Resource information
One of the effects of the food price crisis on the world food system is the increasing acquisition of farmland in developing countries by other countries seeking to ensure their food supplies.This brief analyses the pros and cons of land acquisitions in developing countries by capital rich economies. It argues that acquisitions have the potential to inject much needed investment into agriculture and rural areas in poor developing countries resulting into creation of farm and off-farm jobs and development of rural infrastructure. Other possible positive spillovers include resources for new agricultural technologies and practices as well as future global price stability and increased production of food crops. On the other hand, this could also impact negatively on poor local people, who risk losing access to and control over land on which they depend. The authors note that even though some of the land-lease agreements make provisions for investments in rural development, these deals may not be made on equal terms. The bargaining power in negotiating these agreements is on the side of the foreign firm, especially when its aspirations are supported by the host state or local elites. The brief recommends that a code of conduct for host governments and foreign investors needs to be established to control threats in land acquisition. The key elements of a code of conduct for foreign land acquisition presented as:
transparency in negotiations: existing local landholders must be informed and involved in negotiations over land deals
respect for existing land rights, including customary and common property rights
sharing of benefits: the local community should benefit, not lose, from foreign investments in agriculture
careful environmental impact assessment and monitoring: these should required to ensure sound and sustainable agricultural production practices
adherence to national trade policies: when national food security is at risk domestic supplies should have priority.
Recommendations noted include:
institutional arrangements should be modeled after the international business laws adopted over the past 10 years to prevent corrupt practices in the context of foreign direct investment
a code of conduct for foreign land acquisition requires international arrangements and laws that apply everywhere
target countries should improve investment climates through rule of law and contract security
strong collective action institutions should be set up to ensure smallholders effectively voice their concerns and negotiate on favorable terms with the other powerful actors
contract farming and out-grower schemes that involve existing farmers and land users should be used to enable smallholders to benefit from foreign investment while giving the private sector room to invest.
