FOOD: Spotlight on "land grab" deals
JOHANNESBURG, 15 November 2012 (IRIN) - "Land-grab" deals involving
multinationals in developing countries have often been seen as detrimental
to food security and the livelihoods of millions of small farmers, but a new
study puts such deals into the context of agricultural investments more
generally.
“Yes, these deals are important, but in most countries domestic investors
acquire more land than foreigners,” said Pascal Liu, one of the editors of a
<
http://www.fao.org/fileadmin/templates/est/INTERNATIONAL-TRADE/FDIs/Trends_
publication_12_November_2012.pdf> new report by the Food and Agriculture
Organization (FAO) which looks at various forms of foreign investments in
agriculture including land deals.
Liu says most agriculture-related foreign direct investment (FDI) flows into
food processing (such as - fruit juices, sauces and tinned food),
distribution and retailing rather than into land acquisition.
The FAO researchers, in collaboration with the International Institute for
Environment and Development (IIED), examined foreign investments in nine
countries (Ghana, Mali, Senegal, Uganda, Tanzania and Zambia Thailand,
Cambodia and Brazil) selected on the basis of the availability of data and
the ability of local institutions to provide additional research.
FAO estimates that investments of more than US$80 billion a year are needed
globally to keep pace with population and income growth, and feed more than
nine billion people in 2050. “High food prices in recent years have cast a
spotlight on the need to boost investment in poor countries, so that farmers
can respond to rising demand, and as a means to raise rural incomes," said
Jonathan Hepburn of the Geneva-based International Centre for Trade and
Sustainable Development.
Although FDI has risen significantly, especially in Asia and Latin America
over the past decade, only a small share goes to agriculture - less than 5
percent in sub-Saharan Africa, said Liu.
The FAO study also looked at research on "land-grab" deals by the
<
http://landportal.info/landmatrix> Land Matrix, a partnership between the
Centre for Development and Environment (CDE) at the University of Bern in
Germany, the French Centre de coopération internationale en recherche
agronomique pour le développement (CIRAD), the German Institute of Global
and Area Studies (GIGA), the German Agency for International Cooperation
(GIZ) and the International Land Coalition (ILC) - a global alliance of NGOs
and intergovernmental organizations.
Ward Anseeuw, a CIRAD researcher at the University of Pretoria, told IRIN
the "nuanced viewpoints" in the FAO study on agricultural production,
diversification of crops, employment creation, technology transfer and
infrastructure development, "based on empirical case studies and presenting
mixed results, are important contributions to a too often ideologized
debate”.
IRIN summarizes some of the findings from the study and other reports:
1. Lack of data prevents the establishment of trends in FDI, including those
relating to the acquisition of land for agriculture. The number of countries
for which data are available varies from year to year. Looking at
agriculture alone, comparable data are available for 44 countries, so you
never have the complete picture.
2. Media reports on “land-grab” deals are not entirely reliable, as most
countries do not have accurate records. In Mozambique, for example, media
sources indicated that more than 10 million hectares were acquired between
2008 and 2010, whereas a national inventory for 2004-2009 calculated a
figure closer to 2.7 million hectares.
3. The Land Matrix, which collates and seeks to cross-check information on
large-scale land acquisitions, is a more reliable source but is also
affected by other factors such as the lack of transparency in such deals.
Investors and governments may not want to publicize such deals for various
reasons. And even when agreements are signed and sealed, the portion of land
that is actually cultivated could be very different from the total amount
acquired. Kerstin Nolte, a researcher with GIGA, told IRIN: "What the Land
Matrix data confirms is that indeed something is going on - we find that a
large share of the deals are actually implemented (as opposed to
speculation) and the noise made about `land grabbing’ is based on a real
phenomenon."
4. Investors are targeting countries with weak land tenure security but at
the same time relatively high levels of investor protection. "Some 66
percent of the deals reported in the Land Matrix were in countries with high
prevalence of hunger." This was backed up by the
<
http://www.irinnews.org/report/96521/FOOD-Land-grabbing-linked-with-hunger>
2012 Global Hunger Index.
5. Good quality, fertile land with irrigation is being targeted by
investors. Most deals also target areas close to cities, which reduces the
scope for infrastructural development spin-offs.
6. Countries can reduce the risk of entering into harmful deals by taking
guidance from international agreements such as the Voluntary Guidelines on
the Responsible Governance of Tenure of Land, Fisheries and Forests in the
Context of National Food Security (adopted in May 2012 by the Committee on
World Food Security), or Voluntary Principles for Responsible Agricultural
Investment which respect rights, livelihoods and resources. Liu said
<
http://www.irinnews.org/Report/95112/SIERRA-LEONE-Land-deals-beginning-to-s
tir-discontent> Sierra Leone had approached FAO to develop guidelines for
sustainable bioenergy investment. "They [Sierra Leone] were being approached
by several foreign investors and wanted to do it properly without
compromising their food security and farmers."
7. As far as large-scale land deals are concerned, different business models
which involve small farmers while letting them keep ownership of their land,
work best. A number of models envisage varying degrees of participation,
including contract farming arrangements; there are also more innovative
models such as joint ventures between foreign investors and a local farmer
cooperative.
<
http://www.irinnews.org/Report/89689/FOOD-Small-farmers-should-get-on-the-l
and-grab-bandwagon> In such models, local farmers and other members of the
local community are active partners.
8. The impact of FDI varies by project and type of business model adopted,
and it is difficult to generalize. In most cases jobs were created
initially, but livelihoods may not have been sustained. Projects became
increasingly mechanized or the crop being produced was changed; less labour
was needed. Small farmers are often displaced, pastoralists lose grazing
land; general income loss may lead to social fragmentation. GIGA’s Nolte
said research on the impact of FDI relating to land acquisition “is not very
advanced, yet. The Land Matrix data is very poor on this. We cannot cite
good examples of land deals; this is extremely difficult as land deals are
dynamic. Impacts are likely to change over the course of an investment
project.”
9. Business models in which small farmers got to sell their produce to a
contractor at higher prices (or where locals earned additional income for
services such as weeding) helped the local economy. Another positive
spin-off was when small farmers who worked as wage earners reinvested their
earnings in their own farms.
10. In some investment projects small farmers acquired new skills. But, “the
studies suggest that the actual transfer of technology is seldom up to the
level announced by the investors.”
11. The impact of FDI on local livelihoods depends on the production system
and crops selected. Imported synthetic inputs and equipment are unlikely to
help the local economy. Crops such as coffee, fruit and vegetables would
involve more small farmers than commercial crops.
12. At the national level, FDI has brought about some substantial benefits.
Ghana’s total palm oil output is expected to improve quite substantially
because of investment by a single transnational company. In Uganda, rice
production nearly doubled from 120,000 tons in 2002 to 200,000 in 2010 (The
Daily Monitor, Nov 2011) because of the introduction of a new rice variety
by private sector investments. In Ghana, export earnings from
non-traditional agricultural commodities increased four-fold between 2000
and 2009 thanks to FDI.
13. Ten countries have received the bulk (70 percent) of FDI targeted at
land acquisition: Sudan, Ethiopia, Mozambique, Tanzania, Madagascar, Zambia
and the Democratic Republic of Congo, the Philippines, Indonesia and Laos.
14. Governments are increasingly supporting investments by their private
sectors in foreign land deals, rather than investing directly in
agricultural land in developing countries. "This results partly from a
strategy of risk reduction, including financial risks and risks to their
reputation in the wake of negative media coverage. This support can take the
form of public-private partnerships whereby the government provides or
guarantees loans and provides tax rebates, technical assistance or other
means of assistance," said the FAO study.
15. South African companies lead African investment on the continent.
Globally, most investors are focusing their agriculture-related FDI in
Africa - in Nigeria (with UK and Netherlands being the top two investors),
South Africa (Switzerland and Netherlands), Ghana (UK and USA), Egypt (Saudi
Arabia and Switzerland) and Angola (USA and UK).
16. In Asia - Japan leads investment, followed by China. Global investors
tend to favour China, India, Vietnam and Indonesia.
17. FDI encourages the diversification of crops. In Senegal FDI contributed
positively to the production of some high quality fresh fruits, according to
the FAO study.
jk/cb
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Received on Thu Nov 15 2012 - 18:09:49 EST
