Food Crisis Update: Main drivers of price volatility still not addressed

Here is a copy of Tim Wise and Sophia Murphy's update to their influential article:  "Resolving the food crisis: The need for decisive action" You can see it on the  Triple Crisis Blog (which is...

Foreign investments in agriculture for food security

A new FAO report –   Trends and Impacts of Foreign Investment in Developing Country Agriculture - Evidence from case studies – has just been released. The report presents an analysis of the foreign investment in developing countries and as such, responds to concerns around the rapid increase in large-scale land acquisitions and other forms of investment in agriculture by foreign corporate actors. The report advances inclusive business models as the way forward, noting the need for continued growth in investment in agriculture, especially of food crops. Case studies, which analysed the drivers and the main actors in each country, as well as the institutional process and national governance context of decision-making around investment and land allocation, include:

• Brazil
• Tanzania
• Thailand
• Uganda
• Cambodia
• Ghana
• Mali
• Senegal
• Zambia

While the 2007-8 food price crisis drew attention to a 30 year fall in agricultural investment, it also raised concerns about who should invest and how. This prompted the development of standards and principles by a variety of actors, for example:

• Basic Principles on the Purchase and Leasing of Large Areas of Land in Developing Countries (BMZ)
• Elements for a code of conduct for foreign land acquisition (International Food Policy Research Institute)
• Equator Principles (Financial industry benchmark for determining, assessing and managing social & environmental risk in project financing)
• European Union Working Group on Land Issues
• Extracted Industry Transparency Initiative
• Large-Scale Land Acquisition and Responsible Agricultural Investment: For an approach respecting Human Rights, Food Security and Sustainable Development (French Position Paper)
• Minimum Human Rights Principles Applicable to Large-Scale Land Acquisitions or Lease (Special Rapporteur on the Right to Food)
• Principles for Responsible Agricultural Investment that Respect Rights, Livelihoods and Resources (FAO, IFAD, UNCTAD and the World Bank)
• Promoting responsible international investment in agriculture (Japanese government initiative at the 64th United Nations General Assembly)
• Santiago Principles (Generally Accepted Principles and Practices of Sovereign Wealth Funds)
• Voluntary Guidelines to Support the Progressive Realisation of the Right to Adequate Food in the Context of National Food Security (FAO)
• Voluntary Guidelines for Responsible Governance of Tenure of Land, Fisheries and Forests in the context of national food security (CFS)

The UN’s Committee on World Food Security is currently developing a zero draft on a set of principles for responsible agricultural investment (rai) that are to be developed in a consultative manner and hopefully will be adopted by member countries. At a CFS side event hosted by the Inter-Agency Working Group discussing the impacts of investment and PRAI on developing country agriculture, the World Bank’s Agribusiness Unit Team Leader presented “a historical review of 179 agribusiness investments in developing countries” and noted that there was very little incentive to invest in food crops when investing in agriculture, and that most investors will opt for crops that do provide good returns, such as palm oil or rubber. With respect to implications for food security, the report notes that “investors are targeting countries with weak land tenure security” (FAO, 2012:7). Investors tend to focus on the “poorest countries, and those that are also les involved in world food exchanges” (FAO, 2012:7). The major concerns for food security when examining foreign investment in agriculture is that:

• 66% of the deals reported in the Land Matrix occurred in countries with high prevalence of hunger
• In most cases, the land being acquired in fertile land with irrigation. Analysis shows that land deals tend to centre around “cropland where the yield gap is relatively large, and where additional inputs (water, fertilizers, seeds, infrastructure and know-how) may create greater yields” (FAO, 2012:7).

The report identifies several direct risks associated with large-scale land acquisition:

• Displacement of local smallholders
• the loss of grazing land for pastoralists
• the loss of income for local communities
• negative impacts on livelihoods due to reduced access to resources
• which may lead to social fragmentation.