Mr. Jose W. Fernandez
Ms. Elisabeth Tankeu
Dr. Esther Brimmer
Dr. Jacques Diouf
Mr. David Hallam
Mr. Harold Liversage
Mr. Joachim Karl
Mr. Mario Hernández Rubiños
Dr. Mahendra Shah
Ms. Charlotte Hebebrand
Mr. Christopher W. MacCormac
Mr. Jose W. Fernandez
Good afternoon and welcome. I’d like to thank all of you for your commitment and the work of your organizations in addressing the issues up for discussion today. But I’d like to begin with a special acknowledgment of the MCC Director, Daniel Yohannes, for his welcome and hospitality. I’d also like to express appreciation to Ambassador Cousin, here from Rome, who first proposed this event and was the driving force behind it.
Among our participants, we are honored to have Florence Chenoweth, Minister of Agriculture for Liberia; Lual Deng, State Minister of Finance and National Economy from Sudan; and Stephen Wasira, Minister for Agriculture, Food Security and Cooperatives of Tanzania. We are pleased That Jacques Diouf, Director General of the Food and Agriculture Organization (FAO), is able to be here today. And, I would also like to recognize Ambassador Tony Hall from the U.S. Alliance To End Hunger. We especially look forward to your insights, and want to recognize your leadership on key pieces of the puzzle in the global effort to advance food security.
I would also like to express appreciation for our co-hosts, the Government of Japan and the African Union Commission. I want also to acknowledge the substantive work that has been done by the FAO, IFAD, the UNCTAD, and the World Bank Group since the September meeting. The work ahead of us depends on contributions from individual governments, international organizations, civil society and other non-governmental organizations, and other partners around the globe. Your representation and participation here are essential to our work on this important issue.
This event brings perspectives on best practices and lessons learned from not only recipient and investor countries, but also from civil society representatives and the private sector. We want to emphasize the critical importance of hearing today from countries that are destinations for foreign investment in agriculture, to share their experiences on this important issue. We want to encourage more information sharing and a candid exchange of views that will feed into the broader discussions that are taking place in a variety of fora around the world.
Now you’ve all heard the numbers. According to the United Nations, global demand for food, feed, and fiber will likely double by 2050 as the world’s population approaches 9.1 billion. The Food and Agriculture Organization (FAO) estimates that total agricultural investment must increase by 50 percent to meet anticipated global demand, requiring net agricultural investment of $83 billion annually in developing countries. Most of this capital will need to be mobilized from private sources, domestic and foreign, and given the competition for private capital, these investments are most likely to flow to countries with good governance and welcoming investment climates. But equally important is that investment be transparent and responsible.
What do we mean when we say “responsible agricultural investment?” Essentially, we are talking about investments that are done transparently and take into account the property rights of the poor, smallholder farmers and customary users of state-owned land, and that also give full consideration of the impacts to communities and to the environment.
The fundamental features of a sound agro-investment climate – clear land and resource rights and title, openness to foreign investment, national treatment, transparency, and so on – are largely the same for the agricultural sector as for other economic sectors. We believe any effort to promote best practices in investment should acknowledge and strengthen recipient countries’ technical capacity for analysis and evaluation of the costs and benefits of potential investments, and their citizens’ capacities for negotiating equitable deals.
I hope that we are able to discuss in detail today what tools and information are available for all stakeholders to create positive outcomes for both investors and recipients, consistent with the principle of support for country-led food security planning.
And now, I would like to turn the floor over to my colleague from Japan, Mr. Kenji Hiramatsu, followed by Ambassador Ali of the African Union.
I would like to express my appreciation for all of you participating in today’s event. We wanted to provide a forum that would allow governments, the private sector, civil society, and international organizations to come together to discuss responsible agricultural investment. I believe we achieved that.
One of the most important aspects of today’s discussion is that we all agree that we need to better understand the facts surrounding the recent surge in large-scale international agricultural investments. We need to hear the results of research and case studies done by FAO, UNCTAD, IFAD and the World Bank, so we can respond as governments and organizations based on solid information and not hearsay. I think we all agree that their insights and expertise will be extremely important as all the parties – governments, the private sector, and civil society – consider how best to move forward. I believe that this important discussion has helped focus the issue and will guide us as additional consultations are undertaken by the four organizations.
The importance of investment cannot be underestimated. And yes, while we need to acknowledge and respect the market principles that govern investment decisions, we also need to encourage investors and recipients to put in place policies that are transparent, equitable, pro-growth, and environmentally sound.
The next step should be to ensure that this broad, consultative process continues. As we have seen today, the dialogue is enriched by hearing from a variety of voices. There is considerable work that needs to be done in developing how best to proceed on these issues and also in looking at what governments in developing countries need, to be able to analyze, evaluate, and negotiate large-scale investments in agriculture. These are issues USAID, the Millennium Challenge Corporation, and others in the U.S. Government are already involved in with many of your governments and organizations. And as some of the participants noted, the issues are not just with foreign investors: domestic investors may have the predominant role in investing in a country’s agricultural sector.
We also need to raise awareness of and a commitment to best practices. It well may be that voluntary investment principles can help host communities and countries structure land deals and other types of investments to welcome that investment, while protecting the existing rights holders. We agree that more needs to be done to help define those rights, especially in developing states.
In closing, I would also like to extend my best wishes for the work many of you will undertake in the World Bank’s conference starting tomorrow on land policy and administration. Enjoy your stay in Washington. I would also like to note the work that will go on over the next 2 days in UNCTAD’s Investment Commission in Geneva. Please continue the dialogue and your good work.________________________________________
Ms. Elisabeth Tankeu
Your Excellencies, Members of the Diplomatic Community
On behalf of the Dr. H.E Dr. Jean Ping, Chairperson of the African Union Commission and on my own behalf, it is a great pleasure and privilege for me to welcome and address you during this important meeting which the African union Commission is co-hosting with two of its major development partners:-the Government of Japan and the Government of the United States of America. This roundtable is timely and relevant to the current efforts of the African Union to address development challenges confronting the continent in its efforts to eradicate poverty and achieve the Millennium Development Goals.
As you may be aware, agriculture is the mainstay of Africa’s economy. It provides livelihood to majority of the people and accounts for a high proportion of employment and export earnings. Unfortunately, in spite of the high dependency on agriculture and the high endowment of the continent in agricultural resources, the sector has not been able to serve the continent as the engine of sustainable growth and development. The failure of Africa’s agriculture is evident from the continent’s lack of food security, widespread hunger and malnutrition, and the high food import bill (standing at $254 billion in 2007). The sector suffers from several problems including low productivity, high amount of post harvest losses (estimated at more than 30%) and weak backward linkages and little value addition to its products.
The African Union Commission places a high priority to the development of agriculture with a view to embracing the role of the sector as an engine of economic growth and sustainable economic development. In this regard, the AU Assembly of Heads of State and Government has adopted the Comprehensive Africa Agricultural Development Program (CAADP). The main objective of CAADP is to address the various constraints facing Africa’s agriculture and to develop and implement policies, programs, and activities to boost agricultural productivity. At the Sirte and Addis Ababa summits of July 2009 and February 2010 respectively, the Heads of State and Governments reaffirmed their commitment to the development of agriculture, with the current chair Prof Mbingu wa Muharika going further to make food security and elimination of hunger in Africa during the next 5 years to be his priority.
More recently, (March 8-11), African Ministers of Agriculture and industry and Heads of States, meeting in Abuja, Nigeria adopted a major initiative -The African Agriculture, Agribusiness and Agro-industries Development Initiative (the 3ADI)) which aims at harnessing and mobilizing agriculture for sustainable growth and development through the promotion of value chains, agribusiness and agro-industries. The 3ADI focuses on, inter-alia the development of rural infrastructure, technology, land management and water technology systems and emphasizes the importance of increased private public sector investments and partnerships and a strong linkage between farmers and agribusiness. The initiative will be endorsed by all African Heads of State and Governments during this year’s July Summit in Kampala, Uganda. I invite you all to come and witness this historic event.
Excellencies, Ladies and Gentlemen,
The achievement of CAADP and the 3ADI require a significant amount of responsible investment- public and private, as well as domestic and foreign. The 3ADI incorporates an innovative financial facility, through which African institutions will contribute, mobilize and channel resources for the development of agribusiness and agro-industries. Both the public/private institutions and development partners should support the implementation of both CAADP and the 3ADI.
Africa needs responsible investment in its agriculture. Responsible investment is targeted to the promotion of inclusive and sustainable agriculture; responsible investment attaches great importance to social responsibility, the protection of the rights of rural communities, SMES, the women, and youths. Responsible investment protects the environment and is not just focused on profits but supplies agricultural raw materials for industries, diversified diets, foods, fiber and fuel products for sale to consumers in Africa and the global markets.
Measures aimed at improving trade and responsible investment climate in Africa relate to the promotion of good political and economic governance. There is increasing commitment of African countries to participatory and multiparty democracy, rule of law, respect for human rights, transparency and accountability, and responsive institutions. Programs of economic reforms; involving the liberalization of trade, exchange rates, and financial markets; greater role for private sector in the economy, improvement of the legal and regulatory frameworks to support and safeguard investment; trade facilitation and improvement of customs procedures; greater efficiency in the mobilization, allocation and utilization of resources; have been adopted by several African countries and have contributed to the enhancement of the ease of doing business in the continent. The trade and investment climate in Africa is now more favorable than it is generally perceived.
Excellencies, Ladies and Gentlemen,
The key message I want to convey to this august body is that, although it remains the epicenter of global poverty, Africa has opportunities for mutually beneficial trade and investment. It has a large and growing population that has been projected by the UN to be 1.3 billion by 2020. Efforts are being intensified by the African Union and the Regional Economic Communities to accelerate the pace of regional integration and the establishment of a Pan-African Common Market in which goods, capital and people will move freely between countries. Africa is richly endowed with abundant mineral and natural resources. Rates of return on investment in the continent are among the highest in the world. And, as indicated above, enabling policies and programs have been adopted to improve trade and investment climate.
Distinguishes Ladies and Gentlemen,
It is my hope that this roundtable will generate and crystallize ideas that will contribute to, catalyze and boost the implementation of the 3ADI as the platform to spur and cement stronger partnerships between the African Union implementing agencies (AUC, AfDB and ECA) on the one side- and our esteemed development partners (United States of America, Japan, UNIDO, FAO, UNCTAD, and IFAD) on the other side for responsible agricultural investment. African welcomes the lessons learned and sharing of tools that will help facilitate the monitoring of the implementation of this program. We can do it.
If not us –who?
While looking forward to responsible investment that will make our nations and peoples prosper together,
I thank you for your attention.
Dr. Esther Brimmer
Remarks as Prepared
Good afternoon. I want to thank everyone for participating in this important roundtable discussion. I especially want to highlight and thank the Government of Japan and the African Union Commission for joining with the United States to co-host this event.
As you know, the international community endorsed five core principles at the World Summit on Food Security in Rome. Included among these principles are a commitment to country-owned plans; an emphasis on coordination at all levels; and assurance of a strong role for the multilateral system. Events like the one we are holding today in Washington, and the announcement on Thursday of the new Global Agriculture and Food Security Program, show that we are committed to these core principals.
We are all aware of the enormous challenges ahead as we seek to eradicate hunger from the face of the earth. This collective approach focusing on country-owned plans is critical if we are to strengthen strategic cooperation, ensure coordination at the local, national, regional and global levels and meet our commitments to global food security.
Toward that end, it is encouraging, that over five months after the Summit, we see this distinguished group of international, multilateral and UN partners working together toward a common goal. It is also telling that we have foundations, civil society and private sector representatives in this room – you are essential participants and partners in this process.
As you know, in an effort to address global hunger, the G8 at L’Aquila committed $20 billion, including a U.S. pledge of at least $3.5 billion over three years, to promote agricultural development in developing countries. This figure was increased by the G20 at Pittsburgh to $22 billion.
The G8 and G20 commitments are critical to promoting agriculture in developing countries. We have to be honest – even with these extraordinary commitments by donor countries, there is nowhere near enough official development assistance (ODA) available to meet agricultural needs in developing countries in the short and long term. Therefore, in addition to domestic capital and ODA, foreign and domestic agricultural investment, especially from the private sector, is absolutely necessary to help developing countries reach their national food security goals and targets.
I want to touch briefly on several points that we believe are critical components to the goal of food security, and tie into our discussion today on responsible agricultural investment:
• First, we need to ensure a comprehensive approach to Food Security, meaning investment in programs that achieve sustainable agricultural productivity, improve market access, increase incomes so the poor can purchase food, reduce under-nutrition and increase effectiveness of emergency humanitarian assistance by strengthening the capacity of countries to anticipate and prevent hunger related emergencies.
• Second, we need to invest in country-owned plans, aligning our efforts with country-owned investment plans and strategies, reflecting broad-based stakeholder engagement and ownership and supporting results-based programs and long-term sustainable outcomes.
• Third, and this is pertinent to our discussion today, we believe that large-scale foreign and domestic investment in agriculture must be carried out in an environmentally, financially, socially, and culturally-responsible manner. We need to be conscious and sensitive to those individuals with traditional rights to land and those individuals who work on it as well.
Before closing, there are many key stakeholders locally, nationally and internationally who work daily on global food security and are committed to the core principles adopted at the World Summit on Food Security. You all deserve enormous credit for your dedication and effort – especially as we discuss responsible agricultural investment.
Thank you again for this opportunity, we look forward to hearing from all of you, to hear about shared experiences, learn best practices and discuss new ideas. This event will serve to inform key stakeholders, particularly the U.S., UN and international community, NGO’s and private sector, as we work together to address the underlying causes of global hunger and under-nutrition.
It is now my pleasure to welcome Director-General Jacques Diouf of the UN Food and Agriculture Organization. ________________________________________
Dr. Jacques Diouf
1. More than a billion people are undernourished worldwide. Progress in reducing hunger and reducing poverty depends upon investment in agriculture.
2. Large scale acquisitions of developing country agricultural land by foreign investors raise complex and controversial economic, political, institutional, legal and ethical issues in relation to food security, poverty reduction, rural development, technology and access to land and water. This so-called “land grab” has attracted substantial international concern and increasingly strident demands by some civil society groups that it should be stopped
3. On the other hand, lack of investment in agriculture over decades has meant continuing low productivity and stagnant production in many developing countries, especially in Sub-Saharan Africa. The 2009 World Summit on Food Security emphasized the urgent need for this situation to be rectified. FAO estimates that additional investments of $83 billion annually are needed in developing country agriculture and related downstream activities to meet global food needs in 2050. Developing countries’ own capacity to fill that gap is limited. The share of public spending on agriculture in developing countries has fallen to around seven percent and the share of official development assistance going to agriculture has fallen to as little as five percent. Foreign direct investment in developing country agriculture could make a significant contribution to bridging the investment gap if it is done right..
4. Many developing countries are making strenuous efforts to attract and facilitate such international investments to exploit what is regarded as underutilised land. For those countries, therefore, the practical question is not whether foreign direct investment should contribute to meeting their investment needs but how its impact can be optimised to maximise the benefits and to minimise the inherent risks for all involved.
5. Whether these potential developmental benefits are actually likely to be realised and how far these investments can go towards meeting the real investment needs of developing country agriculture depends on how the investments are formulated.
6. Land acquisition is just one form foreign investment might take and one which arguably is least likely to deliver significant developmental benefits to the host country. While much land in Sub-Saharan Africa may currently not be utilised to its full potential, apparently “surplus” land overall does not mean land is unused or unoccupied. Selling, leasing or providing concessional access to land raises the questions of how the land concerned was previously being utilised, by whom and on what tenurial basis. Its exploitation under new investments involves reconciling different claims. Change of use and access may involve potentially negative effects on food security.
7. It is also not clear that land acquisition is necessary or desirable even for investors. Other forms of investment such as contract farming and out-grower schemes can offer just as much security of supply without the economic and political concerns surrounding land acquisitions. Such non-equity arrangements may be more conducive to the interests of the receiving country. Joint ventures can offer more spillover benefits for the host country smallholders. Investments could also be in much-needed infrastructure and institutions which currently constrain much developing country agriculture. This, together with efforts to improve the efficiency and reliability of world markets as sources of food might raise food security for all concerned more generally through expanding production and trade possibilities.
8. If foreign direct investment is to play an effective role in filling the investment gap facing developing country agriculture, there is a need to reconcile the investment objectives of investors with the investment needs of developing countries. Investment priorities need to be identified in a comprehensive and coherent investment strategy and efforts made to identify the most effective measures to promote the matching-up of capital to opportunities and needs.
9. Care must be taken in the formulation of investment contracts and selection of suitable business models; appropriate legislative and policy frameworks need to be in place to ensure that development benefits are obtained and the risks minimised.
10. The perceived risks attached to foreign investments have led to calls for an international code of conduct to regulate them. Similar codes of conduct, international guidelines and transparency initiatives appear to have had a positive impact in other areas involving transnational investment and business.
11. FAO, UNCTAD, the World Bank and IFAD have responded to the international concern by working together to develop a set of draft principles for responsible international investment. The very first of those principles concerns respect for existing land and resource rights. The basis for this is FAO Voluntary Guidelines on Responsible Governance of Land Tenure. The seven principles which highlight the need for transparency, sustainability, involvement of local stakeholders and recognition of their interests and emphasised concerns for domestic food security and rural development have been prepared following intense discussion between the organisations and a large number of presentations in international fora to gauge the extent of political support. This began with the roundtable that was held in the margins of the UNGA in September 2009. Today’s roundtable is another step in this process.
12. Definition of the principles is the first step. The current draft is still a working document. It will be the basis for an inclusive and comprehensive consultative process. The further development of the principles demands widespread consultation with all stakeholders including governments, farmers’ organizations, NGOs, the private sector and civil society more generally. Such a consultative process will inevitably be lengthy but without inclusive, comprehensive and effective consultation and input it is unlikely that a workable solution could be achieved. FAO is fully committed to that process of consultation.
Mr. David Hallam
• No one denies that increasing investment in developing country agriculture is needed
Mr. Harold Liversage
1) Key question is: Who are the main investors in agriculture?
a) Small-holder farmers in developing countries are the main investors - 500 million smallholder farmers, 80% of the food consumed in the developing world, supporting ⅓ of the global population (more than 2 billion people). Most small-holder farmers (between 60 to 80%) are women. Small-holder farmers tend to be the most neglected in terms of investment. Their development needs should be at the centre of any investment in agriculture in the developing world.
b) Who are the main outside investors? Exploitative profiteers or innovative entrepreneurs? There is a huge diversity in size, types of business models and social commitment of investors. Some are socially committed and passionate about development others are more focused on investment returns. Foreign investors are sometimes the more socially responsible investors. Many investors come and go depending on market fluctuations. We tend to focus on large-scale investors but we should not underestimate the importance of small outside investors.
2) Increased foreign interest in investing in agriculture presents opportunities but also risks. We need to minimise the risks and maximise the opportunities. One of the best ways for doing this is through mutually beneficial partnerships that do not require a major transfer of land rights to investors. Such partnerships could include: land leasing, out-grower schemes, contract farming or joint share equity schemes, with outside investors focusing mainly on providing expertise or improved access to markets. The success of such partnerships depends on the level of: ownership, voice (governance), risk sharing and benefit sharing between partners.
It seems that serious investors desire mutually beneficial and sustainable partnerships (it makes good business sense). In many cases small-holder farmers are prepared to relinquish some of their rights to certain lands if they see a real benefit and were properly consulted. But partnerships that do not require large-scale land acquisitions are more sustainable.
3) IFAD has provided support in strengthening such partnerships throughout the world. The Fund has learnt that sustainable partnerships require sustained support by a range of service providers (Government, CSO and Private Sector). There is a need to monitor the implementation of partnerships, to ensure that the anticipated benefits are realised.
Some of the main challenges at the moment are: strengthening dialogue and overcoming mistrust between various stakeholders; promoting good practice.
4) We need to situate large-scale land acquisitions and associated response to these (eg: principles) in a broader context. Land grabbing is not just being done by foreigners – national and local elites, competing communities and within families (men from women and orphans). So any response to LLAs needs to be situated in a broader strategy of promoting good land governance – FAO-led VG, WB LGAF.
5) In Conclusion, IFAD welcomes initiatives at developing principles for responsible investment in agriculture. These guidelines should be: (i) based on best practice, (ii) voluntary, (iii) not only focus on large scale land acquisitions and (iv) should encourage partnerships between small-holder farmers and outside investors.
Mr. Joachim Karl
Thank you for having invited me to this meeting. It is a pleasure to be here with you.
I would like to give you a brief update of UNCTAD's activities in the area of FDI in agriculture. I limit myself to those issues that have not yet been mentioned by my colleague John Lamb in his report about the joint work with FAO, the World Bank and IFAD.
The starting point for us was our latest World Investment Report - one of UNCTAD's flagship publications - which was launched in September 2009 and which dealt with the issue of "TNCs, agricultural production and development". In this Report, we analysed how many TNCs are active in this area, what implications their activities have for developing countries, and what policies host countries, home countries and the international community could adopt to promote more TNC involvement in agricultural production.
Since then, there have been three developments in UNCTAD:
We organised an expert meeting on South-South cooperation in December 2009. In this context, we discussed cooperation in the area of agriculture, including investment in this area.
In February 2010, we organised an expert meeting on "Investment for Development". It discussed key elements of synergies between domestic and foreign investment from a development perspective. One of the areas in which such synergies were considered was agriculture. The meeting was attended by more than 100 participants from more than 60 countries, including government officials, international organisations and academia. Delegates concluded that there is considerable potential for creating more synergies between domestic and foreign investors in agricultural production, and that particular emphasis should be given to the promotion of contract farming arrangements between TNCs and local farmers.
Tomorrow, on 26 April 2010, UNCTAD will host a high level meeting on the issue of FDI in agricultural production. It will be the first time that the initiative to develop principles for responsible investment in agriculture will be discussed at an UNCTAD event.
To conclude, let me assure you that UNCTAD attaches great importance to the development of these principles. UNCTAD will continue to contribute to this vital project in its area of expertise, namely FDI data collection as well as research and analysis concerning national and international FDI policies.
Mr. Mario Hernández Rubiños
PERU: ESTABLISHING A FRAMEWORK FOR TRANSFERRING PUBLIC LANDS
Therefore, the government creates the legal and institutional framework that is use, basically, until today.
2. WHAT ASSETS THE GOVERNMENT HAD TO SELL TO THE PRIVATE SECTOR?
3. WHAT WERE THE CRITERIA FOR THE POLICY OF LAND SELLS?
3.2. JUSTIFICATION OF THE DECISION FOR THE SALE OF SIZEABLE LAND LOTS
3.3. USE OF PUBLIC AUCTIONS MECHANISMS
3.4. PRICE, COMMITMENT FOR INVESTMENT AND GUARANTEES
3.6. There were NEITHER demands nor discrimination for certain crops.
4.2. Large property of lands were transferred to the private sector
4.3. Public auctions
4.4. GOVERNMENT INCOME AND INVESTMENT ACQUIRED
4.5. HOW MUCH IT WAS PAID FOR THE LAND?
4.6. The private investment in land increased the employment in the related region. Each hectare cultivated created two direct employees and three indirect employees. But more important, increase the rural income and, more accurately, the women income. For example, in agriculture industrial plant almost the 70% of the workers are women. This is changing the women role in the families.
5. SOME LESSONS LEARNED
5.2. Are you clear about what are you selling?
5.3. If you do what you have always done, you will get what you have always gotten.
For example, in recent year, the government and the Congress created another mechanism to acquire property right of land.
The last mechanism already explain was the PUBLIC INICIATIVE: the government (more specific, the government officers) decides what assets have to be sold.
But now, we have additional mechanism: the PRIVATE INICIATIVE. That means a company made a proposal to develop an agriculture project buying specific land. Right now, almost 15,000 hectares have been sold with this mechanism and we expect that more entrepreneurs of agricultural project may be realized.
In the nineties and in beginning of 2000, Peru had a government with centralized power. There was not a great "social or environmental flexibility”.
Peru has now a government with a major distribution of governmental power.
Therefore, it is very much desirable to consider a "social vector" and a "environmental vector" to promote private investments in government lands in a successful way.
It will take longer but the operation must have a "social license" of the community involves.
Why a social vector? Because there are many peasant communities that strongly believe his land property is bigger than the government had registries. And right now, with the “agroexport boom” in Peru, this land has increased his value.
Here, is open the great opportunity to enhance a strength collaboration between private sector, peasant communities and the government.
In the next four years, Peru could offer more than 60,000 hectares with legal water rights in two large irrigation project. Majes and Olmos.
We assume that the foreign investor will participated, join with the local investor, in order to buy these land.
In this sense, I think we need a broad study about the past experience and the main drivers for the future.
Dr. Mahendra Shah
The world food security goal of more than doubling production by 2050 will be challenging in an emerging environment of climate change, degrading arable land, increasing water scarcity, reduced Government and ODA investments in agriculture and the slow progress in research essential for the next green revolution. These concerns and future prospects of supply- demand imbalances and disruptions in world food markets has triggered major food importing countries and the private business sector to invest and secure foreign land resources, particularly in developing countries with untapped agricultural potential.
The developing countries are already home to the world’s one billion people suffering chronic hunger. All countries have a legal obligation to comply with the Universal Human Right to Food and this principle needs to be evoked in ensuring that foreign agricultural investments do not result in the food insecurity of the wealthy countries being transferred to developing countries, especially countries that are food insecure and lack the means to invest in their own agricultural development.
For responsible agricultural investment agreements the most critical requirement is that of access by both recipients and investors to comprehensive and reliable information to ensure environmental, social and economic sustainability. Also access to the due process of mediation and law in a situation where conflicts arise is important. In this context an international code of conduct could provide guidance and furthermore, given the criticality of world food security, a multilateral regional mechanisms to monitor and evaluate the transparency and outcomes of investment ventures should also be considered.
The key obstacle to more transparent debate and informed decisions by governments and investors is the lack of science-based information, for example the agro-ecological suitability and sustainable production potential of any given locality for different types of crops. At a national level, this information can be crucial. Parametric assumptions about yield and input levels, and application of a vector of output and input prices adjusted for transport cost spread over an appropriate time period, would allow the computation of expected investment returns and land rents from any given use. This would allow host governments to assess their comparative advantages better in negotiations with outside investors. Globally, such information can help investors who are interested in certain types of crop to identify the most appropriate countries and macro-regions to consider. There is also a pressing need to develop capacity building programmes for analysis and evaluation of agricultural investments deals as well enhancing negotiations skills in developing countries.
The IIASA – FAO integrated agro-ecological and socio-economic methodology and global database for analysis of policy options for food security and sustainable agricultural development, has recently been applied in collaboration with the World Bank to provide insight and decision support for recipients and investors.
The initial results of this study highlight that, for example, an equitable shared-benefits agreement can best provide the basis for responsible and sustainable agricultural development, especially in currently cultivated land areas where the yield gaps are large. Consider a situation whereby food production of 100 tons on a piece of land is boosted to 500 tons with foreign investments enabling adoption of high agricultural technology and management. This could be shared 200 tons for the investor and for the recipient and balance of 100 tons sold on the local market with the proceeds invested to improve infrastructure and social services for the local community. The results also indicate substantial food production potential in unprotected grassland and woodland areas. However any development in these areas will need to take account of traditional land use rights as well as risk of biodiversity loss.
Such an innovative partnership arrangement could be further structured as an official development aid (ODA). Another option is a state-sponsored and funded private-sector entity that brings modern management and best practices for a public good food security goal as well as profitable enterprise. Here the Government and ODA should provide oversight and monitoring to ensure that the long-term investment responsibility and sustainability are assured.
In the midst of the 2008 world food crisis, Qatar was among the first to set up a country lead food security programme. Qatar imports over 90 percent of its food requirements and faces challenges of developing dry land agriculture in an environment of severe water scarcity. An integrated Master Plan for food security and agriculture is being developed including, for example, solar desalinization, drip irrigation agriculture and protected hydroponics, efficient food marketing and strategic storage systems as well renewable energy and a knowledge economy.
Whilst foreign investments can contribute to achieving world food security, at the same time all countries should also put in place investments and policy regimes to enhance their domestic food production. The Middle East is the world’s most food deficient region. In March 2011, Qatar is organizing a summit – Partnering for Food Security in the Arab World and we welcome you all to join us in Doha.
Ms. Charlotte Hebebrand
Allow me to make a few remarks on the topic of large international agricultural investments and on the idea of drawing up principles for responsible agricultural investment. I will be brief on this because you have already heard from many distinguished speakers on these topics.
I would then like to speak about a topic that is quite closely related, I believe, to the phenomenon of large scale international agricultural investment – namely a rather worrisome lack of trust in the international trade system. My aim in doing so is to encourage the four organisations, as well as other groups that are spending a lot of time and effort on drawing up principles for responsible agricultural investment, to also focus on how we might remedy this problem of faltering trust in the international trade system.
• Important to keep in mind that increased investment in agriculture is urgently needed; in fact we have been pleading for greater investment for many decades.
• It is clearly positive when developing countries commit to increasing the share of their national budget allocated to the agricultural sector and when developed countries increase the share of ODA going towards agriculture.
• Private sector investment is also required since the needs for investment in poor countries surpass by far what governments can provide.
• The food price peaks of 2007-80 led to a number of new types of large scale cross border investments – some have referred to these as worrisome land grab deals, whereas others have welcomed them as providing badly needed investment. Where does the truth lie?
• I would argue that the work being undertaken by the WB, FAO, UNCTAD and IFAD, in particular to quantify and qualify the impacts of large-scale investments, is very welcome, so that we can all have a discussion about responsible agricultural investment that is based on facts.
• There are some that will not be pleased with “guidelines,” as they would prefer legally binding commitments. Guidelines will not lead to 100% adherence but they can be very useful for providing greater transparency. Independent monitoring will be very important to ensure that the guidelines have the desired impact.
• It would also be useful to ensure that these principles are conveyed to those that are most likely to be negatively impacted by irresponsible agricultural investment – and there is certainly a challenge here.
• Country-specific - A very important conclusion of the many food security related declarations and initiatives is that efforts must be based on country specific plans. Overarching principles on large scale investments will be helpful, it will be more useful to ensure that they are actually implemented at the country level. It makes good sense for recipient governments and donors to rally around a national (or regional) food security plan, and they are well advised to bring existing and potential investors – both from the public and the private sector – to the table as well. We need on the one hand to attract greater investment and, on the other, try to ensure that it is responsible, and this can best be done on a country specific basis.
Let me turn to some trade considerations. To clarify, I am only speaking here of large-scale investments, which depend entirely or in part on government funding, and that attempt to guarantee long term access to food for the investing country’s population.
What is motivating investor countries? One likely – and rather sensible - reason is that they are keenly aware of their inability to be self sufficient in food production, or of the inefficiencies involved in attempting to become self sufficient and are therefore looking to secure food from other parts of the world.
The case of Saudi Arabia is particularly interesting. It is a country with no rivers or lakes and very limited rainfall, heavy dependence on groundwater, but decided to produce wheat in very harsh climate and to attain self sufficiency. It realized that this was environmentally and economically unsustainable and began phasing out the program and began importing wheat in 2008 – the 1st time in three decades.
A more worrisome reason may be that they do not feel that they can rely on imports to bridge their demand gap and believe that they have to undertake these large-scale investments in other countries in order to secure food for their domestic population; in the case of Saudi Arabia, it undertook the ambitious King Abdullah Initiative for Agricultural Investment Abroad. There is of course a multitude of reasons for the price spikes 0f 2007/08, but trade restrictions played a major, although often overlooked, role
• Could have been responsible for as much as 20-30% of the price increase in some commodities.
WTO rules focus on problems of exporters (IPC Jan 2009 paper on export restrictions):
• High border protection, domestic support and export subsidies — and have largely ignored the importers’ main problem, which is unreliability of supplies.
• Quantitative restrictions on exports, including agricultural goods, are banned in the GATT, but exceptions in the agreement make the rules difficult to interpret and enforce. The WTO allows the use of quantitative restrictions and embar¬goes on agricultural exports if used temporarily to relieve shortages of “basic foodstuffs or other materials of importance to the exporting country.”
• URAA elaborates on the matter of disciplines on export prohibitions and restrictions: Article 12 stipulates that when a member institutes new export restric¬tions (emphasis added) “in accordance with paragraph 2(a) of Article XI of GATT 1994,” the member shall observe the following provisions:
• It has been relatively easy, there¬fore, for countries to justify export restrictions as a means of relieving critical food shortages. No definitions exist as to what is “temporary,” “critical” or what constitutes a “shortage.” There has yet to be any successful challenge to the export restrictions implemented by an exporter of a foodstuff. The requirement in the WTO Agreement on Agriculture to notify such export restrictions has not been noticeably effective.
• The reputation of exporters has taken a further hit, and according to the WTO, not one of the countries that imposed restrictions in the past year complied with the requirement to notify under Article 12 of the URAA.
Improving Importers’ Confidence in the System
• If indeed, this loss of confidence in the trading system is at the root of these new investment deals, it would be wise to not only consider principles for responsible international agricultural investment, but also (or perhaps instead) principles to safeguard a more open and equitable food and agricultural trading system.
• If a DDA conclusion proves too difficult in the near future, an “exporters’ code” could be negotiated — both to safeguard the progress made in the export competition pillar and to address export restrictions. Such a code would include the ending of export subsidies, both direct and through food aid, export credit guaran¬tees and state-trading entities, as well as a ban on export embargoes and a limit on export taxes.
• Since such a code would aim to remove important distortions from the global agricultural market and address supply availability concerns, it could aptly be referred to as a “food security code.” The details of such a code could be negotiated by those who are most affected (the exporters but also recipients of food aid) and implemented on a non-discriminatory basis.20 In order to speed up such an agreement, it could be negotiated among a smaller group of countries, such as those accounting for (say) 80 percent of grain exports. The obligations would apply only to those that chose to participate. Its benefits of course would be applied to all WTO members.
In conclusion, allow me to briefly recap these four points: 1. we require a better understanding of the scope and impact of large scale agricultural investments; 2. Guidelines are good, implementation will be very important – help those most vulnerable to benefit from them and ensure good country level planning; 3. if an underlying motivation for them is a distrust of the international trade system, we are well advised to try to address that distrust.
Mr. Christopher W. MacCormac
1. If the goal of the principles for responsible investment is to increase world-wide investment to increase global food production, then the discussions on implementing those principles need to go beyond multinational/transnational corporations. The principles are just as relevant to public and private sector investment in agriculture by developing countries on a national or subregional basis, as they are to global food enterprises (for example, they could be applied to; slash and burn agriculture; integrated pig-poultry-fish production systems; small-grower coffee production; monoculture versus multiple cropping in irrigated or rainfed areas even for small-scale production; zero tillage production methods). Last Sunday's conversation, centered as it was on large-scale estate or plantation-type agriculture production by contract, would exclude much of developing Asia's agriculture systems and by association, most of Asia's farmers.
2. While there is a need to organize agriculture production in developing countries in ways that enable more cost-effective allocations of capital and labor, this doesn't mean that today's small farms and farmers can't increase food production (which I think was an inference, if not a conclusion, from last Sunday's discussions). My understanding is that conventional plant breeding (not GMO) plus new multiple cropping patterns still offer potential for increasing overall yields and/or reducing inorganic inputs. I don't think we are yet at the point where we can say with confidence that we must substitute economies of scale and greater capital rather than science and innovation to increase food production in developing countries.
3. Notwithstanding my arguments in para.2 above, I believe the 'principles' should advocate for optimizing investment in rural development, so that local labor that is 'surplus' to local food production can be deployed productively in the local region so that both local farm and off-farm household incomes rise together. We might need some new paradigms for effective approaches (for example, more coordinated, region-based public sector investment across major types of infrastructure such as roads, power, irrigation, food storage). The external development assistance agencies should bring their considerable knowledge resources to bear on this matter, and should do so in partnership with each other.
4. I didn't understand the 'voluntary' nature for applying the principles. Shouldn't the principles underpin improvements to public policy that govern both public and private investment in agriculture?