Prepared for the Conference – Making Investment Work for Africa: Pan-African Parliament.Midrand, SA, 21-22 July 2011

Surge in Large-Scale Land Acquisitions : Drivers, Features, Way

Forward.

Madiodio Niasse, ILC Secretariat

• Established in mid-1990s as: Popular Coalition to Eradicate Hunger and Poverty, which became ILC in 2003

• A global alliance to promote secure and equitable access to and control over land for the poor;

• About 120 member organisations, including IGOs and CSOs (farmers’ organisations, research institutes, NGOs and CBOs);

• About 30 CSO/FO members in Africa • The phenomenon of large-scale land transactions

at the heart of the Coalition’s mandate• Coalition has addressed it through studies (CPL),

monitoring (matrix, portal) and policy dialogues (dialogue on Large-scale land acquisitions and their alternatives)

The International Land Coalition

I. The problem: Africa’s needs for investments in agriculture

and water development

• Need for development of agricultural land:– Only 7% of Africa’s arable land is under irrigation (4% for

SSA): against 20% globally– Rate of irrigation development: less than 1%/year

• Need for development of water infrastructure– Only 1300 large dams for all Africa (2/3 in Southern Africa)

against: about 45.000 globally– Africa’s hydro installed capacity: 21,000 MW (about 3% of

the world total (Three Gorge Dam: 18,300 MW)

• Estimated investment needs– CAADP: USD$250 billion from 2002-15 (including US$ 70 for

Sustainable Land Management and water control infrastructure)

Investment needs for agriculture, land & water

Where the money will come from?

• National budgets: Maputo Declaration• ODA • New philanthropic assistance to Agric sector

Too limited portion of investment needs, and observed trends not impressive

• Need private sector investment: domestic and foreign

• Past private investment in agriculture and water development (e.g. BOT for some hydropower schemes) has been timid.Key Q

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II. Drivers of large-scale investment in land

Longer term build-up to the rush for farmlands in the South

• Population increase• Economic growth• Increased meat consumption, esp. in

“emerging economies”• Low investment in agric/food

production, esp. in the South• Land degradation• Water resources depletion in

populated agrarian and/or emerging economies (India, China)

Structural Adjust. Progs in the Agriculture sector: removal of subsidies to small holder farmers;

sharp decrease of ODA & public invest in agr; market deregulation

Vulnerability to

volatility of

internal food

market prices

Longer term build-up to the rush for farmlands in the South (Case of Sahel region)

Recent causes: Land for biofuel for energy and climate security (1/2)

1970s: Oil crisis Rush for responses to oil dependency

Promotion of biofuels: Brazil, US, etc.

Late 1990s: Kyoto Protocol (1997): GHG reduction targets for 2012

EU Biofuels Directive (2003)

2006-2007: IPCC’s 4th Assessment Report;

EU Renewable Energy Directive (2008): 10% Biofuels target for transport by 2020

By mid- 2000 : 25 million ha devoted to Biofuels:– Brazil: 8-9 million ha for ethanol (mainly sugar cane)– US: 16 million ha for ethanol (mainly Maize)– EU: 3 million ha (all biofuels, esp. biodiesel from rapeseed, ect.)– Other: exp. Palm oil (Indonesia); Soy (Brazil)

Immediate triggers: 2005-2008 - Oil and food price hikes

Based on FAO, June 2008. Soaring Food prices. Facts and perspectives..

Immediate triggers: The Global Financial Crisis

• Started in mid- to late 2007• A milestone: Collapse of Lehman

Brothers Bank (US): Sep. 2008• Bankruptcies/crises (2008/2009):

• Banks• Real state companies• Insurance companies• Pension Funds • Sovereign Funds

Financial investors in search of alternative lucrative by less risky investment opportunities

(1) 2007-08. Bad weather conditions poor harvest in key food exporting countries (Australia, Ukraine..)

(2) (5) Food price hikes

Immediate causes: From food price hikes to global “rush for farmland”

(4) Record high Oil prices

(3) (6) Freeze/ban of food exports in 20+ countries

(8) Riots in various

big cities in the South

(9) GLOBAL RUSH FOR

LANDFood

Energy (7) Panic food purchases

III. Magnitude Large-scale foreign acquisitions of land

wake-up call

Magnitude of Large-scale land acquistions - World

• Madagascar/Daewoo case: 1.3 million ha to Daewoo Logistics

• GRAIN Report : Seized!”• IFPRI Report: 15-20 million ha /IIED-FAO-IFAD Report..• World Bank: (GRAIN blog based on press reports)

– 464 deals (for which land area information avail for 203 deals)

– 81 countries– 46 million ha (2008-2009)

• “new colonialism”• Land grabbing

• Investments for ag. sector• Win-win opportunities

•At least 80 million ha globally- 50 million ha in Africa,- 20 million ha in Asia,- 9 million ha in Latin America-1 million in other regions, mainly Eastern Europe

Total: 1233 announced deals

• “New scramble” for Africa’s land• Africa as the “last frontier” (S. Payne)

Africa : main target of the foreign land acquisitions: (2/3rd of reported deals)

Reported land deals (sources: ILC web data)

IV. Key features of lands deals

Reported land deals – Main crops

Top 6 host countries per ha concernedBrasil 1631000Cambodia 1251294Madagascar 2626070Mozambique 820422Philippines 4717687Ethiopia 2326820

Top 6 host countries per number of dealsCambodia 92Ethiopia 48India 46Laos 58Madagascar 33Philippines 33

Reported land deals –Target countries

Reported land deals: Who are the investors? • Oil-rich / food-insecure Gulf States

• Land and water scarce populous but capital-rich Asian countries. (China:20% of world pop / 9% of world arable land)

• Traditional Western food-producing, processing, and exporting companies seeking to “square the market”

• New actors attracted by opportunities related to biofuel demand

• New actors – Investment funds

THROUGH:• Direct gov.

involvement• Sovereign

Wealth Funds• State-owned

enterprises

• Hedge funds• Pension funds• Invest banks

Reported land deals –Origin of the investors

Water: an important but ignored dimension

• Water often as primary motive of the rush. E.g. case of Gulf States; China, India

• Water requirements of projected crop production:– Biofuels: Sugar cane (36,000 l/ha in Markala project in

Mali); Jatropha – Food and feed: Rice (11,000l/ha), wheat (5,000l/ha),

maize (4,000l/ha)

• Investments in water development structures:– Irrigation schemes / dams – Rainfed agricultural schemes

• Surface & groundwater• Water inflows to river systems

Diama Dam (Credit: OMVS)

Jatropha (Credit: wikipedia)

http://ga.water.usgs.gov/edu/irsprayhigh.html

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Water: an important but ignored dimension: reported deals in Senegal and Niger River basin countries

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Water: an important but ignored dimension: reported deals in Nile River Basin countries

• Lack of transparency• Lack of proper planning:

Lack of technical and economic and financial feasibility analysis

Lack of environmental and social analysis• Lack of consultation with affected people• Rarely in coherence with national rural

development and poverty reduction strategies

Other key patterns

Poor governance tends to be enabler instead of a disincentive for attracting investments

IV. Way forward

• Increased realisation of the fact that there is virtually no empty/idle/unused land;

• Investment in agriculture does not necessary involve acquisition of land by the investor;

• Increased realisation of the complexity and lack of a critical mass of tested good practice examples of ‘win-win-win’ models;

• Initial impacts of many deals tend to show that they rarely live-up to their promises in terms of benefits to the host country (jobs, technology transfer, rural infrastructure, etc.) while posing significant social and environmental risks

Trends – How is the discourse changing?

Still being debated: Whether land deals (land grabbing) can be addressed through agreed international principles and guidelines

• The need for transparency and the development of national investment policies and regulations;

• Protecting local rights by implementing land tenure reform;

• Empowerment of democratic local land administration to manage and protect local rights;

• Genuine consultations with local people; • Large land concessions to investor as last resort:

• Give priority to mobilising community’s investment• Promote alternative models of community-investor partnerships;

• The need to engage in genuine rural national development and poverty reduction strategies centred on national interest and priorities.

Key considerations in the way forward

…We will work towards encouraging models of investment in agriculture and other rural land-based activities that are socially, economically and environmentally sustainable and reduce poverty and hunger. We will contribute towards strengthening the capacities of local land-users, indigenous peoples, agricultural workers and their organisations, and creating incentives for more investments in and by small-scale producers rather than transfers of large areas of land or concessions. We believe that such investments and the fight against poverty must go hand in hand, and are closely linked to secure and equitable land rights for small-scale producers, who should be recognized as the main investors in land and agriculture.

Tirana Declaration of ILC members -- excerpts (1/2)

We denounce all forms of land grabbing, whether international or national. We will denounce local-level land grabs, particularly by powerful local elites, within communities and or among family members. We denounce large-scale land grabbing, which has accelerated hugely over the past three years, and which we define as acquisitions or concessions that are one or more of the following:

(i) in violation of human rights, particularly the equal rights of women; (ii) not based on free, prior and informed consent of the affected land-users; (iii) not based on a thorough assessment, or in disregard of, social, economic and environmental impacts, including the way they are gendered; (iv) not based on transparent contracts that specify clear and binding commitments about activities, employment and benefit sharing, and; (vi) not based on effective democratic planning, independent oversight and meaningful participation.

Tirana Declaration of ILC members -- excerpts (2/2)

Thank you !

For more information on ILC : www.landcoalition.org