Increasing Investments in Land and Agriculture – Who Benefits?
Posted 11:41 PM by Internal Voices in Labels: 9th Edition
Nina Porst, Intern at FAO Brussels, Belgium
In the past year, reporting on large-scale international land deals seems to have increased. Articles on Saudi Arabian rice grown in Ethiopia, a failed land deal by a South Korean company in Madagascar and a pan-African conglomerate leasing 25.000 ha of rice paddies in Angola are just a few examples.(1) This may indicate that foreign investment in agriculture is increasing, especially in developing countries. Against a backdrop of climate change, overall population increase and food, fuel and financial crises, what impact is this trend likely to have on the world’s poor?
With a combined world population that is set to increase and with urbanization on the rise, it is not surprising that governments look towards investing in large foreign land masses as a part of their food security strategies. More people will have to be fed and many of those people will not, due to increased urbanization, be able to produce their own food. However, investments in land abroad are not the sole domain of governments (often via state-owned enterprises). In fact, as concluded in a new report by the FAO, IFAD and IIED, private enterprise has also begun to show an interest in investing in land abroad.(2) This is likely a reflection of the multiple current incentives for engaging in agricultural production, including of course food production, but also production of biofuels, non-food commodities and competitive returns from agriculture or land.(3)
Given the projected impacts of climate change, there is certainly a need for investment in agriculture, especially in the world’s poorest regions. By 2020, in some countries yields from rain-fed agriculture could be reduced by up to 50% and investment in irrigation is therefore necessary.(4) According to the World Investment Report 2009, recently launched by UNCTAD, FDI can indeed help fill the investment gap in agriculture in developing countries, as well as that in technology and other resources.(5) According to the study by FAO/IFAD/IIED, a renewed interest in agriculture as a source of employment, growth and revenue is present among many African countries. This is reflected in national-level policy reforms to improve conditions for foreign investors in for example Mali (2005), Mozambique (1993) and Tanzania (1997).(6) As such, there seems to be widespread recognition of the potential positive impacts of foreign investment in agriculture. However, there are also potential negative impacts lurking around the corner, of which it is also worth taking note.
Although there is a perception that land is widely available in Africa, it is important to take into account that most land is under claim and is in use. The problem is that claims are often based on unwritten tenure systems founding their legitimacy on “tradition” – though in practice, they have changed profoundly over time as a result of cultural interactions, population pressures, socio-economic change and political processes.(7) Hence, there is a real risk that local farmers’ claims may be ignored and that they will subsequently lose access to their land. Although very little is yet known about the precise impacts of these land deals, be they positive or negative, certain recommendations can be made to both host governments and investors with the aim of maximizing benefits and development opportunities.
Recommendations for investors include not underestimating the importance of image and reputational risk, making careful assessments of the local context and making sure there is clarity with regard to costs and benefits. Host countries, on the other hand, should conduct state-of-the-art assessments of the social and environmental impacts of proposed investments, make sure that contracts are structured to maximize sustainable development and secure local land rights.(8) It may be, as stated by Alexander Müller of the FAO, that we are observing “the beginning of a story” (9), and for now, we are waiting for the plot to unfold. Certainly, land acquisitions, and FDI in agriculture more generally, are trends bound to be of interest in the near and long-term future.
References
(1) BBC, 2009, “Madagascar Leader Axes Land Deal”, 19 March, http://news.bbc.co.uk/2/hi/africa/7952628.stm
Blas, j. , 2009, “Saudis Get First Taste of Foreign Harvest”, Financial Times, http://www.ft.com/cms/s/0/bc1e4974-0906-11de-b8b0-0000779fd2ac.html
Burgis, T. , 2009, “Lonrho Secures Rice Land Deal in Angola”, Financial Times, http://www.ft.com/cms/s/0/63460024-e342-11dd-a5cf-0000779fd2ac.html
(2) Cotula, L. , Vermeulen, S. , Leonard, R. and Keeley, J. , 2009, Land Grab or Development Opportunity? Agricultural Investment and International Land Deals in Africa. IIED/FAO/IFAD, London/ Rome. Available at: ftp://ftp.fao.org/docrep/fao/011/ak241e/ak241e.pdf
(3) See report referenced above, pages 52-58.
(4) Figures from Müller, A., 2009, “Land Acquisitions and Food Security”, presentation at FAO Launch of Study, 8/9/2009 European Parliament, Brussels. Power point on file with author.
(5) “World Investment Report 2009: Transnational Corporations, Agricultural Production and Development”, press briefing by Professor Daniël Van Den Bulcke, 16/9/2009, at UNRIC. Power point on file with author.
(6) Cotula, L. , Vermeulen, S. , Leonard, R. and Keeley, J. , 2009, Land Grab or Development Opportunity? Agricultural Investment and International Land Deals in Africa. IIED/FAO/IFAD, London/ Rome, pp. 58-59. Available at: ftp://ftp.fao.org/docrep/fao/011/ak241e/ak241e.pdf
(7) Ibid, pp. 90.
(8) For more information see Ibid, pp. 102-110.
(9) At the FAO Launch of Study, 8/9/2009 European Parliament, Brussels.
In the past year, reporting on large-scale international land deals seems to have increased. Articles on Saudi Arabian rice grown in Ethiopia, a failed land deal by a South Korean company in Madagascar and a pan-African conglomerate leasing 25.000 ha of rice paddies in Angola are just a few examples.(1) This may indicate that foreign investment in agriculture is increasing, especially in developing countries. Against a backdrop of climate change, overall population increase and food, fuel and financial crises, what impact is this trend likely to have on the world’s poor?
With a combined world population that is set to increase and with urbanization on the rise, it is not surprising that governments look towards investing in large foreign land masses as a part of their food security strategies. More people will have to be fed and many of those people will not, due to increased urbanization, be able to produce their own food. However, investments in land abroad are not the sole domain of governments (often via state-owned enterprises). In fact, as concluded in a new report by the FAO, IFAD and IIED, private enterprise has also begun to show an interest in investing in land abroad.(2) This is likely a reflection of the multiple current incentives for engaging in agricultural production, including of course food production, but also production of biofuels, non-food commodities and competitive returns from agriculture or land.(3)
Given the projected impacts of climate change, there is certainly a need for investment in agriculture, especially in the world’s poorest regions. By 2020, in some countries yields from rain-fed agriculture could be reduced by up to 50% and investment in irrigation is therefore necessary.(4) According to the World Investment Report 2009, recently launched by UNCTAD, FDI can indeed help fill the investment gap in agriculture in developing countries, as well as that in technology and other resources.(5) According to the study by FAO/IFAD/IIED, a renewed interest in agriculture as a source of employment, growth and revenue is present among many African countries. This is reflected in national-level policy reforms to improve conditions for foreign investors in for example Mali (2005), Mozambique (1993) and Tanzania (1997).(6) As such, there seems to be widespread recognition of the potential positive impacts of foreign investment in agriculture. However, there are also potential negative impacts lurking around the corner, of which it is also worth taking note.
Although there is a perception that land is widely available in Africa, it is important to take into account that most land is under claim and is in use. The problem is that claims are often based on unwritten tenure systems founding their legitimacy on “tradition” – though in practice, they have changed profoundly over time as a result of cultural interactions, population pressures, socio-economic change and political processes.(7) Hence, there is a real risk that local farmers’ claims may be ignored and that they will subsequently lose access to their land. Although very little is yet known about the precise impacts of these land deals, be they positive or negative, certain recommendations can be made to both host governments and investors with the aim of maximizing benefits and development opportunities.
Recommendations for investors include not underestimating the importance of image and reputational risk, making careful assessments of the local context and making sure there is clarity with regard to costs and benefits. Host countries, on the other hand, should conduct state-of-the-art assessments of the social and environmental impacts of proposed investments, make sure that contracts are structured to maximize sustainable development and secure local land rights.(8) It may be, as stated by Alexander Müller of the FAO, that we are observing “the beginning of a story” (9), and for now, we are waiting for the plot to unfold. Certainly, land acquisitions, and FDI in agriculture more generally, are trends bound to be of interest in the near and long-term future.
References
(1) BBC, 2009, “Madagascar Leader Axes Land Deal”, 19 March, http://news.bbc.co.uk/2/hi/africa/7952628.stm
Blas, j. , 2009, “Saudis Get First Taste of Foreign Harvest”, Financial Times, http://www.ft.com/cms/s/0/bc1e4974-0906-11de-b8b0-0000779fd2ac.html
Burgis, T. , 2009, “Lonrho Secures Rice Land Deal in Angola”, Financial Times, http://www.ft.com/cms/s/0/63460024-e342-11dd-a5cf-0000779fd2ac.html
(2) Cotula, L. , Vermeulen, S. , Leonard, R. and Keeley, J. , 2009, Land Grab or Development Opportunity? Agricultural Investment and International Land Deals in Africa. IIED/FAO/IFAD, London/ Rome. Available at: ftp://ftp.fao.org/docrep/fao/011/ak241e/ak241e.pdf
(3) See report referenced above, pages 52-58.
(4) Figures from Müller, A., 2009, “Land Acquisitions and Food Security”, presentation at FAO Launch of Study, 8/9/2009 European Parliament, Brussels. Power point on file with author.
(5) “World Investment Report 2009: Transnational Corporations, Agricultural Production and Development”, press briefing by Professor Daniël Van Den Bulcke, 16/9/2009, at UNRIC. Power point on file with author.
(6) Cotula, L. , Vermeulen, S. , Leonard, R. and Keeley, J. , 2009, Land Grab or Development Opportunity? Agricultural Investment and International Land Deals in Africa. IIED/FAO/IFAD, London/ Rome, pp. 58-59. Available at: ftp://ftp.fao.org/docrep/fao/011/ak241e/ak241e.pdf
(7) Ibid, pp. 90.
(8) For more information see Ibid, pp. 102-110.
(9) At the FAO Launch of Study, 8/9/2009 European Parliament, Brussels.
0 comment(s) to... “Increasing Investments in Land and Agriculture – Who Benefits?”
0 comments:
Post a Comment