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Africa: Land, Take 2
AfricaFocus Bulletin
Oct 28, 2010 (101028)
(Reposted from sources cited below)
Editor's Note
A World Bank report leaked to the Financial Times in late July on
"The Global Land Rush" reportedly documented a devastating picture
of weak land governance and poorly thought-out investments, despite
a few examples of the sustainable and equitable investment
practices it called for. By the time the report was published in
September, the title had become "Rising Global Interest in
Farmland."
Despite cautious bureaucratic language, however, the published
report still lays out criteria that the authors acknowledge are
rarely being met. It notes that many announced deals had not been
implemented at all or performed poorly, that existing rights to
supposedly "unused" land were often not considered, and that the
schemes were rarely if ever integrated into national development
plans. On the basis of a review of land availability and
productivity by country, it also stresses that the primary need is
not for land expansion but rather improved productivity on existing
land, primarily small-holder farms.
The question, of course, is whether the World Bank's future
programs will take into account its own evaluation. But the study
has undoubtedly strengthened the case for skepticism about promised
benefits from large-scale land deals.
This AfricaFocus Bulletin contains excerpts from a summary note on
the report which was jointly published by the World Bank's
Agricultural and Rural Development & Development Economics Unit.
Both the note and the full report are available on the World Bank
website (http://www.worldbank.org/rural).
There are a large number of recent reports on this issue, both from
international agencies and from non-governmental research and
advocacy groups.
Several additional excerpts of particular interest are in two other
AfricaFocus Bulletins released today, available on the web but not
sent out by e-mail to avoid overloading your mailboxes.
- "Africa: Questionable Land Investments"
(http://www.africafocus.org/docs10/ag1010b.php) has excerpts from
a report from the Oakland Institute on IFC support for land deals
(with a foreword by Howard G. Buffett) and a report from Friends of
the Earth on the role of European biofuel investments in African
Countries.
- "Africa: Land Grab or Development"
(http://www.africafocus.org/docs10/ag1010c.php) contains excerpts
from a report by the UN Special Rapporteur on the Right to Food,
with suggested principles for large-scale agricultural investment,
and from the executive summary of a 2009 study of recent land deals
in Ethiopia, Ghana, Madagascar, Mali, Sudan, Mozambique, and
Tanzania, by a team from the FAO, IFAD, and the International
Institute for Environment and Development.
For additional relevant commentary and analysis, see also
(1) http://www.stwr.org/land-energy-water/overview.html
Direct URL to note on World Bank report and related links:
http://tinyurl.com/29xeh5m
(2) Raj Patel, "World Bank on land grabs: It's all good unless
you're African, a woman, disempowered, or poor"
http://rajpatel.org / direct URL: http://tinyurl.com/3xrsaje
(3) GRAIN Landgrab page, includes link to October 2008 report
http://www.grain.org/landgrab
(4) Annual World Bank Conference on Land Policy and Administration
http://tinyurl.com/2alhkr7
(5) Danielle Nierenberg and Bernard Pollack, "Innovations in Access
to Land: Land Grab or Agricultural Investment?", Huffington Post,
August 5, 2010
http://tinyurl.com/34us9l6
(6) The Oakland Institute
http://oaklandinstitute.org/
Has several related reports, including the recent (Mis)Investment
in Agriculture: The Role of the International Finance Corporation
in Global Land Grabs and The Great Land Grab (October 2009)
For previous AfricaFocus Bulletins on issues related to
agriculture, see http://www.africafocus.org/agexp.php
++++++++++++++++++++++end editor's note++++++++++++++++++++
Rising Global Interest in Farmland and the Importance of
Responsible Agricultural Investment
Jointnotes: Land Policy and Administration
World Bank,
Agriculture and Rural Development & Development Economics
http://www.worldbank.org/rural
There are one billion hungry people worldwide. The food and fuel
price spike in mid-2008 and continuing price volatility have
underscored the vulnerability of the world's food system to shocks
- such as the losses in crop production in the summer of 2010 that
prompted Russia to ban wheat exports, leading to an increase in
wheat prices of more than 70 percent in five weeks. These price
spikes have had a number of repercussions, including a desire by
countries dependent on food imports to secure food supplies in the
face of uncertainty and market volatility, speculation on land and
commodity price increases, and a search for alternative energy
sources. These factors have prompted a sharp increase in investor
interest in acquiring significant quantities of farmland, water,
and forested areas in both developing and emerging countries.
Some see this phenomenon of large-scale land acquisition as an
opportunity to overcome long term underinvestment in agriculture,
catalyze technology and skills transfers, increase agricultural
productivity, and reduce poverty. Such investments could allow
countries with abundant or underutilized land and large yield gaps
to gain access to technology, increase employment, and create the
preconditions for sustained and broad-based development. Others
point to the risks as eagerness to attract investors, where land
and resource rights are ill defined and institutional capacity is
weak, could result in conflict, and environmental damage.
If the world is to deliver on its goal of halving poverty and
hunger by 2015, developing countries need to boost agricultural
productivity, improve access to food markets, decrease
vulnerability to agricultural risks, and create better and more
sustainable rural livelihoods. Foreign investment can play a role
in helping developing countries meet these goals. But there is an
urgent need to attract not just more investment, but better
investment that contributes to sustainable agricultural growth in
the host country.
The World Bank's work on land policy and administration and
responsible agricultural investment or "agro-investment" builds on
its commitment to support country efforts to improve agriculture's
contribution to food security, create wealth among the poor,
facilitate economic transformation, and provide environmental
services. The World Bank is especially concerned that such
large-scale resource acquisitions do not disadvantage smallholder
farmers, who depend on land for their livelihoods.
While the issue has been hotly debated, this debate has suffered
from two main weaknesses. On the one hand, there has been a dearth
of rigorous empirical analysis of what is happening on the ground.
On the other hand, most attention has been focused on investor
demand rather than on the availability of potentially cultivable
land and countries determination of whether larger-scale farming
could complement smallholder agriculture to promote broad-based
rural development. The report Rising Global Interest in Farmland:
Can it Yield Sustainable and Equitable Benefits? responds to these
issues. It reviews global trends of land expansion as well as
empirical evidence on land acquisitions in 14 countries between
2004 and 2009: Brazil, Cambodia, Democratic Republic of Congo,
Ethiopia, Indonesia, Liberia, Lao PDR, Mexico, Mozambique, Nigeria,
Peru, Sudan, Ukraine, and Zambia.
This is complemented by a review of the policy framework and an
assessment of global land availability based on agro-ecological
simulations.
Rising Global Interest in Farmland points to examples where
investment provided large and sustained benefits to local
populations. In many cases however, desired benefits were not
achieved. Especially in Africa, investments often did not achieve
their full potential in terms of productivity and poverty reduction
because of:
- Weak land governance and a failure to recognize or protect local
communities' land rights;
- Lack of country capacity to process and manage large-scale
investments;
- Investor proposals that were insufficiently elaborated or
technically non-viable; and
- Lack of a development strategy to determine whether large-scale
investment can be instrumental in helping the host country to
achieve its development objectives, and if it is suitable, where
and how investment can contribute to those objectives.
Additionally, in many countries, a widespread lack of information
makes it difficult for public institutions to properly do their
jobs. Without addressing this lack of information, even the most
progressive regulations will be difficult or impossible to enforce,
corruption can flourish, and it will be difficult to attract
serious investors. It will be critical to increase access to
information and establish ways in which it can be used to enforce
regulations and allow open debate to inform policies and
regulations, in addition to strengthening governments' own
structures and making data publicly accessible.
The report also identifies the 'yield gaps,' the amount by which a
country's actual production falls short of its potential
production. Yield gaps, together with the amount of land that is
available for expansion is used to classify countries into a series
of four broad typologies (box 1).
BOX 1: Typology of countries according to potentially available
land and yield gap
Type 1: Little land for expansion, low yield gap. ...
Type 2: Suitable land available, low yield gap. In countries where
land is relatively abundant and technology, infrastructure, and
human capital relatively advanced, the public sector should
establish and maintain an appropriate regulatory framework for
efficient factor markets and the protection of areas with high
social or environmental values.
Type 3: Little land available, high yield gap. In countries with
little cropland available, low yields, and high population density,
increasing agricultural productivity will require effective public
investment in technology, infrastructure, and market development.
To effectively reduce poverty, private investment should target
smallholders, particularly where non-agricultural employment is
scarce.
Type 4: Suitable land available, high yield gap. In countries with
low population density and low yields, smallholder expansion may be
limited by labor supply. It may be appropriate to encourage outside
investors to introduce labor-saving mechanization on large farms.
The public sector should actively promote contractual arrangements
that generate multiplier effects benefitting local smallholders.
Review of the policy, legal, and institutional frameworks also
leads the report to conclude that a key reason for limited success
of large-scale investment to date is the significant gaps in the
laws, policies, and institutions that govern such investments. It
notes that most dangers could be avoided if there are well defined
rights to use and occupy land and greater accountability on the
part of governments and investors.
BOX 2: Examples of effective methodologies
The report provides a number of examples of methodologies which
have been used effectively on the ground. These include the
following.
- Securing local land rights, participatory mapping, and land use
planning in Mexico and Tanzania;
- Transparent land transfer mechanisms involving consultation with
local communities in Argentina and Peru;
- Community consultation and internal decision making mechanisms in
Mexico;
- Processing of investments and use of taxes, payment for
environmental services, and other incentives in Indonesia; and
- Ensuring compliance with environmental safeguards in Brazil.
Moving Forward: Opportunities for Action
The World Bank's empirical analysis from Rising Global Interest in
Farmland concludes that effective responses to increased pressure
on land requires both government leadership in host and source
countries, as well as input from a wide range of stakeholders,
including private sector operators, civil society organizations,
and international institutions. Each has a critical role to play.
A) Governments
For governments, the policy, legal and institutional frameworks
will determine their ability to enhance opportunities.
Specifically, the evidence is that countries should:
A1) Identify strategic priorities and assess whether, given
available resources and necessary trade-offs, large-scale
investments could contribute to employment generation, food
security, regional and smallholder development, and technology
transfer.
- Identify public infrastructure or technology investments that
could complement private sector efforts through a participatory
process of land use planning. Such a process would also enable land
holders to determine whether they want to transfer land to
investors.
- Review and refine investors' incentives in order to promote
positive outcomes--examples include encouraging investment in areas
where land rights have been clarified or infrastructure is in
place, or offering tax holidays only after certain milestones are
achieved.
- Inform and educate communities in both urban and rural areas,
ideally through a participatory dialogue that includes all
stakeholders and draws lessons from experience.
A2) Improve land governance to ensure that the pressures from
higher land values do not lead to dispossession of existing rights.
- Ensure existing rights, including user rights, are sufficiently
protected to create the basis for voluntary transfers.
- Have state land identified geographically and ensure that
mechanisms for its management, acquisition, and divestiture, as
well as the imposition of land use restrictions, are transparent
and justified.
- Make information on land rights that is complete and current
available to all interested parties in a cost-effective manner.
Ensure that accessible mechanisms for dispute resolution and
conflict management are in place.
A3) In countries where large-scale land transfers are deemed
appropriate, improve the capacity of government institutions to
administer and manage large-scale land transfers and learn from
experience through a variety of mechanisms, including an audit of
existing contracts. Such analyses could provide guidance on
appropriate regulations and standards, environmental safeguards,
and ways to ensure that approved investments are economically
viable and that they generate local benefits.
Most commonly, capacity building is required in order to:
- Establish effective consultation that enables representative
participation, provides relevant information, records reservations
and decisions, and develops an agreed approach to monitoring and
remedies.
- Streamline and review institutional responsibilities in order to
strengthen coordination between agencies and their capacity to
develop and monitor transparent land transfer mechanisms as well as
design environmental and social assessments.
- Develop more open modalities of land acquisition such as, the
auction model as practiced in Peru, while identifying and
protecting indigenous people's rights.
- Strengthen records management including, for example, developing
and maintaining an inventory of state land and transfers in a
central database--a task that can be conducted at lower cost with
the benefit of new technologies.
- Strengthen technical review and screening of proposed projects as
part of due diligence.
B) The Private Sector
Leading companies in the private sector have recently devoted
increased attention to principles, guidelines, best practices, and
voluntary codes intended to guide large-scale agricultural
investments. In other sectors, such leadership is typically
followed by the consolidation of approaches taken by key companies
into harmonized sets of private standards coupled with
certification and compliance systems, eventually integrated with a
target country policy and regulatory frameworks.
In an effort to complement the Food and Agricultural Organization
(FAO) of the United Nations, the International Fund for
Agricultural Development (IFAD), the United Nations Conference on
Trade and Development (UNCTAD) and World Bank Group initiative in
formulating Responsible Agro-investment Principles, the authors of
Rising Global Interest in Farmland sought to identify efforts that
could be effective in setting and implementing standards relating
to environmental and social sustainability. In particular, the
study focused on cases in which large transfers of rights and
large-scale agricultural investments were involved, whether those
transfers took place through leasing, purchase, or other tenure
arrangements.
In considering industry standards regarding land acquisition,
active government participation is critical in order to effectively
translate experience into broad policy reform and to fully
integrate those standards in a country's policy and regulatory
frameworks. Further, there remains a need for principles with
focused, specific criteria founded on experience, plus realistic
disclosure mechanisms, third-party verification, and effective
enforcement mechanisms.
C) Civil Society and Local Governments
Civil society and local governments can build critical links to
local and indigenous people's communities and:
- Educate communities to assist them in effectively exercising
their rights;
- Assist in the design, negotiation, implementation, and monitoring
of investment projects where requested; and
- Act as watchdogs to critically review projects and publicize
their findings to hold governments and investors accountable and
provide input into formulation and revision of country strategies.
D) International Organizations
International organizations could support countries to
maximize opportunities and minimize risks from large-scale
and acquisition by:
- Assisting countries to integrate information and analysis on
large-scale land acquisition into national strategies;
- Offering financial and technical support for capacity building;
- Supporting stakeholder convergence around responsible
agro-investment principles--for all stakeholders--that can be
implemented and monitored; and
- Exploring mechanisms that disseminate information and good
practices on management of land acquisitions based on the
experience of existing initiatives. The Extractive Industries
Transparency Initiative model is one possible, but imperfect, model
that could inform the design of a new approach.
Principles for Responsible Agro-Investment
The Rising Global Interest in Farmland report is one example of the
World Bank's commitment to informing debate and understanding of
agricultural investment trends and their impacts on economic growth
and poverty reduction. As an additional input into this discussion,
the World Bank has worked with FAO, IFAD and UNCTAD, and more
recently with an expanding set of governmental, non-governmental,
and private partners, to help ensure that responsible investments
are carried out through the formulation of a set of principles to
help governments, investors, communities, and other interested
stakeholders to facilitate "responsible agro-investment that
respects rights, livelihoods, and resources." The principles
address:
- respecting land and resource rights;
- ensuring food security;
- ensuring transparency, good governance, and a proper enabling
environment;
- consultation and participation;
- responsible agro-enterprise investing;
- social sustainability; and
- environmental sustainability.
Private investment can provide opportunities to upgrade technology,
improve market access, and increase employment--all pre-conditions
for sustained and broad-based development. Private investment in
agriculture has significant potential to complement public
investment in the sector. Countries with reasonably well
functioning markets have derived significant benefits from private
agro-investment in the form of better access to capital, technology
and skills, employment generation, and productivity increases.
Contract farming, other outgrower arrangements, and joint ventures
with local communities in which the commercial arrangement relies
principally on access to the fruits of the land may often offer a
better combination of risk and reward sharing than direct
ownership, leasing, or other means of control over productive
resources.
Discussions about the risks and opportunities that large-scale
investment in land entails will continue. The World Bank intends to
inform these discussions, providing principles and standards to
guide the investment, and identifying ways to encourage buy-in
among a wide range of actors. The actors include communities, civil
society organizations, government institutions, development
agencies, and private investors. There is a diversity of investors,
both private and public.
They include operating companies in the agro-food, biofuels, and
extractive industries; institutional investors such as pension
funds and insurance companies; private equity funds; governmental
or government-linked companies such as sovereign funds; and
individual entrepreneurs. Each is different and investment
objectives, time horizons, expectations of returns, appetite for
risk, and stakeholders. Industry know-how varies widely across this
cohort of actors.
As part of this initiative, an interactive, web-based Knowledge
Exchange Platform for Responsible Agro-Investment was released in
April 2010. The Platform offers a toolkit of resources that brings
together examples of relevant research, analysis, principles,
guidelines, tools, and best practices from multiple sources on the
issue of responsible agro-enterprise for global reference and
discussion. This site will continue to be updated.
Next Steps
Multi stakeholder E-discussion: Recognizing the significance of
this important and complex issue, and that the World Bank Group is
only one of many organizations engaged in this work, an open
e-discussion hosted by the Global Donor Platform for Rural
Development and facilitated by the International Institute for
Sustainable Development will take place in September 2010. The
discussion will focus on policy recommendations that might emerge
from empirical research.
Applying the principles operationally in cooperation with leading
organizations and firms on the investor side: With the support of
networks, associations, or programs that are industry-driven yet
not directly engaged as investors, the World Bank and other
international agencies will work toward mainstreaming the RAI
Principles and adapting them to different industries or contexts,
in close consultation with other stakeholder groups, including
NGOs.
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
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