La Fondazione Giangiacomo Feltrinelli è uno dei maggiori centri europei di documentazione e di ricer- ca nell'ambito delle discipline storiche e delle scienze.
Laboratorio Expo
KEYWORDS
La Fondazione Giangiacomo Feltrinelli è uno dei maggiori centri europei di documentazione e di ricerca nell'ambito delle discipline storiche e delle scienze politiche, economiche e sociali. Possiede un ricchissimo patrimonio di libri, periodici e manoscritti che riguardano la storia nazionale e internazionale dall’Età moderna a oggi. Con il progetto Laboratorio Expo, realizzato in collaborazione con Expo Milano 2015, la Fondazione intende dar corso alla sua tradizione di valorizzazione della storia politica e sociale, sviluppando ulteriormente le sue attività in termini di ricerca accademicoscientifica e di enunciazione di raccomandazioni per la governance dei processi socio-politico-economici contemporanei. L’investimento di riflessione scientifica e studio promosso da Fondazione Giangiacomo Feltrinelli nell’ambito di questo progetto riguarda i temi della sostenibilità ambientale ed etica, della cultura del cibo, dello sviluppo sostenibile e del rapporto città/cittadini e si propone di mettere in dialogo aspetti culturali, antropologici, economici e sociali legati alle tematiche di Expo2015.
La collana “Laboratorio Expo Keywords” è una finestra sul cantiere di idee in corso. Offre in tempo reale argomenti per saperne di più, discutere e decidere del nostro domani.
Introduzione
Nell’ultimo decennio, in particolare dal 2007-2008, l’aumento del prezzo del petrolio e l’introduzione di incentivi all’utilizzo di bio-carburanti negli Stati Uniti e in Europa, sommandosi alla costante crescita della popolazione mondiale e della domanda di prodotti alimentari, hanno determinato un significativo incremento dei prezzi agricoli. Ciò si è tradotto in una corsa all'acquisto di terre ("land rush") nei paesi in via di sviluppo da parte di multinazionali e di fondi di investimento internazionali, con un picco nel 2009 e che rimane tuttora a livelli elevati. In larga parte, si tratta di acquisizioni finalizzate a progetti di agro-business. Si rilevano tuttavia molti casi di fondi sovrani di paesi dipendenti dalle importazioni di generi alimentari (ad esempio i paesi del Golfo) che, per ragioni di sicurezza alimentare, si assicurano vaste estensioni di suoli agricoli in paesi ancora dotati di un potenziale di terre fertili non sfruttato. Vi sono altresì casi di investimenti non guidati da finalità di business o di sicurezza, bensì dalla speculazione finanziaria, spinta dai prezzi crescenti dei prodotti agricoli e dai bassi rendimenti delle attività finanziarie.
Gli investimenti diretti stranieri nei paesi in via di sviluppo, sotto forma di grandi acquisizioni di terra, possono rappresentare un’opportunità ma anche una minaccia per le popolazioni locali. Da una parte, infatti, consentono l’accesso a flussi di capitali in paesi in cui essi scarseggiano e promuovono l’introduzione di tecnologie e infrastrutture, con benefici potenziali in termini di produttività ed efficienza. D’altra parte, la possibilità di soprusi ai danni delle comunità locali, specie laddove i diritti di proprietà non sono ben protetti, implica grandi rischi in termini sociali e ambientali. Preoccupante è il risultato, documentato nel testo, secondo il quale le grandi acquisizioni di terra sono tanto maggiori quanto più le istituzioni sono deboli. Si invoca dunque il ruolo della regolazione internazionale, nel supporto dei paesi, per la promozione della trasparenza nei contratti e la difesa dei diritti delle comunità locali e dei soggetti più deboli.
Stefano Pareglio e Jacopo Bonan
Nadia Cuffaro, Giorgia Giovannetti, Salvatore Monni Foreign Acquisitions of Land in Developing Countries:
the “Land Grabbing” Debate
The last few years have seen a surge of foreign acquisitions of land in developing countries which has triggered considerable policy debate and many empirical studies. This wave of foreign direct investment (FDI), the majority of which has been for agricultural use, has led to fears of “land grabbing”. This e-book briefly outlines the extent, patterns and origin of (foreign) investment in agriculture and land, the determinants of FDI, the opportunities and risks of land acquisitions; the problems of regulation.
1. Extent, Patterns and Origin of Investments
The increase of foreign acquisitions of land mainly for agricultural use – i.e. resource- seeking private FDI in agriculture in developing countries - is an important feature of the second half of the 2000s.
This phenomenon of land acquisitions by foreign investors at first emerged through media reports. Reliable and uncontroversial data on investment in agriculture and land are hard to find for several reasons and only recent efforts to systematically collect data have improved availability. In the following, data are mostly taken from the Land Matrix dataset. According to this data base (as of march 2014) agriculture accounted for about 76% and forestry for about 15% of all concluded transnational land deals, which consist in this case in about 35.9 million hectares across the world, acquired through purchases or long term leases (typically 50 years and some 99 years). Figure one illustrates the geographical distribution of land deals, showing that Sub Saharan Africa has been the most targeted region, followed by East Asia and Latin America. Figure 1 Total acquisitions by region
Sub Sah Africa Latin America Car East Asia South Asia Middle East North Africa
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Some regions are only investors others mostly target (Africa) but land deals occurred within and between regions, with a strong tendency to intra regional flows in Asia and South America and South-South deals becoming increasingly common. Figure 2 Land deals by investor/target region 300 250 200 150 100 50
Investor region
Melanesia
Central Asia
Central America
Eastern Europe
Central Africa
Northern Africa
Caribbean
Western Africa
Southern Africa
Southern Europe
South America
Eastern Africa
South Asia
Middle East
Western Europe
Northern America
Eastern Asia
Northern Europe
South‐East Asia
Australia and New …
Target_region
0
A variety of actors are involved in FDI in land, both from the private and public sector. Agribusiness accounts for the largest share of investors in land acquisitions but governments and sovereign wealth funds (SWFs) are also involved. In search for food (and water) security and in the wake of the food price surge of the late 2000s and the increasing scarcity of water, several countries fully depending on food imports, such as the Gulf countries, have substantially 9
increased their investments (though mainly to few countries). The number of private-public partnerships has also been increasing in the last few years. As for private sector finance, there seems to be sufficient empirical evidence that confirms a trend of increasing interest, with a wide array of institutional investors involved in developing countries agriculture and specifically in land acquisitions. SWFs have been buying/leasing large tracts of farmland in the developing world; international private equity groups – which operate raising capital primarily from other institutional investors, mostly to invest into, or to acquire, an operating company – are investing more and more in the agricultural sector; international pension funds have also been expanding and diversifying their portfolios to include more developing world agriculture exposure. More generally the financializing of commodities has brought new potentials for profit-making to the primary sector thus stimulating speculative investments in land.
2. Determinants of FDI
The variables explaining (recent) flows of private FDI in land can be traced back to: (i) price trends and profitability of investments in agriculture; (ii) the increasing value of agricultural land; (iii) factors influ 10
encing the choice of location; (iv) factors influencing the decision to internalise land rather than acquiring products through contracts. The main determinant is profitability and therefore price trends: in recent FDI in agriculture, a crucial role has been played by the food crisis, the rise of biofuels and the related price increases. The recent developments, especially on the demand side, suggest the possibility of a fundamental change in the behaviour of agricultural commodity prices: high prices could continue. The available data show that interest in land acquisitions increased rapidly in the wake of the 2007-8 commodity price boom and, despite slowing down in 2009, remained high thereafter. The value of agricultural land is growing as a consequence of an increasing population and corresponding decline in the average amount of land per person, combined with a very uneven distribution of population growth, soil degradation, climate change impacts and land resources. Since the 2008-2009 financial crisis, land has been considered an alternative way to invest capital in a moment of low and risky returns on financial assets and higher agricultural prices, such as those prevailing in 2008, may have pushed the trend further. There also are indications that food security concerns of countries that are heavily dependent upon 11
imports have played a significant role in fostering land acquisition abroad, as the recent wave of high food prices, high price volatility and policy-induced supply shocks has provoked a fear that dependence on world markets for food supplies or agricultural raw materials has become more risky. With regard to the choice of location, land investments have privileged land abundant low income countries, indicating that investments are mainly resource seeking. The traditional policy and institutional variables – such as strength of the legal and regulatory systems, protection of property rights, credible enforcement and so on – that in general tend to enhance investments, do not seem to positively affect investment in land, a finding that has been a cause for concern. Finally, investments are not only land but also water seeking. Water is indeed more and more scarce but comes “for free” with land. While water is a renewable resource, and globally there is enough water to feed a growing and more wealthy population, demand temporarily or permanently outstrips availability in some regions inducing crisis. Freshwater shortages have indeed begun to constrain socioeconomic development in some cases. Among other global trends, population growth and related increases in demand for agricultural and forestry products to provide food, fodder, fibre and fuel will put further pressures on water resources. In addition, the share of the popula 12
tion at risk of water stress is projected to expand greatly due to climate change. Food production is the largest user of water at the global level, responsible for around 80% of blue water (volume of surface water and ground water); plus a large fraction of green water (volume of rainwater) use by terrestrial (agro-) ecosystems. Accordingly it is also responsible for resource over exploitation. This is why the water – land nexus (and the connected water- energy nexus) has been an increasing cause of concern. Finally one should remark that in the history of the involvement of multinational enterprises in agriculture there has been a shift from direct, equity participation (through foreign direct investment in land) to direct, non-equity participation (through contract farming) or indirect, non-equity participation (through standards and other information intensive relationships) i.e. a shift from land internalisation to value chain coordination. An important determinant of such a shift was the high level of conflict and related risks associated with foreign ownership of land. The reactions to the recent trend of acquisitions confirm the controversial nature of foreign ownership of land.
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3. Impact: opportunities and risks
FDI potentially offers crucial opportunities to recipients in terms of access to capital, but also in technology and innovation, standards and supply chain management, foreign-market access and exports and infrastructure development. There is a category of countries with suitable land available and a large proportion of smallholders with very low productivity, hence high potential for increasing yields, where larger farm sizes enabled through mechanisation could be a viable strategy, and FDI in land possibly functional. A large share of current FDI flows has actually gone to regions with the above characteristics. Among the most affected countries in this category the majority are African, especially from East Africa. When land is acquired for productive investments there should be potential benefits for the local communities in terms of employment and infrastructure. However there are risks associated mainly with unsecure property rights, land concentration, the high incidence of project failures. The current wave of FDI flows and land acquisitions is taking place in contexts where many people have only insecure land rights which makes them vulnerable to dispossession. 14
In the important case of Sub-Saharan Africa, where many countries have been targeted by investors, “State landlordism” associated with widespread insecurity of land tenure has been a feature of land tenure over the last century. Most of the customary estate of Africa is still subject to dual tenure, with one regime (statutory law) defining these lands as unowned state lands or in effect government property, making it hard for ordinary landholders to secure and defend their interests, especially those related to traditionally collective estates. The state may be involved in large land acquisitions in less than transparent ways; furthermore, within communal tenure systems local leaders play a key role in land acquisitions and issues may exist as to the representativeness and downward accountability of these leaders towards their constituents. Lack of transparency emerges as a key issue in large scale land acquisitions and may lead to extensive dispossession of vulnerable groups. Rising investments in land abundant countries tend to be associated with large scale farming based on a non-family corporate model, and are likely to result in land concentration. Hence, part of the concern for the recent FDI flows is linked to the likelihood that it may shift the path of agricultural development away from smallholder strategies, with the possible negative implications extensively discussed in the development and agricultural economics literature. Table 15
one shows the large average size of acquisitions in some African countries, and the significance of traditional rights systems, public ownership and tenure insecurity.
Table 1 Deals and institutional variables Africa-Target country (with more than 5 deals reported)
Deals count
Average size of deals Traditional Public
Ethiopia 51 17935 3,00 4,00 Mozambique 47 11135 1,00 3,00 United Republic of Tanzania 24 9588 1,00 3,00 Ghana 22 32996 4,00 2,00 Nigeria 18 9162 1,00 2,00 Zambia 17 22678 4,00 2,00 Sudan 16 74438 3,00 3,00 Sierra Leone 14 73900 3,00 4,00 Senegal 13 20619 1,00 3,00 Mali 10 17669 1,00 3,00 Liberia 8 79638 4,00 4,00 Madagascar 8 72857 3,00 4,00 Democratic Republic of the Congo 6 28286 3,00 2,00 (from 0 to 4 very large) Share of rural land under the traditional rights system (from 0 to 4 very large) Share of land in public ownership (from 0 to 4 very high) Land tenure insecurity Sources: Land Matrix Accessed December 2013 Institutional profles database 2012 http://www.cepii.fr/IPD.asp
Tenure insecurity
3,50 2,25 0,75 3,00 3,50 3,00 1,75 2,25 1,75 1,75 3,25 2,75 3,75
A peculiar feature of FDI in land, that distinguishes it from investments in manufacturing or services is the finding that land deals carried out by foreigners are often not followed up by productive investments, as illustrated in figure 3. The discrepancy is generally high but especially so for Africa. 16
Figure 3. Status of land deals
There are many possible explanations, including the low cost of acquisitions, which has attracted investors of different “quality”; the impact of the financial crisis of 2007-08, as land may be acquired by financial institutions in the expectation of its value going up, rather than planning for longer term productive investments; the impact of unexpected conflicts with local communities over property rights, documented in many case studies on “land grabbing”.
4. Regulation
There are many sources of regulation that are relevant to foreign direct investments in land: the national law of the host state, customary tenure systems, investment contracts, international law, trans 17
national law (when the law of the company’s home state is used for litigation) and to a certain extent, corporate social responsibility. The previous section discussed the importance of national law and customary tenure systems and their interaction in shaping the pattern and outcomes of FDI in land. The focus was on Africa, but the strong role of the state in the control of “unused” land has also been crucial for land allocation to investors in other developing regions. Another sensitive point in terms of regulation of large land acquisitions is the role of investment contracts: governments often have limited capacity in regulation and regulatory enforcement. As a result, the role of the specific international investment contract between the host state and the investor is mostly critical and, in the case of large land acquisitions, analysis has uncovered the incompleteness and lack of transparency of contracts. The international dimension of the regulation of large acquisitions international law has developed at two speeds (Cotula, 2013): on the one hand, the proliferation of investment treaties and growing use of international arbitration has significantly strengthened the legal protection of FDI against interference by host government; on the other hand, the legal safeguards available to affected local rights are still undermined by shortcomings in rule of law, substantive rules and legal remedies. 18
Finally, there is the issue of corporate social responsibility (CSR). Land rights have so far been a relatively marginal topic in the CSR debate, dominated by environmental and labour issue, but the recent wave of FDI in agriculture has focused international attention on it. The debate is on the possible role of responsibility codes (encompassing guidelines, recommendations or rules) developed by international (development) organisations in serving as “model” for CSR in the domain of large acquisitions. Two major initiatives in this field are the FAO, Voluntary Guidelines and the development of Principles for Responsible Agricultural Investment that Respects Rights, Livelihoods and Resources.
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References
Anseeuw W., Boche M., Breu T., Giger M., Lay J., Messerli P., Nolte K., (2012), Transnational Land Deals for Agriculture in the Global South. Analytical Report Based on the Land Matrix Database, CDE/CIRAD/GIGA, Bern/Montpellier/ Hamburg Cotula L. (2013), Commercial Pressures and Legal Rights: The Trouble with the Law Regulating Agricultural Investment in Africa, QA-Rivista dell’Associazione Rossi-Doria n.2 Cuffaro N., Giovannetti G., Monni S., (2013) Foreign Acquisitions of Land in Developing Countries. Risks, Opportunities and New Actors, QA-Rivista dell’Associazione Rossi-Doria n. 2 Deininger K., Byerlee D. (2011b), Rising Global Interest in Farmland: Can It Yield Sustainable and Equitable Benefits?, World Bank, Washington, Dc
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