Foreign companies have recently started buying or leasing huge tracts of agricultural land in developing countries – generating scare stories in so doing.
The phenomenon is popularly known as “land grabbing”; the more neutral term is “transnational land acquisition”.
A seminar in Zurich brought together development experts to put the issue into context and take a long term view. It was organised by the North-South Centre of the Federal Institute of Technology Zurich and the Bern-based Swiss National Centre of Competence in Research North-South.
Land acquisition is not an entirely new phenomenon: after all, that’s what 19th century colonialism was all about too. And western food companies have owned or leased land in other countries for many years.
But in the past couple of years, less traditional actors have moved in – companies from countries like China, Saudi Arabia, and South Korea. The movement took off as a result of the food crisis of 2008, when at least 25 producing countries restricted the export of key food crops.
Food importing countries reacted by searching for ways of getting round the restrictions. Similarly, high oil prices in 2007 fostered interest in biofuels – and land on which to produce them.
These developments are recent and researchers are still trying to assess their significance and impact. The World Bank has commissioned a major report, but its publication, originally due in May, has been delayed until the end of June at the earliest.
Nevertheless, even if there are still huge gaps in scholarly research, that does not mean that people in the host countries are not aware of what is going on.
Ralf Leonhard of FIAN – Food First Information and Action Network – described to the seminar the experience of a group of villagers in Kenya. Rosy promises made by a company wanting to use their land for a sugar plantation looked much less rosy after they visited a community whose lands had been leased to a foreign company to grow rice and saw how their livelihoods had been undermined.
More dramatically, a “land grab” deal in Madagascar brought down the government early in 2009: President Marc Ravalomanana was forced to resign in the face of popular anger sparked largely by an agreement he had concluded to lease a huge area of arable land to South Korea’s Daewoo Logistics, which wanted to grow maize and biofuels.
Andrea Ries of the Swiss Agency for Development and Cooperation (SDC) told swissinfo.ch that what happened in Madagascar was not particularly exceptional. “We’ve seen that Mozambique has a moratorium [on granting new land concessions to foreign investors]; in many countries there is a lively debate.”
What outsiders – like the SDC – can do is to help them to learn from each other, she said. “We are supporting farmers’ organisations from different countries to directly be part of the international debate. I don’t think they should be only represented by international organisations or international NGOs.”
One problem is the asymmetry of international investment law, where investors enjoy a much higher level of protection than the indigenous people.
The traditional assumption has been that investment stimulates growth, whose benefits in the long run “trickle down” to the entire community. But it is now being recognised that this is not necessarily the case.
Rights may come into conflict. When a host government accepts a foreign investment, the investor can expect his legitimate expectations to be fulfilled, and this expectation is protected by international law.
It would be legitimate, for example, for the investor to expect to be able to use water for an agricultural project. But this could very well conflict with the needs of the local community for the same water.
As things stand, when there is a dispute, it is normally investors who are the plaintiffs, and the host state has to defend itself.
“This is why civil society has to have arguments to put forward for sustainable development and people’s rights,” Katja Gehne of the World Trade Institute explained to swissinfo.ch.
Her colleague, Elisabeth Bürgi Bonanomi, pointed out that advocates were often hampered by lack of legal knowledge.
“All these countries have accepted international legal standards, but they don’t implement them,” she said. “It’s important for advocates to know what these international legal standards are, to be able to argue from them.”
Ries disputes the popular view that the newcomers are necessarily a cause for concern.
“We shouldn’t say that China and Saudi Arabia are bad investors and that European companies are the good investors. That is not the case. We should scrutinise both.
“Agro-industry is a very global enterprise and it probably needs a new set of regulations and a new set of decision-making, which takes into account local interests and international market forces and regulation.”
And she is upbeat in the long term. Companies from countries including Saudi Arabia and China are investing in agricultural land to have more control over a strategic industry – in just the same way that other international companies do, she says.
“If you take the lessons of European agro-investors, the strategy they have followed is that they have become local. If you take Nestlé, they have developed local markets, they have catered to local needs, they have had to interact with local laws and interests, and that is what many companies which start to expand in key countries will have to learn.
“They will have to engage with local stakeholders, and if they do so – and that will take a strong learning curve and a lot of hiccups – I think they can make a contribution.”
Julia Slater in Zurich, swissinfo.ch
Hosts and investors
The top three host countries by region are:
Africa: Sudan, Ghana, Madagascar
Latin America: Brazil, Argentina, Paraguay
East Asia Pacific: Indonesia, Philippines, Australia
The top three investing countries are:
There has been a surge of interest in foreign investment in agricultural land since the biofuels boom of 2003 and the global food crisis of 2008.
Foreign investors lease or purchase land and secure water rights for agricultural production.
Up to now, most contracts have been kept secret from the public, intergovernmental organsations and NGOs.
Lack of transparency increases opportunities for corruption.
Water is regarded as one of the most significant drivers for this type of investment.
Sub-Saharan Africa uses only 2% of its freshwater for irrigation: investors see this as untapped potential.