Large-Scale Farm Deals Endanger Local Control, World Bank Says

via CAAI

September 07, 2010

By Sandrine Rastello

Sept. 8 (Bloomberg) -- Foreign purchases of agricultural land from Mozambique to Cambodia pose “significant risks” to the livelihoods of farmers in countries with “weak land governance,” the World Bank said in a report.

Large-scale purchases raise “a real concern about the ability of local institutions to protect vulnerable groups from losing land on which they have legitimate, if not formally recognized claims,” according to the report by the Bank’s Agriculture and Rural Development department.

“The veil of secrecy that often surrounds these land deals must be lifted so poor people don’t ultimately pay the heavy price of losing their land,” World Bank Managing Director Ngozi Okonjo-Iweala, a former Nigerian finance and foreign minister, said in a statement. The acquisitions “can come at a high cost,” he said.

Rising prices of rice, corn and palm oil in 2008 triggered deadly unrest in some parts of the developing world. The report, Rising Global Interest in Farmland, said that over the next year farmland investment spiraled, with 10 times more property bought in developing countries by nations seeking food security.

Nations dependent on food imports, such as Saudi Arabia and South Korea, stepped up efforts to buy land and lock-in overseas resources to ensure food security, the bank said. Foreign investment in Sudanese agricultural land in 2009 was estimated to increase five-fold by 2014, according to a Sudan Investment Ministry estimate last year.

Environmental Impact

Investor deals also have an environmental impact in countries such as Brazil, where deforestation was pursued to enable farmland expansion, the report said. The report reviewed data from 14 countries in Africa, Latin America, Europe and Asia between 2004 and 2009.

“The question will be what will the bank be able to do to change these dynamics,” said Vince McElhinny, who is a project manager for The Bank Information Center, a nonprofit in Washington, D.C. that advocates for transparency and public accountability within the World Bank. “In practice what we’re seeing is a trend that suggests that it will be able to do very little.”

Foreign agricultural investments have sometimes met with resistance. Protests by local communities in Madagascar caused that country to abandon a $6-billion farming agreement last year with Daewoo Logistics Corp.

Governments were “unprepared” for the increase in such land deals after the food and fuel crisis, the report said.

The report noted that private investors had the potential to increase productivity in less-developed countries with technological help. “In many cases, however, the desired benefits were not achieved,” the report said. The World Bank is trying to develop voluntary principles for responsible agricultural investment, it said.

-- Editors: Christine Spolar, Christopher Wellisz

To contact the reporter on this story: Sandrine Rastello in Washington at

 srastello@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at

cwellisz@bloomberg.net