Responsible agricultural investments – how to make principles and guidelines effective

Presentation by Kjell Havnevik Stockholm, March 25 2014

Discussion paper Swedish FAO Committee (Publ. series no. 9)

• Basic foundation of discussion paper: In order to make principles for responsible agricultural investments relevant for developing countries necessary:

• To understand features of and conflicts between smallholder and large scale agriculture

• To adjust and transform RAI principles into concrete guidelines as basis for strategies/policies

• To this effect, invite you to read/reflect on ch. 11.

Background

• RAI process initiated by the World Committee on World Food Security (CFS) in 2012

• Principles to be of global character and to include all stakeholders

• Zero Draft of global consultations published in August 2013 for comments and advice

• Process to end in October 2014• This paper limited to RAI in relation to

developing countries.

Overview of draft RAI principles

• Food security, nutrition and the progressive realisation of the right to adequate food in the context of national food security (economic, social, environmental, culture)(Principles 1-4)

• Policy coherence and sector development (5)• Governance and grievance mechanisms (6&7)• Review and accountability (8)• The 8 sub-principles of RAI will be addressed

more directly in empirical case of Ethiopia

Smallholder agriculture

• Major food producers in low/middle income countries

• Potential for sustainable production regimes • High labour absorption – seven times the

potential of large scale (Brazil)• Challenge to understand land issues • Challenge to improve labour & area productivity• Support by international institutions, donors and

national governments declining since late 1970s

Examples of large scale investments

• Case studies in discussion paper based on investor information, NGO studies and research findings

• Addax Bioenergy in Sierra Leone (Swedfund co-investor) in biofuels

• Swedish church organisation and pension funds – forest plantations in Mozambique

• Second Swedish National Pension fund’s investments in large scale agriculture in Brazil

Example from Ethiopia

• Preliminary findings of ongoing research by Kassa Teshager on large scale investments

• Gambella and Benishangul regions in Ethiopia • Two Indian companies (Karuturi and S & P, and

two Saudi Arabian Companies (Saudi Star and Horizon, latter no production yet)

Aims Principles OUTCOMES

Respecting land rights

Existing land rights and associated natural resources are recognized and respected.

Peasants have constitutional rights to use land but not to sale and mortgage. Private investors-domestic and foreign- have the right to lease and transfer their holding rights and mortgage it. However, informal – customary rights are not being respected or recognised.

Ensuring food security

Investments not to jeopardize food security but strengthen it.

People living around the investment areas are more food insecure than before. Investors encouraged to produce for export not for local supply. Less than 8% of land transferred to investors have been developed.

Ensuring transparency, good governance, and a proper enabling environment

Processes of land acquisitions to be transparent, monitored and accountable.

Laws and policies are in place. But level of transparency is low. Integration is weak. No monitoring and accountability mechanisms.

Consultation and participation

All those materially affected are consulted, and the agreements from consultations are recorded and enforced.

Free prior informed consent of the local community is non-existent.No participation of Community based and civil society organisations in land deals.

Responsible agro-investing

Investors ensure that projects respect the rule of law, reflect industry best practice, are economically viable, and result in durable shared value.

Economic viablity and appropriateness of technology to local community questionable. Large scale investments do not reflect the investors best practices. Companies lack effective farm management and human resource handling, part. Indian. Labor-, environmental- and other relevant laws do not appear to be enforced.

Social sustainability

Investments generate desirable social and distributional impacts and do not increase vulnerability.

No clear benefit sharing mechanisms in the contracts.Investors have no contractual obligation to provide social services and basic infrastructure. Companies conduct their CSR in social services and infrastructure development in a limited way.

Environmental sustainability

Environmental impacts of a project are quantified and measures are taken to encourage sustainable resource use while minimizing and mitigating the risk and magnitude of negative impacts.

Environmental Impact Studies rarely carried out prior to implementation of the project.There is no contractual agreement on sustainable use of resources-water, land, forest, etc. and risk management.

Other research findings

• Neville and Dauvergne (2012:279). In particular in biofuel investments in SSA, ”outcomes have largely been lose-lose” ….”appears to be a systematic pattern.”

• FAO (2013), investments requiring large scale land acquisition where land rights are unclear and insecure, ”the disadvantages often outweigh the few benefits to the local community, especially in the short run.”

Large scale agriculture – concluding reflections

• Highly mechanised, require little labour• Mainly for export – food and energy• Large land needs that lead to legal and illegal

displacements/resettlements• Water for irrigation – water use conflicts• Major user of fertiliser and pesticides that

decreases the fertility of the soil in longer run – problems of sustainability

Major trends

• Dominant narrative in support of large scale agriculture – win – win

• Incentives, loans, guarantees for large scale agriculture (states, Sida, EKN, Swedfund)

• New alliances between investors (private and state, church organisations, sovereign- and pension funds) and states and elites of host countries – smallholders excluded and with no or limited voice

Critique of the RAI principles

• General in character, no prioritisation and lack of attaching of responsibilities

• Do not build on experiences and knowledge required for win-win outcomes

• Do not put sufficient emphasis on the potential role of smallholder vs large scale agriculture for attaining the RAI objectives

• Are not developed into concrete guidelines as basis for policies and strategies

Modifying and conversion of RAI principles into guidelines (ch. 11)

• Approach – raise ten critical question and reach responses based on knowledge and experiences

• Basis for making RAI principles responsible and efficient – suggest direction of future discussions

• Develop on this basis associated RAI guidelines• Which can be the foundation for strategies and

policies with transformational potential in order to attain RAI objectives – food security, nutrition and environmental sustainability

What is required for such changes to come about?

• To link practice and research and promote and interdisciplinary understanding of critical issues

• To change attitudes, based on new knowledge, at all levels – individuals, institutions and countries

• For us to move towards the boundaries of our civilisation in order acknowledge ”the others”

• To try to understand the conditions, needs, features and potentials of the ”others”

• Create ”third spaces” (mutual learning and respect) that can be a foundation for developing just and sustainable societies