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Foreign Land Investments in Developing Countries “ = tryck ner altknappen + 010 på siffer- tangenterna längst till höger på tangent- bordet “ – Contribution or Threat to Sustainable Development? Swedish FAO Committee Publication series, no 7 ISSN: 1652-9316 Production: Ministry for Rural Affairs and Swedish FAO Committee December 2010 Printed by: Davidson tryckeri, February 2011 Article no: L 11.001 Additional copies can be ordered from the Ministry for Rural Affairs via www.sweden.gov.se/rural or by telephone: 08-405 27 50 Table of contents Foreword Magnus Kindbom, Chair of the Swedish FAO-Committee ... p. 4 1. International investment in developing country agriculture – issues and challenges David Hallam, Director, Trade and Markets Division, United Nations Food and Agriculture Organization ... p. 6 2. Land speculation and the rights of the poor: the case of sub-Saharan Africa Professor Göran Djurfeldt, Lund University ... p. 15 3.1 Large-scale international land investment in developing countries Gert Nyberg, Department of Forest Ecology and Management, Swedish University of Agricultural Sciences Umeå ... p. 31 3.2 Livestock diversity for current and future needs: risks and opportunities Professor Jan Philipsson, Department of Animal Breeding and Genetics, Swedish University of Agricultural Sciences, Uppsala ... p. 36 3.3 Land acquisition, agriculture and plant biodiversity Prof. Christina Dixelius, Dept. Plant Biology & Forest Genetics, Swedish University of Agricultural Sciences, Uppsala ... p. 41 4.1 Emerging Foreign Investments in Agriculture: Food Security and Land Rights in Africa Dr. Akinyi Nzioki, The Centre for Land, Economy and Rights of Women, Kenya ... p. 46 4.2 An example of land displacement in Zambia Zambia Land Alliance ... p. 59 5.1 Responsible Investment – A Nordic Investor’s Perspective Heikki Rissanen, Stora Enso Group Forest Operations ... p. 63 5.2 Perspectives on forest investments in Latin America Björn Rasmusson, Bheros ... p. 76 6.1 Swedish International Development Cooperation Agency Sida assistance to natural resource tenure ... p. 83 6.2 A Position Paper for Sida – Natural Resource Tenure Extracts – What is natural resource tenure? ... p. 90 6.3 Extracts from Sida studies no. 23: Natural Resource Tenure – a crucial aspect of poverty reduction and human rights ... p. 94 Foreword This is the seventh volume in the Swedish FAO Committee’s publ­­i­ cation series. The purpose of the publications is to spread knowledge about and interest in issues of global cooperation, in particular the work of the UN specialised agency for agriculture, forestry, fisheries and food (FAO). We live in a time of many difficult global challenges, in which efforts to ensure food security and fight climate change have been further aggravated by the economic crisis, which according to FAO and World Bank analyses has increased the number of people suffering hunger by over 100 million. This number is now close to 1 billion. The food crisis in 2008 had dramatic consequences for many of the world's poorest countries, with prices of various agricultural com­ modities rising sharply. People in the countries dependent on food imports – ‘Low­Income Food Deficit Countries’ LIFDCs( ) – were particularly hard hit. After temporary relief, there are strong indi­ cations that the situation is deteriorating again as a result of failed harvests and protectionism. This volume seeks to contribute to debate by providing various per­ spectives on a new, complex problem affecting food security, namely, the acquisition by foreign investors of rights to use or own land in developing countries, a process often labelled as ‘land grabbing’. In Sweden we had a similar phenomenon, known as ‘baggböleri’, in which small forest owners were tricked out of their livelihoods and their forests cut down. As a result of this, however, Sweden established a system of forest management that has set an example to the world. There is a growing awareness that agriculture and food security in developing countries must be accorded significantly higher prio­ rity and in this perspective investments in agricultural production are required. But if investments are made merely for the purpose of securing another country’s food security, the food situation in the producing countries may deteriorate. Surpluses and deficits are nor­ mally evened out through trade between equals. The Swedish Government is of the view that investments must be compatible with sustainable development. The important principle of ‘using resources without using them up’, in other words, of using land resources sustainably, is dealt with in several of the contributions. 4 Control over land and the behaviour of governments are naturally a matter of national sovereignty, but account must be taken of the people who use the land that is sold or leased. Have those who depend on the land been able to influence developments or are they losing their sources of livelihood? The risk is that particularly weak govern­ ments undersell land rights and enter into long agreements that can prove to be disadvantageous and difficult to break. Investments should contribute to the countries’ development and ability to support a rapidly urbanising population. This publication has been commissioned by the Swedish FAO Committee. This time the Committee has chosen to allow sever­ al writers to spotlight the issue from their own perspectives. The writers are responsible for their own contributions. The publication is intended to stimulate thought and further discussion on the key role of agriculture in development and food security. Magnus Kindbom Chair of the Swedish FAO Committee 5 1. International Investment in Developing Country Agriculture – Issues and Challenges1 David Hallam, Director, Trade and Markets Division, United Nations Food and Agriculture Organization The recent surge of interest in international investment in developing country agriculture has attracted much media interest and inter­ national concern more generally. Certainly, complex and controversial economic, political, institutional, legal and ethical issues are raised in relation to food security, poverty reduction, rural development, tech­ nology and access to land and water. On the other hand, lack of invest­ ment in agriculture over decades has meant continuing low producti­ vity and stagnant production in many developing countries, especially in sub­Saharan Africa. FAO estimates that additional investments of $83 billion annually are needed if developing country agriculture is to meet food needs in 2050. Given the dwindling resources available for investment in agriculture from national budgets or official develop­ ment assistance , foreign direct investment in developing country agriculture could make a significant contribution to bridging the investment gap. The question is how its impact can be optimised to maximise the benefits and to minimise the inherent risks for all involved. The pattern of recent foreign investment in developing country agriculture Unfortunately, there are no comprehensive detailed data on the extent, nature and impacts of these investments although some ge­ neral features are apparent. Foreign investment does appear to have increased although the number of projects actually implemented is less than the number being planned or reported in the media. Foreign investment in agriculture still accounts for a very small percentage of total FDI flows in most developing countries – less than two percent in African countries. The main form of recent investments is acquisition 1 This is a shorter version of the paper. The full text is available at www.regeringen.se/fao 6 mostly through long­term leasing of agricultural land and often large­scale with many involving more than 10 000 hectares . The total amount of land in Africa acquired by foreign interests in the last three years is estimated at more than 20 million hectares but land under foreign control remains a relatively small proportion of total land areas in host countries. The main investors have been from the Gulf States but also China and South Korea and the main targets for in­ vestment have been countries in Africa but there are also investments elsewhere. Investors are primarily private sector but govern ments and sovereign wealth funds are also involved in providing finance and other support or in some cases directly. In host countries it is govern ments who are engaged in negotiating investment deals. Recent investments differ from the previous pattern of foreign direct invest­ ment in that they are resource­seeking (land and water) rather than market seeking and involve acquisition of land and actual production rather than looser forms of joint venture. Investor and host-country motivations The main underlying driver for the recent foreign investments in food production appears to be food security and a fear arising from the recent high food prices that dependence on world markets for foods supplies or agricultural raw materials has become more risky. The recent volatility of international food prices, especially when aggravated by export restrictions taken by major grain exporters, has understandably provoked concerns about the cost and avail abil ity of food in those countries heavily dependent upon imports for their food security. Increasing food self­sufficiency is not a plausible opt­ ion where, as in most Gulf states, land and water constraints are worsening so investment in food production overseas was seen as one possible element of a food security strategy.

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