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News : International Last Updated: May 26, 2009 - 5:02:20 PM


Study warns of impact of "land grab" deals in Africa and other continents by foreign countries and private groups
By Finfacts Team
May 26, 2009 - 3:08:19 AM

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Land acquisitions by foreign countries such as Saudi Arabia and China and private groups, seeking food security, are on the increase in Africa and other continents, raising the risk that poor people will be evicted or lose access to land, water, and other resources, according to the first detailed study of the trend. In the "land grab" in Africa, countries are giving away vast tracts of farmland to other countries and investors almost for free, with the only benefits consisting of vague promises of jobs and infrastructure, according to the United Nations sponsored study.

"Most of the land deals documented by this study involved no or minimal land fees," it says. Although the deals promise jobs and infrastructure development, it warns that "these commitments tend to lack teeth" on the contracts.

The land acquisition accelerated in early 2008, when there was a surge in food prices and South Korea's Daewoo Logistics' deal to acquire a tract of land in Madagascar, is believed to have contributed to the collapse of the African country's government.

The Wall Street Journal reported on Monday, that a year after prices soared to record levels amid panic over supply shortages, rice appears to be plentiful and the market is in the midst of a prolonged slump.

The stalled global economy, large Asian crops and a move by governments to loosen their grip on stocks have conspired to keep prices under pressure for months, analysts said.

Friday, nearby July Chicago Board of Trade rice futures fell seven cents to settle at $12.055 a hundredweight, down 23% from $15.63 on the start of 2009. On April 24, 2008, the nearby contract hit a high of $24.85.

Although the market has had brief rallies and remained range-bound at times, the trend has been lower

The study, carried out by the International Institute for Environment and Development (IIED) at the request of the UN's Food and Agriculture Organisation (FAO) and the International Fund for Agricultural Development (IFAD), warns that "land grab" deals can bring many opportunities (guaranteed outlets, employment, investment in infrastructures, increases in agricultural productiviy) but can also can cause great harm if local people are excluded from decisions about allocating land and if their land rights are not protected.

The report which examined cases in Ethiopia , Ghana, Mali, Madagascar and Sudan, says farmland investment in the past five years has totalled about 2.5m hectares (6.2m acres) - equal to about half the arable land of the UK. However, the Financial Times says other estimates, including one from Peter Brabeck, chairman of food giant Nestlé, put total farmland investments in Africa, Latin America and Asia above 15m hectares, about half the size of Italy.

The study highlights a number of misconceptions about what have been termed "land grabs". It found that land-based investment has been rising over the past five years. But while foreign investment dominates, domestic investors are also playing a big role in land acquisitions.

Private sector deals are more common than government-to-government ones, though governments are using a range of tools to indirectly support private deals.

Concerns about food and energy security are key drivers, but other factors such as business opportunities, demand for agricultural commodities for industry and recipient country agency are also at play. Although large-scale land claims remain a small proportion of suitable land in any one country, contrary to widespread perceptions there is very little "empty" land as most remaining suitable land is already under use or claim, often by local people.

The report found that many countries do not have sufficient mechanisms to protect local rights and take account of local interests, livelihoods and welfare. A lack of transparency and of checks and balances in contract negotiations can promote deals that do not maximise the public interest. Insecure local land rights, inaccessible registration procedures, vaguely defined productive use requirements, legislative gaps and other factors too often undermine the position of local people.

It calls for carefully assessing local contexts, including existing land uses and claims; securing land rights for rural communities; involving local people in negotiations, and proceeding with land acquisition only after their free, prior and informed consent.

A complicated picture

Co-authors Sonja Vermeulen and Lorenzo Cotula of IIED caution that land acquisitions vary greatly and that blanket statements about land-grabbing are highly misleading.

"Ultimately, whether international land deals seize opportunities and mitigate risks depends on their terms and conditions - what business models are used, how costs and benefits are shared, and who decides on these issues and how," says Cotula. "This calls for proper regulation, skilful negotiation and public oversight."

"In many countries, provisions for including local people in decision-making are usually absent or poorly implemented and this increases the risk of them losing access to land and other resources," adds Vermeulen.

"The scale of land acquisitions has been exaggerated but in many countries the agreements that allow foreign ownership of land can be very problematic,"
she adds. "Provisions for including local people in decision-making are usually absent or poorly implemented and this increases the risk of them losing access to land and other resources."

Alexander Mueller, Head of the Environment and Natural Resources Department at FAO stresses the need to see foreign investment and large-scale land acquisitions in the context of global environment and food security challenges.

"This new trend is a result of the recent food crisis and volatility of food prices, among other factors. The new challenges of global food insecurity and global investment should be addressed through appropriate regulations, and well-informed agricultural and food policies. The study should help to link decisions on investment with an awareness of all implications, including social and environmental ones, in a perspective of sustainable rural development. Developing guidelines for land governance, or a code to regulate international investments might be useful to improve decision making and negotiations. FAO and its partners are currently working together to develop such guidelines, and this study is a first step in this process," Mueller said.

"I would avoid the blanket term ‘land-grabbing',"
says Rodney Cooke, IFAD Director, Technical Advisory Division. "Done the right way, these deals can bring benefits for all parties and be a tool for development."

"The poor women and men that IFAD works with every day must not be sidelined," adds Cooke.
"Their input and their interests must be central, and we must ensure that any benefits promised, such as employment, infrastructure, agricultural know-how, do materialise."

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