Will Speller Economist, Investment Issues Section United Nations Conference on Trade and Development...
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Transcript of Will Speller Economist, Investment Issues Section United Nations Conference on Trade and Development...
Will Speller
Economist, Investment Issues Section
United Nations Conference on Trade and Development
Investment Contracts for Agriculture:Practical Guidelines
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This paper draws together two bodies of research on agricultural investment…
UNCTAD and World Bank (2014)
• Detailed primary field research on 39 mature agribusinesses in Africa and South East Asia.
• Investigates what investors are doing to promote economic, social and environmental gains and sustainability.
• Shows how communities and other stakeholders living around the investment perceive and are affected by it.
IISD (2014)
• Review of 80 agricultural investment contracts between investors and host governments.
• Provides a guide for negotiating contracts for farmland and water.
• Outlines a model contract, including model provisions, which investors and host governments can adapt.
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…with a view to operationalising the responsible conduct of agricultural investment through practical guidance.
• Demand for more detailed, practical guidance on how, in concrete terms, to ensure that agricultural investments are not only sustainable in the long-term, but also beneficial and with minimal risks or negative effects in the short-term.
• Proposal of contractual solutions (based on IISD research) to the key positive and negative outcomes of large-scale agricultural projects (drawn from UNCTAD and World Bank research).
• The contract cannot solve all problems, but is one approach to generating positive, sustainable outcomes for investors, governments and communities.
• One element of a programmatic approach of the inter-agency working group of FAO, IFAD, UNCTAD and World Bank.
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Top 5 positive and negatives from farmland investments
Positive Negative
Employment Creation Loss of land and poor resettlement plans
Integration of local farmers Lack of openness and engagement with local communities
Expansion of market opportunities Weak assessment of commercial viability
Establishment of community development programs
Poor management of environmental and social impacts
Increased incomes improved food security
Insufficient mechanisms to raise grievances
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Stages in the contracting process
Preparing for
contract
negotiation
s
• Assessment of suitability and availability of land, soil and water;
• Meaningful inclusion of communities;• Feasibility studies and business plans;• Pre-screening of prospective investors.
Negotiating
the contr
act
• Defining rights and obligations;• Stating applicability of domestic laws;• Engaging with communities;• Defining what information is public.
Monitoring and
enforceme
nt
• Monitoring adherence to domestic laws and terms of agreement;
• Reporting requirements and indicators;• Enforcement of sanctions for non-compliance;• Application of contingency plans.
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Examples of how to maximise key benefits of agricultural investment through the contracting process…
Preparing for contract negotiations
Drafting the contract Monitoring and enforcement
Employment Creation Consider likely composition of employees and jobs.
Require training to integrate local staff.
Integration of local farmers Include provision requiring the establishment of an outgrower scheme.
Participate in and monitor price setting mechanisms.
Expansion of market opportunities
Give priority to investors which will set up local processing facilities, where viable.
Establishment of community development programs
Establish terms and process for community development programmes or financially-inclusive business models.
Increased incomes improved food security
Monitor impact of investment on local food security.
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Examples of how to minimise the key risks of agricultural investment through the contracting process…
Preparing for contract negotiations
Drafting the contract Monitoring and enforcement
Loss of land and poor resettlement plans
Map out and identify all existing users of the land, including formal and informal rights.
Lack of openness and engagement with local communities
Engage with local communities during the design of the project and drafting terms of the contract.
Weak assessment of commercial viability
Screen investors with respect to technical and financial capabilities.
Design contingency plans for cases in which investors fail.
Poor management of environmental and social impacts
Incorporate findings of impact assessments and management plans.
Insufficient mechanisms to raise grievances
Include a provision for establishment of grievance and redress mechanism.