World Bank backs farmland investment By Javier Blas in London
Published: September 7 2010 19:58 | Last updated: September 7 2010 21:50
The World Bank has backed the practice of countries selling large tracts of agricultural land to overseas investors, but is urging host countries to demand much more from investors to increase farming productivity and peoples livelihoods.
In a long-awaited report on the so-called global farmland grab, the multilateral donor organisation warns about the risk of the deals, particularly the limited recognition of local rights and highly centralised approval processes.
EDITORS CHOICE Wheat trading jumps on Russia crisis - Sep-07Maputo drops bread price rise - Sep-07World Bank warns on farmland grab - Jul-27In depth: Global food crisis - Aug-12In depth: Africa and China - Aug-17The bank walks a fine line between supporting the farmland deals in order to boost agricultural output in poor countries and warning about the potential risks of the controversial investments. But the tone of the World Banks report is generally more positive towards the investments than previous interventions by other multilateral organisations, notably the UNs Food and Agriculture Organisation.
When done right, larger-scale farming can provide opportunities to poor countries with large agricultural sectors and ample endowments of land, the report states. The bank, nonetheless, does not endorse all the investments and it also criticises strongly some of the deals for depriving local communities of their arable land.
The study is the broadest yet of the rapidly growing trend in which countries or their proxies invest in overseas land to boost their food security. It gained notoriety after an attempt in 2008 by South Koreas Daewoo Logistics to secure a large chunk of land in Madagascar for a very low price and vague promises of investment.
The magnitude and often speculative nature of land transactions observed recently has caught many actors by surprise, the World Bank says on its report Rising Global Interest in Farmland: Can It Yield Sustainable and Equitable Benefits? It adds: Demand for land acquisition continues and may even be increasing.
Critics, including prominent international non-governmental organisations like Oxfam, and the FAO believe the deals are a form of neo-colonialism.
The World Bank is proposing a seven-principle code of conduct for investors and host countries, including respecting local land rights, ensuring food security, ensuring transparency and good governance, consultations with those involved, responsible agro-investing, social sustainability and environmental sustainability.
The multilateral organisation also suggests building on the experience of the Extractive Industry Transparency Initiative, which commits governments to disclose revenues from oil and mining groups to improve transparency on the deals. The EITI provides an interesting model that can inform much-needed efforts to improve land governance, the report sates.
Critics say that eight years after its launch, only Liberia, Timor-Leste and Azerbaijan, are full members of the EITI, questioning the efficiency of the initiative. But the World Banks report states that countries could receive tangible benefits in the form of technical, financial or reputational support.
The bank paints a poor picture of some of the deals already signed, saying that land acquisition often deprived local people, in particular the vulnerable. It adds: Consultations if conducted at all were superficial and did not result in written agreements, and environmental and social safeguards were widely neglected.
In some cases, investors who were unable to turn a profit due to unrealistic plans then started to encroach [on] land that had explicitly been set aside for use by local people, causing environmental damage and threatening local food security.
The bank says that 45m hectares worth of large scale farmland deals were announced in 2009, compared with annual average expansion of agricultural land of less than 4m hectares before 2008.
Juergen Voegele, director of agriculture at the World Bank, says in the report that given commodity price volatility, growing human and environmental pressures, and worries about food security, interest in farmland is rising.
The demand for land has been enormous, he writes in the studys preface.
