1. Labour Market Effects of Large-Scale Agricultural Investments – Conceptual Considerations and Estimated Employment Effects – Annual World Bank Conference on Land and Poverty 12-07: Labor Market Effects of Large Scale Land-Based Investment The World Bank, Washington DC 17 March, 2016 Martin Ostermeier & Kerstin Nolte

2. Motivation Motivation | Goal and methodology | Conceptual framework | Results | Conclusion and next steps 2 Source: The Land Matrix Global Observatory (retrieved March 6th, 2016).  Increasing demand for land in low- and middle income countries  Impact and implications for target countries heavily debated  Employment creation a key factor amongst community benefits  Potential for employment creation is decisive for:  Achieving community benefits  Inclusive development International land acquisitions according to negotiation status Number of cases Intended sizeSize under contract (in million ha) Concluded deals 1,15556.2 38.7 Intended deals 20616.7 n.a. Failed deals 926.9 0.8 No information 762.0 1.0

3. Goal of the paper Motivation | Goal and methodology | Conceptual framework | Results | Conclusion and next steps 3  What happens to the rural labour market if a commercial farm is set up?  Does large-scale commercial farming lead to net employment creation? Methodology  Identify key determinants of the employment creation potential  Develop different scenarios in a transition matrix  Provide empirical estimates based on Land Matrix data

4. First round effect  Former land use  Brownfield investment  Greenfield investment  Higher crowding out  Crop planted  Annual crop  Perennial crop  More labour intensive  Production model  Contract farming  Preserving employment opportunities Conceptual framework 4 Motivation | Goal and methodology | Conceptual framework | Results | Conclusion and next steps

5. Second round effects  Backward linkages  Established global players  Mostly in industrialised countries  Forward linkages  High export rates of unprocessed goods  Mostly to industrialised countries  Employment creation effect rather unlikely Conceptual framework 5 Motivation | Goal and methodology | Conceptual framework | Results | Conclusion and next steps

6. Conceptual framework 6 Motivation | Goal and methodology | Conceptual framework | Results | Conclusion and next steps Final land use Former land use Commercial farm PerennialAnnual no CFCFno CFCF Brownfield investment Cultivated land Commercial agriculture 1a1b1c1d Greenfield investment Smallholder agriculture 2a2b2c2d Pastoralists 3a3b3c3d Forestry 4a4b4c4d Conservation 5a5b5c5d

7. Final land use Former land use Commercial farm Perennial crops (59%) Annual crops (41%) no CFCFno CFCFTotal Brownfield investment Cultivated land Commercial agriculture 1a1b1c1d 8%5%16%8%38% Greenfield investment Smallholder agriculture 2a2b2c2d 12%3%9%3%27% Pastoralists 3a3b3c3d 2%1%3%0%6% Forestry 4a4b4c4d 10%13%2%0%25% Conservation 5a5b5c5d 3%0% 4% Total (%)37%22%30%11%100% (n=958) Results 7 Motivation | Goal and methodology | Conceptual framework | Results | Conclusion and next steps

8. Results 8 Motivation | Goal and methodology | Conceptual framework | Results | Conclusion and next steps DeterminantAfricaLatin AmericaAsiaEastern EuropeOceania Former use Brownfield80%27%42%10%0% Greenfield20%73%58%90%100% Crop Annual60%73%19% 89%12% Perennial40%27%81%11%88% Production model CF27%5%17%4%8% No CF73%95%83%96%92%

9. Most large-scale agricultural investments…  Take place on greenfields  Plant annual crops  Do not apply contract farming schemes  Have weak linkages to other sectors Next steps  Quantify net employment effect (large-scale vs. smallholder farm)  Quality of jobs created  E.g. compensation of income loss, type of employment, etc.  Extend regional analysis Concluding remarks 9 Motivation | Goal and methodology | Conceptual framework | Results | Conclusion and next steps

10. Martin Ostermeier / Dr. Kerstin Nolte GIGA German Institute of Global and Area Studies Neuer Jungfernstieg 21 / 20354 Hamburg Tel. +49-(0)40-42825-768 Email: Ostermeier@giga-hamburg.de Skype: Martin-Ostermeier Homepage: http://www.giga-hamburg.de Contact 10

11. Results 11 Gliederung | Gliederung | Gliederung | Gliederung | Gliederung

12. Results 12 Gliederung | Gliederung | Gliederung | Gliederung | Gliederung Source: The Land Matrix Global Observatory (retrieved Jan 12th, 2016).

13. Results 13 Gliederung | Gliederung | Gliederung | Gliederung | Gliederung Source: The Land Matrix Global Observatory (retrieved Jan 12th, 2016).

14. Results 14 Gliederung | Gliederung | Gliederung | Gliederung | Gliederung Source: The Land Matrix Global Observatory (retrieved Jan 12th, 2016).

15. Final land use Former land use Commercial farm Perennial cropsAnnual crops no contract farming contract farming no contract farming contract farming Brownfield investments Cultivated landSmallholder1a1b1c1d Commercial farm 2a2b2c2d Greenfield investments Pastoralists 3a3b3c3b Forestry 4a4b4c4b Conservation 5a5b5c5b Conceptual framework 15 Introduction | Importance of agriculture | Conceptual framework | Results | Conclusion | Next steps and open questions