World Bank warns on 'farmland grab'
8 August, 2010 | By Javier Blas
--------------------------------------------------------------------------------
Investors in farmland are targeting countries with weak laws, buying
arable land on the cheap and failing to deliver on promises of jobs and
investments, according to the draft of a report by the World Bank.
“Investor interest is focused on countries with weak land governance,”
the draft said. Although deals promised jobs and infrastructure,
“investors failed to follow through on their investments plans, in some
cases after inflicting serious damage on the local resource base”.
In addition, “the level of formal payments required was low”, making
speculation a key motive for purchases. “Payments for land are often
waived ... and large investors often pay lower taxes than smallholders
... or none at all.”
The report, The Global Land Rush: Can it yield sustainable and equitable
benefits?’ is the broadest study yet of the so-called “farmland grab”, in
which countries invest in overseas land to boost their food security, or
investors – who are mostly locals – buy arable land. The “farmland
grab” trend gained notoriety after an attempt in 2008 by South Korea’s
Daewoo Logistics to secure a large chunk of land in Madagascar for a
very low price and vague promises of investment. The deal contributed
to a coup d’état in the African country.
commits governments, mainly in developing countries, to disclose
revenues from oil and mining groups to improve transparency on the
deals. Critics noted that eight years after its launch, only Liberia, Timor-
Leste and Azerbaijan, were full members of the EITI. But the draft said:
“By establishing a consistent format for reporting on land acquisition
and monitoring [the] process over time, it could provide access to
information sorely missing.”
The draft highlighted a few successes in land acquisition – mostly in
Latin America and also in Tanzania – but the overall picture it gave was
one of exploitation, warning that investors either lacked the necessary
expertise to cultivate land or were more interested in speculative gains
than in using land productively.
It stated that “rarely if ever” were efforts made to link land investments
to “countries’ broader development strategy”.
“Consultations with local communities were often weak,” it added.
“Conflicts were common, usually over land rights.”
The report said some countries allocated land to investors that was
within the boundaries of local communities’ farmland.
Data on farmland deals is sketchy, mostly relying on local media
reports. But the World Bank’s draft report said official data for a few
countries showed large transfers, including 3.9m hectares in Sudan and
1.2m in Ethiopia between 2004 and 2009. The demand for farmland is
unlikely to slow down due to higher commodity demand and prices.
8 August, 2010 | By Javier Blas
--------------------------------------------------------------------------------
Investors in farmland are targeting countries with weak laws, buying
arable land on the cheap and failing to deliver on promises of jobs and
investments, according to the draft of a report by the World Bank.
“Investor interest is focused on countries with weak land governance,”
the draft said. Although deals promised jobs and infrastructure,
“investors failed to follow through on their investments plans, in some
cases after inflicting serious damage on the local resource base”.
In addition, “the level of formal payments required was low”, making
speculation a key motive for purchases. “Payments for land are often
waived ... and large investors often pay lower taxes than smallholders
... or none at all.”
The report, The Global Land Rush: Can it yield sustainable and equitable
benefits?’ is the broadest study yet of the so-called “farmland grab”, in
which countries invest in overseas land to boost their food security, or
investors – who are mostly locals – buy arable land. The “farmland
grab” trend gained notoriety after an attempt in 2008 by South Korea’s
Daewoo Logistics to secure a large chunk of land in Madagascar for a
very low price and vague promises of investment. The deal contributed
to a coup d’état in the African country.
- The draft was leaked to the
Financial Times by a person
who said they wanted to
prevent the World Bank
releasing the report in the
middle of the summer holiday
period.
- The Washington-based body
said the report was a work in
progress and revisions were
being made. “When it is
released in August, we
believe it will contribute
much-needed data and other
information to this complex
subject.”
- The World Bank advocated in
its draft the launch of a Land
Transparency Initiative
commits governments, mainly in developing countries, to disclose
revenues from oil and mining groups to improve transparency on the
deals. Critics noted that eight years after its launch, only Liberia, Timor-
Leste and Azerbaijan, were full members of the EITI. But the draft said:
“By establishing a consistent format for reporting on land acquisition
and monitoring [the] process over time, it could provide access to
information sorely missing.”
The draft highlighted a few successes in land acquisition – mostly in
Latin America and also in Tanzania – but the overall picture it gave was
one of exploitation, warning that investors either lacked the necessary
expertise to cultivate land or were more interested in speculative gains
than in using land productively.
It stated that “rarely if ever” were efforts made to link land investments
to “countries’ broader development strategy”.
“Consultations with local communities were often weak,” it added.
“Conflicts were common, usually over land rights.”
The report said some countries allocated land to investors that was
within the boundaries of local communities’ farmland.
Data on farmland deals is sketchy, mostly relying on local media
reports. But the World Bank’s draft report said official data for a few
countries showed large transfers, including 3.9m hectares in Sudan and
1.2m in Ethiopia between 2004 and 2009. The demand for farmland is
unlikely to slow down due to higher commodity demand and prices.
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