New Agriculturist: Developments - 'Land grabbing'

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'Land grabbing' - realising the benefits

'Land grabbing' - realising the benefits

Foreign investment may increase agricultural productivity in Africa, but who ultimately will benefit?
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The acquisition of land in developing countries through outright purchase or long-term lease is growing apace. Whether seeking financial profit or using land for outsourcing food production, a dramatic spate of deals seems to have been triggered by the recent food crisis. And while the potential for investment is welcomed by many developing countries, there are increasing concerns over the impact on the poor. In response, IFPRI has proposed an international code of conduct to ensure that contracts "are designed in ways that will reduce the threats and facilitate the opportunities for all parties involved."

Benefits of investment in land can include increased productivity and employment, development of agricultural technology, and construction of schools and health facilities and other types of rural infrastructure. But these benefits do not always materialise. Alexandra Spieldoch of the Institute for Agriculture and Trade Policy warns, "Smallholder producers are the most vulnerable. They have the least political voice, they are often the least well organised, and they lack bargaining power."

Growing concerns

Unequal power relations leave smallholders at risk of exploitation, eviction and loss of land, without consultation or compensation, particularly if land rights are customary and not legally recognised. "Denying people the right to continue with their livelihoods, by taking away the natural resources on which their livelihoods depend, is a violation of their human rights," stresses Michael Taylor from the International Land Coalition. "One myth is that this land is empty or unused, and that simply is not true. It is naïve for investors to think they can take away so much land and not face a backlash."

In 2008, South Korean-owned Daewoo Logistics Corporation was granted the lease for 1.3 million hectares in Madagascar - half the arable land on the island - causing widespread protest. Although scrapped after the recent coup, the deal for a 99-year lease added to growing concern that the rights of poor rural communities are under threat, as wealthier countries take steps to secure their access to, and control over, the production and supply of food.

Irrigation can dramatically increase agricultural productivity, but can also have negative impacts for local people and the environment
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As communities lose access to land for local food production, IFPRI stresses, "the very basis on which to build food sovereignty is simply being bartered away." Long-term environmental damage is also a concern: large-scale intensive agriculture can threaten biodiversity, and promote land degradation though soil erosion and increased salinity. Large-scale irrigation can also reduce water availability to local communities.

Recommendations for regulation

IFPRI believes that the benefits for governments and local communities depend primarily on how foreign investments are designed and implemented. In response to their concerns, they have called for a dual approach involving implementation of a code of conduct and strengthening of the policy environment and the capacity of host governments to negotiate with potential investors.

The key elements of the proposed code of conduct include: transparency in negotiations; respect for existing land rights; sound and sustainable agricultural practices; and revised national trade policies, so that exports are curtailed and domestic food supply is prioritised when food security is at risk. IFPRI also recognises a need for enforcement, or "teeth", and calls for legal penalties to be modelled on the European Union's code of conduct on bribery, so that investors can be held to account.

Maximising the benefits

Secondly, IFPRI recommends that in order to take advantage of potential opportunities, host countries need to improve their investment climates. For example, IFPRI proposes that contract farming by local, smallholder farmers, can create win-win investments. ExAgris Africa, a UK-based company, allocates about 20 per cent of its commercial farmland in Malawi to associations of smallholder farmers, providing training, credit inputs, and offering better prices for produce. "In return, we benefit from improved farm security, a growing local economy and a relationship in which the business and the smallholder associations help each other out as need arises," says Jim Goodman, ExAgris's Managing Director.

Through partnerships with private investors, farmers can achieve increased production and better access to markets
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According to Goodman, the blanket labelling of all farm investments as "land grabbing" is undermining some of the positive aspects of land investment. "Sustainable and profitable farming requires not only fertile land and plentiful labour," he says, "but also substantial long term capital investment and appropriate technical and financial management to realise the available potential." When all of these factors are in place, he argues, the benefits, such as increased rural employment, increased national food security and local economic development, will begin to emerge.

But Ruth Meinzen-Dick of IFPRI warns, "If the local people are not deriving a benefit, you can expect protests," as the Daewoo-Madagascar deal clearly demonstrated. And, despite Goodman's optimism, the potential threats to poor communities remain. A combination of international law, government policies, and the involvement of civil society, the media and local communities is required, states IFPRI. Only then will agreements be properly negotiated, sustainable farming practices used and benefits shared.

Date published: July 2009