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"Large-scale land-based agricultural investments -- Current status, lessons learned, way foward" by Dr. Madiodio NiasseDirector, ILC
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"Large-scale land-based agricultural investments -- Current status, lessons learned, way foward" by Dr. Madiodio Niasse Director, ILC


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Presented at the Seminar on Responsible Agricultural Investments in Developing Countries: How to Make Principles and Guidelines Effective? Organized by Swedish FAO Committee & SIANI

Presented at the Seminar on Responsible Agricultural Investments in Developing Countries: How to Make Principles and Guidelines Effective? Organized by Swedish FAO Committee & SIANI

Published in: Environment, Technology, Business

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  • 1. Large-scale land-based agricultural investments -- Current status, lessons learned, way foward Dr. Madiodio Niasse Director, ILC Seminar on Responsible Agricultural Investments in Developing Countries: How to Make Principles and Guidelines Effective? Swedish FAO Committee & SIANI Stockholm, Sweden 25March 2014
  • 2. I. About the International Land Coalition
  • 3. ILC - a Global multi-stakeholder platform Established in mid-1990s as: Popular Coalition to Eradicate Hunger and Poverty, which became ILC in 2003 TODAY: 150 MEMBER ORGANISATIONS, INCLUDING: 10 IGOs (FAO, IFAD, WB, UNCCD, UNEP, WFP, IFPRI, IWMI, ILRI, ICRAF) 100 Southern-based FOs (AFA, FUNDAPAZ, EAFF) and CSOs (ANGOC, CEPES, LN-WA) 40 global and Northern-based CSOs (Oxfam, SNV, WRI, LANDESA, CIRAD, IIED) 5 Strategic Partners (MFA-Netherlands, SDC-Switzerland, EC, Sida-Sweden, AU-LPI) HOW DO WE WORK?: • advocacy • dialogue • knowledge sharing • capacity building and empowerment. WHO? A global alliance of civil society and intergovernment al organisations WHAT PURPOSE? Promote secure & equitable access to and control over land for poor women and men
  • 5. II. Current global wave of large- scale land transactions
  • 6. (1) 2007-08. Bad weather conditions  poor harvest in key food exporting countries (Aust, Ukr) (2) (5) Food price hikes 2007-2008 : Surge in large-scale transnational land deals (4) Record high Oil prices (3) (6) Freeze/ban of food exports in 20+ countries (8) Riots in various big cities in the South (9) GLOBAL RUSH FOR LAND Food Energy (7) Panic food purchases
  • 7. 10 12 3 10 10 33 72 66 100 212 Understanding the crisis - underlying causes Trends in transnational land deals -2000-2009 (Land Matrix -only based on reported deals) Underlying drivers: ☞ Pursuit of national food security in a context of a failing global food market ☞ Energy security in a context of high dependency on fossile oil, with dwindling reserves and price oil price hikes ☞ Environmental security (climate change mitigation) ☞ Search for alternative investment opportunities after the crisis of the banking sector (2007- 2008)
  • 8. Magnitude and characteristics of LSLAs Magnitude - Estimates varies: 25 millions ha (IFPRI, 2009) 56 millions (BM, 2010) 65 millions (Global Land Project, 2010) 50-80 millions (Land Matrix, 2012) 36 millions ha based on size in concluded 936 deals 80 million ha concluded and intended size in 1130 concluded and intended deals (Land Matrix, Feb. 2014) Key features • Escalation following food and energy price crises of 2008/9 • Key drivers: food crops; agrofuels • A large proportion small-scale landgrabbing within countries, but often unnoticed. • No single predominant investor type: Top ten countries of origin- both emerging and developed economies • China and Gulf countries - active but not predominant • Linkages between weak governance and attractiveness to LSLBIs?
  • 9. 52% 12% 22% 6% 8% Target Regions Africa America Asia Europe Oceania Food crop and agrofuel as main drivers Africa, the main target region : more than half of land area Key features
  • 10. Usa 7,095,352 Malaysia 3,394,113 Arab Emirates 2,819,223 UK 2,262,676 India 2,023,703 Singapore 1,840,755 Netherlands 1,684,896 Saudi Arabua 1,573,218 Brazil 1,368,857 China/ Hong Kong 1,342,034 Top 10 Countries of orgin of investors Papua New Guinea 3,799,169 ha Indonesia 3,549,462 ha South Sudan 3,491,313 ha DRC 2,717,358 ha Mozambique 2,167,882 ha Brazil 1,811,236 ha Ukraine 1,600,179 ha Liberia 1,361,213 ha Sudan 1,191,013 ha Sierra Leone 1,184,403 ha Top 10 Investor Targeted Countries Key questions: • Why Now? • Is it sign of a new era or a short-term phenomenon? Features
  • 11. III. Land and water in the emerging geopolitics of food
  • 12. Understanding the current context Food Self-sufficiency paradigm Food Security paradigm ? Food price index Global food production
  • 13. 100 200 300 400 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 150 250 350 sources: UNESA 2013, FAOSTAT 2013, FAO 2011, HLPE 2012, MEA 2005, Rockstrom et al 2009 Relativegrowth baseline=1960=100 global cereal production global extension of cultivated land global freshwater withdrawal global extension of irrigated land 2010-2020 : A turning point for land & water governance?
  • 14. Elements of the new geopolitics Expanding demand for land for food: • Rapid population growth • Nutrition transition • Energy and climate mitigation demand for land/water Constraints to expanding food supplies: • Climate change and variability • Reduced yield gaps • Closing land and water frontiers in traditionally high performing grain producing regions , etc. • Japan Syndrome Structural dimensions of current/emerging food security problems: • Land and water -- reaching the resource limits (planetary boundaries) . Illustration : Saudi Arabia • Japan syndrome: A densely populated fast-growing and industrialising countries, experiences the shrinking of their grainland, translating into increased dependency on imports (Bown, 2004). -- Illustration : China and India
  • 15. Land and water constraints - Example of Saudi Arabia (1/2)  Plan A - Food self-sufficiency taking advantage of the oil boom:  form the late 1970s, a 30-year effort to crete giant farms (artificial oases) to produce wheat, fodder, etc.  by 1990s: US$85 billion invested, resulting in:  SA became self-suffcient in wheat for more than 20 years  SA being one of the "world largest exporters" of wheat!  At what cost?  Heavy subsidies in support of the agriculture sector (for each ton produced farmers paid 5 times than EU/North American farmers  Unsuainable water use: for every ton of wheat 3000-6000 tons of water required ( against an avg of 5,000 tons) ;  In recent years, the country was pumping 20 million cum of groundwater per year  As a result of this "hydrological madness" (Pearce, 2012), only 1/5 of the country's fossile groundwater is remaining !!
  • 16.  Plan B - Rely on imports to achieve food security:  in 2008 decision to phasing out of wheat production by 2016 and relying on the market  Coincided with the triple food, energy and financial crises  In spite of increased oil revenues, SA had enomous difficulty importing the food it needed (many traditional food exporters deciding to limit or ban exports)  Plan C - Food security through foreign land acquisitions  Initiative for Saudi Agricultural Investment Abroad targeting 27 countries (Egypt, Suda, Pakistan, Philippines, etc.)  One of the most active acquirers of foreign land: > 1,035,186ha acquired abroad since 2000.  About 28 countries expering similar "water-based food bubbles" (L. Brown, 2011) Land and water constraints - Example of Saudi Arabia (1/2)
  • 17. 5, 3 M ha (17 M agr)) The Japan Syndrome (Shimizu, 2011) 3, 6 M ha (4.5 M agr) - 32% since 1960s 0 500 1000 1500 2000 2500 3000 1960 1970 1980 1990 2000 2004 Areax1000hecatres Trends in arable land in South Korea (Honma & Hayami, 2007) 0 100 200 300 400 500 600 700 800 900 1000 1960 1970 1980 1990 2000 2004 Arablelandx1000hectares -20% since 1980s) China and India : Threats of the Japan syndrome and implications for global food security Trends in arable land in Taiwan(Honma & Hayami. 2007) -50% since 1970s)
  • 18. Preventing the Japan syndrome - Case of China  China - 20% of the world population ; 8.5 % of arable land; 6.5% of freshwater (Hofman and Ho, 2012)  Land reform, green revolution solutions, coupled with heavy investment on water infrastructure helped achied food self- sufficiency  Paying the cost of the Green Revolution:  Unsustainable use of water ==> closing river basins; dwindling groundwaters  Land degradation, and loss of fertile land;  Narrowing of the "yield gap" in cultivated land, and reduced scope for further intensification per unit of land  Loss of arable land: 8.2 million of arable land between 1997 and 2010 (Hofman and Ho, 2012)  Loss of food self-suffficiency: Net food importer from 2004
  • 19.  China's responses:  "Going Global", including in the farming sector :  State firm engaged in Land acquisitions in Asia (Loas, Cambodia), Latin America (Argentina), Africa. One of the top-ten leading foreign land acquirers  Containing "Japan syndrome": China has a set a bottom-line of 120 million hectares of arable land that need to be safeguarded in a context of growing land coversion for urban and industrial purposes  massive investment in land and water development infrastructure : hundreds of billion of US$ in the coming decade  Open question for discussion: Can China prevent the Japan Syndrome? Preventing the Japan syndrome - Case of China
  • 20. Case of India (striking similarities with China): - Same effects of Green Revolution: dwindling groundwaters, land degradation - Country also starting to experience the Japan Syndrome: Major threat to landlessness / eviction facing small farmers and marginalised groups: industralisation (SEZs), infrastructure projects; urbanisation. ==> Risk of losing its food-self-sufficiency Responses:  "Sanctuarisation" of the grainland: India contemplating the possibility to "classify" its remaining arable land to prevent its conversion to other uses  Acquisition of foreign land: one of the top ten largest investor countries in foreign land The way China and India will manage their land and water will have major implications for global food security Preventing the Japan syndrome - Case of China
  • 21. IV. Challenges facing targeted countries
  • 22. • Need for development of agricultural land: – Only 7% of Africa’s arable land is under irrigation (4% for SSA): against 20% globally – Rate of irrigation development: less than 1%/year • Need for development of water infrastructure – Only 1300 large dams for all Africa (2/3 in Southern Africa) against: about 45,000 globally ( Africa’s hydro installed capacity: 21,000 MW (3% of the world total--TGD: 18,300 MW) • Estimated investment needs – CAADP: USD$250 billion from 2002-15 (including US$ 70 for SLM and water control infrastructure) Actual investments being mobilised: – Only 7 out of 53 African countries have met the Commitment known as Maputo Declaration to allocate at least 10% of national budget to the agricultural sector; – On avg, African government spend US$20 per rural inhabitant per year (Pearce, 2012) – Agricultural aid was reduced by half between the mid-1980s and the 2000s, to bottom at 3-4% of total aid (Pearce, 2012) – CAADP largely based on the old paradigm of food security with heavy reliance on the market and aid money Challenges facing targeted countries - The case of Africa
  • 23. Severe land degradation Lack of investment in agricultural modernisation Lack of investment in water control infrastructure Poverty - hunger A generation gap: loss of farmer pride; youth outmigration Africa's millions of smallholder farmers face a primary challenge of feeding themselves Challenges facing targeted countries - The case of Africa
  • 24. A. First, give priority to domestic, intra-regional solutions • Development national food security strategies – These strategies define, among others, conditions of acceptability of foreign investment (E.g. Qatar's National Food Security programme with foreign investment as a component; India;'s National Food Secutirty bill under debate with the aim of achieving a "Hunger-Free India") • Strengthen security of tenure of farmland, esp. for smallholder farmers and of common property resources, esp. for pastoral and IP communities • "Sanctuarisation" of the grainland: – China has a set a bottom-line of 120 million hectares of arable land that need to be safeguarded in a context of growing land coversion for urban and industrial purposes (8.2 million ha of arable land lost btw 1997-2010) – India contemplating the possibility to "classify" its remaining arable land to prevent its conversion for other uses • Stepping up investments in food security: – CAADP : a sound response to an era that longer is: investment levels too modest in the cuurent challenges – National compacts developed as part of CAADP are not enough • Develop intra-regional cooperation on food security ("food exchange agreements") What is the best strategy for targeted countries - Africa ?
  • 25. What options for Africa ? B. A more strategic approach to foreign investment opportunities 1. First create conditions for mobilising small farmers investments in their land 2. For investments by foreign governments: • For government-led foreign investments, give priority to "exchange agreements" (Mukherjee, 2012) – Foreign government invest in the host country's national food security strategies (capital, infrastructure, technology, scientific assistance) – Host country to gurantee to the investor government an agreed share of the increase in food production during the payback period; priority to the investor guarantee in exports after the payback period 3. For investments by foreign private actors /companies: – Alternative business models such as carefully negotiated contract farming, joint ventures, purchase agreements (e.g. Social Fuel Seal in Brazil), etc. – Land concessions conceivable in contexts where: o The development of the land to be allocated requires resources (capital, technical expertise , etc.) not availanble through other means; o Existing land rights of owners, inhabitants and users of the land are respected, whether they are statutory or customary rights; and that land owners and users are duly consulted and give their consent o Highest environmental standards are followed in the assessment/management of social and environmental impacts of the venture; o Venture is labour-intensitive and international farm labour standards are respected o Venture is integral part of the national agricultural and food security strategy and is complementary with the the smallholder farming sector
  • 26. Investor perspective -- Common mistakes • Assuming that the land is idle, empty, abandoned, void of rights • Ignoring overlapping rights – State land does not mean that the land does not belong to and is used by other communities • Over-reliance on government officials and locally elected officials and political and customary leaders ( Case of SENHUILE – Senegal) • Underestimating the food security priority faced by many countries – Assuming that food security is achieved when income increases (e.g. through agrofuel revenues) – Need to ensure instead that the investment involves staple food crop production (e.g. Malibiocarburant SA) • "Land greed" – Because it is easy to acquire more land once you engage in a country and know the key actors: Tempting to ask for as much land as possible, even if not needed immediatement (all land demands for hundreds of thousands, sometimes millions of hectares of land) • Quick and dirty feasibility studies (tech, eco, financial) studies, as well as of impact assessment studies • Secrecy – concealing transactions, and avoiding disclosure of key documents such as ESIA reports • Tendency to overlook impacts on water and related ecosystem services
  • 27. Moving forward -- Frameworks to guide actio Many concurrent proposals for standards and benchmarks:  VGGT (section 12 -- 15 paragraphs)  PRAI Principles (7 principles): FAO-IFAD-WB-UNCTAD  RAI Principles under the auspices of CFS: e-consultations; negotiations from April  Guiding Principles on Large-Scale Land-Based In Africa  OCDE-FAO Joint initiative to promote responsible investment in agriculture -- "Responsible Business conduct", based on all significant proposals (PRAI, VGGT, Equator Principles, UN Compact, etc..). Setting in place of an advisory committee to lead the development of "practical guidelines" Common features: -- They are NOT ONLY about land, although land is an important component -- They are "voluntary", but important to guide action
  • 28. Moving forward -- What a country like Sweden can do? • Re-engage in supporting rural and agriculture sector development in poor countries • Help developing countries formulate and implement sound food security strategies • Accompany land reform and governance strengthening efforts (securing land rights) • Ensure responsible conduct of Swedish and EU private sector companies in developing countries • Support civil society international and of the South in their watchdog role • Support effort toward increased transparency • Work toward consensus on RAI, and support effective implementation
  • 29. Conclusions • Food security : one of greatest challenges of the 21st century • The challenge is linked to the shrinking of farmland in a context of water scarcity • This has resulted in rush for land, in reality about water • Protection of existing arable land and restoration of degradated should be key pillars of national food security strategies in all countries • In poor countries, national food security strategies should be centered on smallholder farmers as main investors in food production in line with what WDR-8 calls a "smallholder-based productivity revolution" • When foreign investments are needed, priority should be given to the ones that do not imply large concessions to the investors • Developed countries such as Sweden should reengage in support the revival of agriculture and rural development in poor countries, and ensure responsible business conduct of its private sector companies when engaging the South
  • 30. THANK YOU !