Präsentation fh sesssion2_gesamt

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Präsentation fh sesssion2_gesamt

  1. 1. Lecture SeriesMonday, 14.11.2011Con icts over land and water: The role of The Water-Energy-Foodlarge scale investors in Africa   Security Nexus Winter Semester 2011 / 2012Dr. Michael Brüntrup,German Development Institute / Deutsches Institut fürEntwicklungspolitikTanja PickardtDeutsche Gesellschaft für Internationale Zusammenarbeit
  2. 2. Conflicts over land and water: The role of large scale investors in Africa Michael Brüntrup, DIELecture Series „The Water-Energy-Food Security Nexus“Winter Semester 2011 / 2012Cologne, 14. November 2011 2   © 2008 Deutsches Institut für Entwicklungspolitik 2
  3. 3. Background – reasons for growing large scale land acquisitions•  The boom of mainly government-induced biofuel policies in several countries•  Rising world food market prices since about 2005, particularly since food price crisis 2007/08 - food security - profits•  Search of financial investors for alternative investments, possibly long-term, stable, and countercyclical to increasingly volatile and risky traditional financial products•  Sale of certificates for reducing emissions from deforestation and forest degradation (REDD)•  With rising oil and energy prices, biomass becomes an interesting (not policy induced) feedstock for energy production and petrochemical industry•  Land speculation•  Globalisation of agricultural trade (demand, information, standards ..)•  Technology development (overcoming small farmer advantages) 3   © 2008 Deutsches Institut f¸r Entwicklungspolitik 3
  4. 4. Actors involved in LSLA Inter- Transnational organisationsNational Investor Government sector structuresNational NGOs Rural households -displaced -workers Districts Traditional/ -losers of -contract Lokal indigenous access to NR farmers authorities -other locals Local -downstream communities water users -in-migrants 4   © 2008 Deutsches Institut f¸r Entwicklungspolitik 4
  5. 5. Opportunities of LSLA•  Access to new, high price, high value addition markets•  Large marketing capacities•  Access to and favourable conditions to capital/credit, some of which handed over to local actors (contract farming)•  Infrastructure investments, some for co-use by local actors•  Access to and development of new technologies, some of which handed over to local actors (contract farming)•  Better soil fertility management (nutrient balance)•  Co-generation of and better adaptation to public regulation and private standards•  New networking opportunities•  Formal, often relatively well paid and secured jobs•  Indirect effects (up- and downstream sectors, demand)•  Corporate Social Responsibility (CSR) projects•  Local taxes and levies 5   © 2008 Deutsches Institut f¸r Entwicklungspolitik 5
  6. 6. Opportunities•  Access to new, high price, high value addition markets•  Large marketing capacities•  Access to and favourable conditions to capital/credit, some of which handed over to local actors (contract farming)•  Infrastructure investments, some for co-use by local actors•  Access to and development of new technologies, some of which handed over to local actors (contract farming)•  Better soil fertility management (nutrient balance)•  Co-generation of and better adaptation to public regulation and private standards•  New networking opportunities•  Formal, often relatively well paid and secured jobs•  Indirect effects (up- and downstream sectors, demand)•  Corporate Social Responsibility (CSR) projects•  Local taxes and levies 6   © 2008 Deutsches Institut f¸r Entwicklungspolitik 6
  7. 7. Dynamics of agricultural trade, Subsahara Africa and World Aksoy / Akaman (2010)7   © 2008 Deutsches Institut f¸r Entwicklungspolitik 7
  8. 8. To capture more of value addition in a market chain, farmers need to invest and organise UNCTAD (n.d.)8   © 2008 Deutsches Institut f¸r Entwicklungspolitik 8
  9. 9. Agricultural commodity prices are only a fraction of total food cost in agro-industry value chains (example: USA) Rozanski / Thompson1 (2011) 9   © 2008 Deutsches Institut f¸r Entwicklungspolitik 9
  10. 10. To access many of these markets, supplies have to be … competitive of constant, reliable high quantity of high, constant apperance and quality increasingly traceable Aksoy / Akaman (2010)10   © 2008 Deutsches Institut f¸r Entwicklungspolitik 10
  11. 11. Dynamics in markets Aksoy / Akaman (2010)11   © 2008 Deutsches Institut f¸r Entwicklungspolitik 11
  12. 12. Importance of domestic markets in SSA Romanik (2006)12   © 2008 Deutsches Institut f¸r Entwicklungspolitik 12
  13. 13. But also these markets are … Romanik (2006) increasingly semi-formal and formal (supermarket) channels screened and controlled for quality and conformity13   © 2008 Deutsches Institut f¸r Entwicklungspolitik 13
  14. 14. Opportunities•  Access to new, high price, high value addition markets•  Large marketing capacities•  Access to and favourable conditions to capital/credit, some of which handed over to local actors (contract farming)•  Infrastructure investments, some for co-use by local actors•  Access to and development of new technologies, some of which handed over to local actors (contract farming)•  Better soil fertility management (nutrient balance)•  Co-generation of and better adaptation to public and private standards•  New networking opportunities•  Formal, often relatively well paid and secured jobs•  Indirect effects (up- and downstream sectors, demand)•  Corporate Social Responsibility (CSR) projects•  Local taxes and levies 14   © 2008 Deutsches Institut f¸r Entwicklungspolitik 14
  15. 15. Smallholders are constrained by access to and unfavourable conditions for capital• High transaction costs for both borrowers and lenders• Generally lower population density and dispersed demand• Often limited economic opportunities available to local populations• High risks faced by potential borrowers and depositors due to the variability of incomes,exogenous economic shocks and limited tools to manage risk• Seasonality – potentially affecting both the client and the institution• Heavy concentration on agriculture and agriculture related activities exposes clients andinstitutions to multiple risks, both idiosyncratic (one household) and covariant (entire region orcountry)• Lack of reliable information about borrowers• Lack of market information and/or market access• Weak institutional capacity – including poor governance and operating systems, low staff andmanagement skills• “Crowding out” effect due to subsidies and directed credit• Increased risks associated with the concentration of a portfolio on agriculture activities that aremost prevalent in the area• Lack of adequate or usable collateral (lack of assets, unclear property rights)• Risk of political intervention, which can undermine payment morale through debt forgivenessand interest rate caps• Inhospitable policy, legal and regulatory frameworks• Undeveloped legal systems, inadequate contract enforcement mechanisms• Undeveloped or inadequate infrastructure Andrews (2006)• Land held may be too small to be sustainable or located too remotely to be reached efficiently 15  • Individuals may be dependent upon only one crop with no other external sources of income12 © 2008 Deutsches Institut f¸r Entwicklungspolitik 15
  16. 16. Opportunities•  Access to new, high price, high value addition markets•  Large marketing capacities•  Access to and favourable conditions to capital/credit, some of which handed over to local actors (contract farming)•  Infrastructure investments, some for co-use by local actors•  Access to and development of new technologies, some of which handed over to local actors (contract farming)•  Better soil fertility management (nutrient balance)•  Co-generation of and better adaptation to public regulation and private standards•  New networking opportunities•  Formal, often relatively well paid and secured jobs•  Indirect effects (up- and downstream sectors, demand)•  Corporate Social Responsibility (CSR) projects•  Local taxes and levies 16   © 2008 Deutsches Institut f¸r Entwicklungspolitik 16
  17. 17. Infrastructure is indispensable, costly and beyond smallholder, often even government capacities African Development Bang Group (2011)17   © 2008 Deutsches Institut f¸r Entwicklungspolitik 17
  18. 18. Opportunities•  Access to new, high price, high value addition markets•  Large marketing capacities•  Access to and favourable conditions to capital/credit, some of which handed over to local actors (contract farming)•  Infrastructure investments, some for co-use by local actors•  Access to and development of new technologies, some of which handed over to local actors (contract farming)•  Better soil fertility management (nutrient balance)•  Co-generation of and better adaptation to public regulation and private standards•  New networking opportunities•  Formal, often relatively well paid and secured jobs•  Indirect effects (up- and downstream sectors, demand)•  Corporate Social Responsibility (CSR) projects•  Local taxes and levies 18   © 2008 Deutsches Institut f¸r Entwicklungspolitik 18
  19. 19. Typical improved technologies and obstacles to adoption by African smallholders Odoemenem / Obinne (2010)19   © 2008 Deutsches Institut f¸r Entwicklungspolitik 19
  20. 20. Opportunities•  Access to new, high price, high value addition markets•  Large marketing capacities•  Access to and favourable conditions to capital/credit, some of which handed over to local actors (contract farming)•  Infrastructure investments, some for co-use by local actors•  Access to and development of new technologies, some of which handed over to local actors (contract farming)•  Better soil fertility management (nutrient balance)•  Co-generation of and better adaptation to public and private standards•  New networking opportunities•  Formal, often relatively well paid and secured jobs•  Indirect effects (up- and downstream sectors, demand)•  Corporate Social Responsibility (CSR) projects•  Local taxes and levies 20   © 2008 Deutsches Institut f¸r Entwicklungspolitik 20
  21. 21. Also under low-input smallholder agriculture, soil degradation can be a serious problem Reich / Eswaran (2004)21   © 2008 Deutsches Institut f¸r Entwicklungspolitik 21
  22. 22. Opportunities•  Access to new, high price, high value addition markets•  Large marketing capacities•  Access to and favourable conditions to capital/credit, some of which handed over to local actors (contract farming)•  Infrastructure investments, some for co-use by local actors•  Access to and development of new technologies, some of which handed over to local actors (contract farming)•  Better soil fertility management (nutrient balance)•  Co-generation of and better adaptation to public and private standards•  New networking opportunities•  Formal, often relatively well paid and secured jobs•  Indirect effects (up- and downstream sectors, demand)•  Corporate Social Responsibility (CSR) projects•  Local taxes and levies 22   © 2008 Deutsches Institut f¸r Entwicklungspolitik 22
  23. 23. Opportunities•  Access to new, high price, high value addition markets•  Large marketing capacities•  Access to and favourable conditions to capital/credit, some of which handed over to local actors (contract farming)•  Infrastructure investments, some for co-use by local actors•  Access to and development of new technologies, some of which handed over to local actors (contract farming)•  Better soil fertility management (nutrient balance)•  Co-generation of and better adaptation to public and private standards•  New networking opportunities•  Formal, often relatively well paid and secured jobs•  Indirect effects (up- and downstream sectors, demand)•  Corporate Social Responsibility (CSR) projects•  Local taxes and levies 23   © 2008 Deutsches Institut f¸r Entwicklungspolitik 23
  24. 24. Opportunities•  Access to new, high price, high value addition markets•  Large marketing capacities•  Access to and favourable conditions to capital/credit, some of which handed over to local actors (contract farming)•  Infrastructure investments, some for co-use by local actors•  Access to and development of new technologies, some of which handed over to local actors (contract farming)•  Better soil fertility management (nutrient balance)•  Co-generation of and better adaptation to public and private standards•  New networking opportunities•  Formal, often relatively well paid and secured jobs•  Indirect effects (up- and downstream sectors, demand)•  Corporate Social Responsibility (CSR) projects•  Local taxes and levies 24   © 2008 Deutsches Institut f¸r Entwicklungspolitik 24
  25. 25. Agricultural wage labour is paid badly, but they earn better than many smallholders“From Mozambique to Malawi, Zambia to Ethiopia, sugar offers a lifeline forcountless families who work on sugar plantations or grow sugar themselves. Theyearn enough to send their children to school, to buy food to feed them, and toobtain at least some of the essential medicines they need to treat them when theyfall sick. “In Sofala province in central Mozambique, employment figures have doubled since therehabilitation of two large sugar estates. As a result of trade in sugar, Sofala has beentransformed from the province with the highest poverty headcount in 1996-97, tothe province with the lowest incidence of poverty in 2002-03. This success storycould be repeated across the continent. ‘Cutting sugar cane is difficult. I was not “Salaries in the sugar sector are low. very good when I started but I am better This is particularly true for farm now, faster. At the end of six months, if labourers and even more so for they say I can keep working then I will. I labourers employed by smallholder need to earn money to support the family. farmers. The latter are generally Things are difficult here – I still get employed on far worse terms than blistered hands and the money is not really workers on the sugar estates.” Oxfam (2004) enough, but I am glad to have a job.’ 25   © 2008 Deutsches Institut f¸r Entwicklungspolitik 25
  26. 26. Opportunities•  Access to new, high price, high value addition markets•  Large marketing capacities•  Access to and favourable conditions to capital/credit, some of which handed over to local actors (contract farming)•  Infrastructure investments, some for co-use by local actors•  Access to and development of new technologies, some of which handed over to local actors (contract farming)•  Better soil fertility management (nutrient balance)•  Co-generation of and better adaptation to public and private standards•  New networking opportunities•  Formal, often relatively well paid and secured jobs•  Indirect effects (up- and downstream sectors, demand)•  Corporate Social Responsibility (CSR) projects•  Local taxes and levies 26   © 2008 Deutsches Institut f¸r Entwicklungspolitik 26
  27. 27. Large scale farms can create vibrant rural economies through second-round effects, CSR and local taxes Oxfam (2004)27   © 2008 Deutsches Institut f¸r Entwicklungspolitik 27
  28. 28. Threats•  Unequal power and knowledge of negotiation partners (agro-industries, farmers, communities, governments)  unfair contracts•  Detrimental interference of governments (corruption, neo-patrimonialism, politics), but also over-protection•  Displacement of non-permanent users of natural resources (vegetation, water, culture, )•  Expulsion of land owners without proper compensation•  Environmental degradation, particularly biodiversity, but also water, pesticides, soils•  Structural monocultures,  dependencies of workers and outgrowers + dependencies of sub-regions•  Unbalanced distribution of profits, inequity•  Investment ruins with degraded ecological, economic and/or social environments 28   © 2008 Deutsches Institut f¸r Entwicklungspolitik 28
  29. 29. Investor – rural population relations•  Land reallocation•  Jobs (quantity, quality, wages, origin/local preferences)•  Inclusive smallholder schemes •  Contracts (markets) •  Quality and process management •  Credit •  Inputs (including water) •  Production •  Diversification•  Surplus sharing•  Capital participation (land for shares)•  Local taxes and levies•  Corporate Soicial Responsibility (CSR) projects•  Mutual political protection/advocacy•  Neo-patrimonial, patron-client relations•  Food availability components (attention to local suppliers!) 29   © 2008 Deutsches Institut f¸r Entwicklungspolitik 29
  30. 30. Time dimension and problem/conflict hotspots F a i l u r e 30  © 2008 Deutsches Institut f¸r Entwicklungspolitik 30
  31. 31. Government responsibilitiesPrinciples (human right to food): Respect, protect, fulfil P Participation A Accountability N Non-Diskrimination T Transparency H Human dignity E Empowerment R Rule of Law•  Facilitate prior informed consent: •  (Help) Check large investors (reputation, demos, finances, business plans…) •  Provide model contracts •  Facilitate negotiations •  ….•  No disappropriation for private interests, fair compensation (land for land, compulsory CSR, local taxes and levies ….)•  Policy coordination and key infrastructure (see below)•  International treaties, agreements, contracts (see below)•  Dispute settlement (monitoring, bankruptcy laws, ombudsman, funds, courts, mediation, advisory services, …) 31   © 2008 Deutsches Institut f¸r Entwicklungspolitik 31
  32. 32. Policy areas for influencing impacts of large scale land investments Taxation Labour Economic Outward oriented policies development (investment, trade, etc.) Food Security Investor contracts Rural development InfrastructureLand use planning Land+Water+other NR Input/Output markets Agriculture Environment Corporate Social Responsibility; CSR Primary  produc7on   Processing   Marke7ng   32   © 2008 Deutsches Institut f¸r Entwicklungspolitik 32
  33. 33. Area 1: The rural development and food security complex•  Coherent, inclusive policies and strategies (food security > fair benefit sharing > inclusive growth)•  Farmer and community organisation empowerment•  Research (for supporting planning and decision making)•  Rights on land and natural resources and their transfers (property and rights, registration, valuation, taxation, markets, litigation, …)•  Water and other natural resources management•  Multi-sector, multi-level land use planning•  Agricultural value chain development•  Linkage programmes•  Reliable food markets (infrastructure, information, storage, …)•  Rural development hubs•  Special regards on vulnerable, displaced and losing groups 33   © 2008 Deutsches Institut f¸r Entwicklungspolitik 33
  34. 34. Area 2: Investment Agreements and Investor Contracts•  Pre-establishment Rights•  Exclusion of Performance Requirements•  National Treatment (Deviations from)•  Most Favoured Nation Treatment National Policies•  Fair and Equitable Treatment•  Prohibition of Expropriation without compensation•  Right to Products Export (Deviations from)•  National Security (food security) Investment•  Safeguards Agreements•  Dispute Settlement•  Local content rules Stabilisation•  Social and environmental conditions clauses•  Infrastructure, compulsory CSR•  Risk insurance/set aside funds (for mitigation failure) 34   © 2008 Deutsches Institut f¸r Entwicklungspolitik 34
  35. 35. Opportunities for Development Cooperation•  Support of international Code of Conduct•  Support for formulation of investment agreements•  Support to creating specific Corporate Social Responsibility•  Support to sectoral initiatives and (soft) standards•  Support for creating international transparency and “intelligence”•  Support of national policy coordination, including transparency•  Support of (selected) national policies and strategies•  Support of investor contract design, moderation and arbitration of contract negotiations and implementation•  Advocacy for rural communities and neglected interests•  Selective support of contract implementation, e.g. by support of local farmers and communities in making best use of new opportunities and avoid or mitigate negative effects, connecting research, extension, BDS and investor schemes 35   © 2008 Deutsches Institut f¸r Entwicklungspolitik 35
  36. 36. Conflicts over land and water: The role of large scaleinvestors in Africa - Risks Tanja Pickardt University of Cologne, 14 November 2011
  37. 37. Structure •  Background: Investments in land   Extent     Risks     Reasons  for  low  level  of  partcipa7on  of  the  popula7on   – Examples from the field   Mali     Namibia  
  38. 38. „Land Grabbing“: Media attention
  39. 39. Global in- vestment in landSource: HLPE 2011, p. 15.
  40. 40. Large-scale land acquisitions and leases, reported area In developing countries, 227 million hectares of land has been reported to be sold or leased since 2001. (Oxfam / Land Matrix Partnership 2011)
  41. 41. Regional distribution and production orientation of large scale investments in landSource:Deininger et al.(2010)
  42. 42. Actor   Mo(ve   Country  of  origin:   Country  of  origin:   characteris(cs   examples  State   Sa7sfy  the  rapidly  rising  demand   High  popula7on  pressure   South  Korea,  Japan,  State-­‐owned   for  food,  fodder  crops  and   Strong  economic  growth   China,  Vietnam,  enterprises   agricultural  commodi7es   South  Africa  State   Reduce  dependency  on  world   Food  impor7ng  countries  with   Bahrain,  Libya,  State-­‐owned   market  by  cul7va7ng  own  food   limited  land  and  water   Kuwait,  Katar,  Saudi  enterprises   abroad   resources,  but  high  capital   Arabia   endowment  thanks  to  oil   extrac7on  State   Reduce  dependency  from  limited   Promo7on  instruments  for   USA,  EU  member   available  oil  resources   investments  from  industrialised   states   Mi7gate  climate  change  effects   countries   (focus  on  renewable  resources)  Private  Sector   Secure  land  for  the  cul7va7on  of   Entrepreneurs  from   USA,  EU  member   agricultural  commodi7es,  to   industrialised,  emerging  and   states,  emerging   profit  from  high  world  market   developing  countries,   and  developing   prices   investment  agencies   countries  Private  Sector   To  realize  short  term  gains  from   Entrepreneurs  from   USA,  EU  member   land  specula7on   industrialised,  emerging  and   states,  emerging   developing  countries,   and  developing   investment  agencies   countries  
  43. 43. Large-scale land investments: Risks•  Food  security  and  water  supply  endangered:  Poten(al  human  right   viola(on    •  Rese]lement  without  compensa7on,  forced  evic7ons:  Human  right   viola(on    •  Aggrava7on  of  land  conflicts:  Increased  rural  exodus    •  Local  jobs  at  risk:  Deteriora(on  of  livelihoods    •  Race  to  the  bo]om:  Nega(ve  impacts  on  human  livelihoods,   environment,  ecosystems  •  Discrepancy  between  the  availability  of  produc7ve  land  and  the  supply   of  water  for  irriga7on:  Overconsump(on  of  water,  nega(ve  impacts  on   downstream  users,  nega(ve  impacts  on  ecosystems  •  Insufficient  contractual  provisions:  Nega(ve  effects  on  na(onal   economies    Many  of  those  risks  occur  due  to  a  lack  of  par7cipa7on  of  the   affected  popula7on  in  decision-­‐making  and  nego7a7on  
  44. 44. Reasons for a lack of participation of the local population in negotiation, planning and implementation  •  Informa7on  asymmetry  and  power  imbalances  between  the   investor,  the  government  and  the  affected  popula7on  (the  local   popula7on  is  ocen  not  informed  about  their  rights)  •  Lack  of  informa7on  on  the  land  rights  situa7on  (statutory  law  vs.   tradi7onal  land  rights)  as  well  as  on  sectoral  plans  •  Corrup7on  •  Level  of  par7cipa7on:  ocen  communi7es  are  “consulted”  and  give   their  consent  without  being  properly  informed  and  involved  in  the   planning  process.  Principle  of  free,  prior  and  informed  consent  ?   What  level  of  par7cipa7on  is  adequate  ?  •  Not  all  interest  groups  do  have  legi7mate  representa7ves,  if   par7cipa7on  takes  place  
  45. 45. Case  study  1:  Interior  Delta  of  the  Niger  River,  Mali   Source: http://fr.wikipedia.org
  46. 46. Investment  projects  Source: A. Sangaré: Etude rélative à l’établissement d’un bilan des ressources en eau
  47. 47. Water  demand  and  contractual  arrangements  in  the  Interior  Delta  of   the  Niger  River    •  100  000  out  of  1.8  Mio.  ha  presently  cul7vated  (up  to  350.000  ha  are   es7mated  to  have  irriga7on  poten7al  )  •  The  total  number  of  awarded  contracts  is  es7mated  to  cover  761.000  ha.  4   contracts  with  interna7onal  investors  are  known  to  be  signed,  with  a  total   surface  area  of  156.000  ha.  All  four  investments  have  commenced  or  are   about  to  start.    •  The  new  investments  foresee  two  cul7va7on  periods  /  year  for  rice,  other   cereals  and  sugar  cane    •  Sufficient  water  availability  during  rainy  season  (June  –  December)  BUT  •  Water  deficiency  in  dry  season  (January  –  Mai)  already  at  present:  cri7cal   mark  (40m³/s)  is  regularly  exceeded  (especially  due  to  sugar  cane  and  rice   cul7va7on)  •  Only  2  of  the  exis7ng  investment  contracts  make  provision  for  water   rights;  those  require  more  than  half  of  the  dry  season’s  cri7cal  reserve,  as   well  as  exclusivity  of  service  in  emergency  situa7on  
  48. 48. Case  study  2:  Overlapping  sectoral  planning,  unclear  responsibili7es  and  lack  of  informa7on,  Namibia  
  49. 49. Caprivi  Region   ? Small  Scale  Commercial   Farming  Areas   Na7onal  Park  and   Conservancies   Irriga7on  Scheme   Agro-­‐industrial  Planta7on   (Interna7onal  Investor)  
  50. 50. Thank you for your attention !

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