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

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 & SIANIStockholm, Sweden

25March 2014

I. About the International Land Coalition

ILC - a Global multi-stakeholder platformEstablished in mid-1990s as: Popular Coalition to Eradicate Hunger and Poverty, which became ILC in 2003TODAY: 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 intergovernmental organisations

WHAT PURPOSE? Promote secure & equitable access to and control over land for poor women and men

THE RURAL POOR MEN AND WOMEN - A LARGE DIVERSITY

Who do we serve?

II. Current global wave of large-scale land transactions

(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

10 12 3 10 1033

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)

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?

52%

12%

22%

6%8%

Target RegionsAfrica America Asia Europe Oceania

Food crop and agrofuel as main drivers

Africa, the main target region : more than half of land area

Key features

Usa 7,095,352Malaysia 3,394,113Arab Emirates 2,819,223UK 2,262,676India 2,023,703Singapore 1,840,755Netherlands 1,684,896Saudi Arabua 1,573,218Brazil 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 haSouth Sudan 3,491,313 haDRC 2,717,358 haMozambique 2,167,882 haBrazil 1,811,236 haUkraine 1,600,179 haLiberia 1,361,213 haSudan 1,191,013 haSierra 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

III. Land and water in the emerging geopolitics of food

Understanding the current context

Food Self-sufficiency paradigm

Food Security paradigm ?

Food price indexGlobal food production

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

Rela

tive

grow

thba

selin

e =

1960

= 1

00

global cereal production

global extension of cultivated land

global freshwater withdrawal

global extension of irrigated land

max projection

min projection

2010-2020 : A turning point for land & water governance?

A turning point ?

Elements of the new geopoliticsExpanding 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

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 !!

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)

5, 3 M ha (17 M agr))

The Japan Syndrome (Shimizu, 2011)

3, 6 M ha (4.5 M agr)

- 32% since 1960s

1960 1970 1980 1990 2000 20040

500

1000

1500

2000

2500

3000

Area

x 1

000

heca

tres

Trends in arable land in South Korea (Honma & Hayami, 2007)

1960 1970 1980 1990 2000 20040

100

200

300

400

500

600

700

800

900

1000

Arab

le la

nd x

1000

hec

tare

s

-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)

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

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

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

IV. Challenges facing targeted countries

• 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

Severe land degradationLack 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

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 ?

What options for Africa ? B. A more strategic approach to foreign investment opportunities1. First create conditions for mobilising small farmers investments in their land2. 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

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

Moving forward -- Frameworks to guide actioMany 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

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

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

THANK YOU !