil or gas. Yet
cash-poor communities often give away this precious asset, in their
desperation for a few dollars.
Poor accounting of large monocultures While land is undervalued, the
claimed social benefits of large monocultures are typically over-stated.
Corporate investors encourage this. Yet the extraction of profits from
local resources and labour is the main reason large monocultures are
created. So the income benefits to local communities are exaggerated and
the environmental costs are played down.
The AMP government plans to charge no rent at all ?during the first nine
years? for the 100,000 hectares of land offered to GT Leste Biotech. The
only consideration that can be seen, from the MOU and government
statements (and putting aside the possibility of corrupt payments), is
an ?expectation? of several thousand jobs, a vague offer to ?provide
community facilities? and promises to share some electricity capacity
and to sell sugar and ethanol at ?reasonable? prices.
However, from the MOU, there would be no claim on the company if this
?expectation? of thousands of jobs became just a few hundred. Further,
it is almost certain that most will be lowly paid jobs. While the
benefits for Timor are vague, the company?s rights in the MOU are more
emphatic. The first 50 years of the lease will be ?irrevocable? and
there will be ?no state participation of any sort, whatsoever? in the
business. That is, Timor Leste will not share any of the
There is also a suggestion to engage local smallholder farmers in cane
production, to provide additional fodder for the company?s sugar-ethanol
mill. This is the ?agro-nucleus estate? model promoted by the Asian
Development Bank, and seen in some parts of PNG over the past thirty
In PNG ?village oil palm? farmers are paid by for their oil palm fruit
contributions to the monopoly mill. However they are forced to accept
fruit prices set by the company, and complain bitterly about fruit
prices. The average income for oil palm farmers in PNG?s Oro province
(61 Kina per week) is higher than the minimum wage (37 Kina) but less
than half the average informal sector incomes (130 Kina) for example in
small businesses, fruit selling and transport.
Monocultures reduce the diversity of production in a region, and reduce
the capacity of small farmers to companion plant and spread their crop
options. Sugar cane is similar to oil palm in this regard. The land
clearing erodes and degrades the soil, silting up rivers and choking
surrounding coral reef. Over half the fertiliser used runs into the
water, causing algae blooms. In the oil palm areas of PNG there has been
obvious loss of crop diversity, biodiversity and damage to rivers.
Finally, monocultures undermine small farming and local food production
and contribute to food insecurity. The economic liberal argument is that
they produce more income, which can then be used to purchase imported
food. However most of that new income is appropriated by the investor
company and local communities become more dependent on cash income to
feed their families.
Small farms are undermined yet, as U.S. food security expert Peter
Rosset says: ?Small farms are ?multifunctional?: more productive, more
efficient and contribute more to economic development than large farms.
Small farmers can also make better stewards of natural resources,
conserving biodiversity and safeguarding the future sustainability of
Local communities are no better off financially with these monocultures
yet they bear very serious environmental and food insecurity costs. None
of this is properly accounted for when governments hand over precious
land to private investors.
Instability from agricultural liberalisation Concerns over sustainable
agriculture are closely linked to food security concerns and to the
current global food crisis. Until the recent crisis, brought on by
steeply rising food prices, small farmers had been hurt by cheap
imports. When imported staple food is cheap, farmers cannot justify
planting next season?s crop. They just cannot compete.
The earlier low prices were a result of heavy domestic subsidies by the
big grain exporters, such as Australia, the EU and the USA, and
pressures for agricultural liberalisation. Since the WTO?s Agreement on
Agriculture, the big powers have poured large subsidies into agriculture
(allowed under WTO rules as they are not directly ?trade related?), yet
tried to dismantle the tariff protection and food price regulation that
was more common in developing countries.
The UN?s Food and Agriculture Organisation (FAO) said in 2004: ?Although
lower basic food prices on international markets bring short-term
benefits to net food-importing developing countries, lower international
prices can also have negative impacts on domestic production in
developing countries that might have lingering effects on their food
security.? Indeed, some countries experienced famines from the impact of
low food prices on domestic farming.
PNG has few food security problems, because the land is fertile and
families have kept their traditional lands. However if we go to a poor
Caribbean country like Haiti we see a different picture. Like many
countries, Haiti had moved from more diverse staple foods (rice, corn,
cassava, millet) to greater dependence on rice. Yet Haiti had been
almost self-sufficient in rice, until the 1980s. Then, under financial
pressure from the World Bank it began to dismantle its tariffs and other
forms of protection. Haiti began to import 200,000 tonnes of rice per
year, mostly from the US. This drove many local farmers out of business
and, when prices rose again, poor people could not afford to buy rice.
Today, more than half the population of Haiti is food insecure or
Low food prices damage local production. High food prices hit poor
people who have to buy their food. This is the unstable situation
created by trade-dependent food patterns.
The recent high food prices have been driven by the high oil prices
(which contribute to fertiliser and transport costs), demand for richer
diets (meat, oil seed) in the wealthier countries and pressure on land,
including from the biofuel industry. The FAO points out that these
rising prices, in the last year, have pushed the number of hungry people
in the world from 850 million to nearly one billion.
Biofuels have raised introduced competition between food for people and
food for cars. The UN?s Special Rapporteur on the Right to Food, Jean
Ziegler, who has called biofuels a ?crime against humanity? puts it this
way: ?232kg of corn is needed to make 50 litres of bioethanol. A child
could live on that amount of corn for a year.?
Now, in the middle of Timor Leste?s own food crisis, it has been
proposed that Timor, on the one hand, gives away farm land which could
produce food and, on the other hand, participates in a global industry
which will raise even more the price of imported food. Will Timor export
ethanol at the expense of food for its children?
Concluding comments A prudent approach to food security, in any country
which does not have a staple food surplus, must involve strong measures
of domestic self-reliance and self-sufficiency. This includes Timor,
which has special reasons of history, environmental damage, population
growth and climate to be concerned about food security and sustainable
Putting aside the word games some agricultural exporting neighbours play
with the words ?self-reliance? and self-sufficiency?, self-reliance must
mean Timor seeking to grow most of its own food, support small farmers
to remain on their land, encourage domestic markets and place
agricultural exports in second place.
Such an approach will meet hostility from the big powers who advocate
agricultural liberalisation and the privatisation of land. But they are
looking to their own advantage and are not the ones who have to live
with food insecurity and environmental damage.
Niche and companion planted exports such as organic coffee and tropical
fruits may not compromise the land, but export oriented monocultures
certainly will. And after all, well managed tourism will raise many
times more money that any agricultural exports, and distribute that
money far more widely.
No sensible person should seriously link land privatisation and large
monoculture cash crops to ?agricultural sustainability and food
security?, but this is now happening in Timor Leste. It is the East
Timorese people who, with their great spirit of resistance, will have to
ensure that they do not, once again, become beggars in their own
Dr Tim Anderson is Senior Lecturer in Political Economy at the
University of Sydney.
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