Foreign Land Acquisitions (FLAs): Neo-colonial landgrab?
Trends According to IFPRI, 15-20m hectares of farmland in poor countries have been subject to transactions or talks involving foreigners from these deals are worth $20 billion-30 billion. According to WB tallies from 463 projects reported in farmlandgrab.org between Oct June 2009, at least 46.6M has. are involved, mostly in sub-saharan africa. 21% of these are already in operation, 70% have been approved The major current investors are the Gulf States but also China and South Korea. Investors are primarily private sector (investment or holding companies rather than agro-food specialists). Governments and sovereign wealth funds are also involved directly or by providing finance and other support to private investors.
Trends main targets are countries in Africa (e.g. Sudan, Ghana, Madagascar) but there are also investments in Southeast Asia (e.g. Indonesia, Philippines) and South America (e.g. Brazil, Argentina, Paraguay) Target countries are perceived to have plenty of cheap and underutilized land available, favourable climate, cheap local labour In host countries it is governments who are engaged in negotiating investment deals.
Trends Land most in demand are those close to water resources, close to markets and from which produce can be easily exported. Focused on staples or biofuels such as wheat, maize, rice, jatropha for repatriation rather than traditional cash crops (e.g. tropical fruits) for export they involve acquisition of land and actual production rather than looser forms of joint venture (e.g. outgrowing arrangements)
Drivers 1. Greater food insecurity; 2. Energy insecurity (rush towards the production of agrofuels); 3. Water insecurity; 4. Speculation on future increases in the price of farmland; 5. Increased demand for certain raw commodities from tropical countries; 6. Expected subsidies for carbon storage through plantation and avoided deforestation
Benefits? More investment in rural areas poverty reduction Employment creation transfer of technologies improve the access of local producers to markets increase in public revenues Improved food security for investor countries
Risks False economic benefits Displacement, dispossession and impoverishment of small peasants and other marginalized communities Greater food insecurity for affected communities and host countries Environmental degradation Social and political conflict Undue foreign political interference and influence
Principles for responsible agro- investment (WB, FAO, IFAD, UNCTAD) 1: Respecting land and resource rights. Existing rights to land and associated natural resources are recognized and respected. 2: Ensuring food security. Investments do not jeopardize food security but strengthen it. 3: Ensuring transparency, good governance, and a proper enabling environment. Processes for acquiring land and other resources and then making associated investments are transparent and monitored, ensuring the accountability of all stakeholders within a proper legal, regulatory, and business environment. 4: Consultation and participation. All those materially affected are consulted, and the agreements from consultations are recorded and enforced.
Principles for responsible agro- investment (WB, FAO, IFAD, UNCTAD) 5: Responsible agro-investing. Investors ensure that projects respect the rule of law, reflect industry best practice, are economically viable, and result in durable shared value. 6: Social sustainability. Investments generate desirable social and distributional impacts and do not increase vulnerability 7: Environmental sustainability. Environmental impacts of a project are quantified and measures are taken to encourage sustainable resource use while minimizing and mitigating the risk and magnitude of negative impacts.
Actual experience (World Bank observations) Public institutions in target countries not only lack the capacity to handle the upsurge in investor interest but are also not geared toward attracting viable investments. Approval processes are often ill-defined, centralized, and discretionary, with different parts of the same government often at odds with each other. In some cases investors can benefit more from trying to navigate the system than from trying to design investments that generate jobs and increase productivity. Consultation with local right holders is in many cases superficial, with a lack of prior information and no written agreements that would clearly specify different parties’ responsibilities and thus could be used to provide a basis for redress in case agreements are not adhered to.
Actual experience (World Bank observations) Land boundaries (and rights) are often ill-defined, and environmental and social safeguards can be neglected. Weak protection of land rights may lead to uncompensated land loss by existing land users or land being given away well below its true social value. Government capacity to monitor compliance is severely limited. But instead of relying on publicity of relevant documents and independent third party verification, agreements are surrounded by an air of secrecy that makes public reporting and monitoring near impossible. “Many investments... failed to live up to expectations and, instead of generating sustainable benefits, contributed to asset loss and left local people worse off than they would have been without the investment. In fact, even though an effort was made to cover a wide spectrum of situations, case studies confirm that in many cases benefits were lower than anticipated or did not materialize at all.”
Recommendations Reorient agri investment to support smallholder based sustainable agriculture Agrarian reform; strengthen land tenure of smallholders Governments should enact measures to prioritize food security at the domestic level as the top priority Restrict investments that impinge on right to food and violate free, prior, informed consent and full disclosure