"Land-grabbing is driven by outsourced food production," said Alexander Müller, assistant director-general at the FAO's sustainable development department, speaking in the European Parliament on Tuesday (8 September).
Countries that suffered from the 2007-2008 food price crisis have started to lease or buy up land from the developing world to ensure the availability of food supplies for their growing populations, as they themselves lack arable ground and water to increase production, he explained.
This type of foreign direct investment (FDI) is very different from other FDI carried out in view of getting access to local markets. In land-grabbing, land is purchased to meet countries' own needs via overseas production. This is also why some refer to these land deals as a "new form of colonialism".
While international land deals are gaining ground, their impact remains little understood. "Nobody has an overview of what is currently going on in different countries," said Müller. The FAO report on the matter is the first attempt to understand the phenomenon.
With a focus on sub-Saharan Africa, the report sheds light on key trends and drivers in land acquisitions, the contractual arrangements behind them and the impacts on land access for rural people in the host countries.
While food security, particularly in investor countries, is a key driver of government-backed investment, "many government-backed deals are driven by investment opportunities rather than food security concerns (e.g. China)," notes the report.
It underlines that other drivers behind current land deals in Africa are "global demand for non-food agricultural commodities and biofuels, expectations of rising rates of return in agriculture and land values, and policy measures in home and host countries".
Hasty land deals
One major problem of foreign land acquisition is working out its impact on the small rural farmers whose land is being sold or leased.
Over 70% of people in sub-Saharan Africa live in rural areas and some 90% of agricultural production comes from small-scale producers, with an average of two hectares of land per farmer, Müller said. In contrast, many land acquisitions are in excess of 10,000 hectares, up to one million hectares.
Müller further noted that high-quality value land tends to be sold or leased first and this generally for a long, over fifty year, period.
FAO notes that "virtually all the contracts" analysed in the report tend to be "short and simple compared to the economic reality of the transaction".
Contracts either ignore or vaguely touch upon the key issues like enforcing compliance with investor commitments, maximising government revenues and clarifying their distribution, promoting business models that maximise local benefit through employment creation and infrastructure development, and "balancing food security concerns in both home and host countries".
"We need to make land purchase legal and approved by local people," Muller said, stressing the need for guidelines on international acquisition of traditional and community-based land rights.
Guidelines
The FAO believes that local consultation and engagement are key success factors in international land acquisition.
The UN body has launched nine regional consultations among farmers' organisation, NGOs, local government and other stakeholders in view of developing guidelines for land acquisition. "We need investment in agriculture, but how can this be done in a way that it profits the poor?," Müller asked.
Based on its initial findings, the FAO has already outlined a number of general recommendations for investors, host governments, civil society organisations and international development agencies.
The organisation particularly encourages investors to embrace innovative business models that promote local participation, as long-term land leases (50-99 years) are judged "unsustainable" unless there is some local satisfaction.
In parallel, host governments are asked to carefully assess the social and environmental impacts of proposed investments, keep investment decision-making transparent and secure local land rights.
International development agencies are encouraged to engage with all stakeholders to provide expertise and ensure that land deals maximise any contribution to sustainable development.
