Rush to acquire African farmland risks countries bearing costs of global resource scarcity, says study

The EU Renewable Energy Directive provides confidence for very large investments.

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BOGOR, Indonesia (23 February, 2012)_ The recent rush to acquire farmland in order to meet  rising global demands for food and fuel is putting African countries at risk of bearing the social, economic, and environmental costs of global resource scarcity, says a new study by the Center for International Forestry Research (CIFOR).

Many of these costs threaten to arise from the rising direct competition between established land uses and plantation monoculture. At the local level, this can be manifested in environmental degradation, loss of access to socially and economically valuable land resources, and conflicts between subsistence and commercial agriculture.

While much has been written on the opportunities and risks of this trend, reliable empirical evidence as to its magnitude, distribution and underlying drivers is scant. With sub-Saharan Africa having become one of the most significant targets for large-scale farmland acquisitions for plantation agriculture and forestry in recent years, it is critical that our micro-level understanding is complemented by an appropriate evidence-based contextualization of macro-level processes.

To address these knowledge gaps, a recent CIFOR publication, “The Anatomy of large-scale farmland acquisitions in sub-Saharan Africa“, analysed 353 verified large-scale farmland projects exceeding 2,000 ha in size established between 2005 and 2011.

While it was found that projects were operating in at least 32 countries in sub-Saharan Africa, two-thirds of the documented 18.1 million hectares of land acquired by agricultural and forestry projects was located in just seven countries.

The study confirms that ’Northern’ investors, particularly from Europe, are acquiring the largest tracts of farmland to fuel a long-term demand for alternative sources of energy in industrialised countries. The guaranteed market for biofuels provided by the EU Renewable Energy Directive was instrumental in providing investor confidence to invest in overseas farmland, particularly in the period 2005-2008.

More recently, an increasingly important driver is becoming the demand for food products from ‘southern’ countries facing domestic agricultural expansion constraints (particularly from South and Southeast Asia). These constraints are becoming more and more acute as a result of high price fluctuations on global soft commodity markets, the rising spending power of growing populations, and the diminishing domestic availability of agro-ecologically suitable land. The food price crisis of 2007/2008 proved to be a significant trigger for southern investors to seek access to Africa’s cheap and abundant land reserves.

In some countries in sub-Saharan Africa the scale of these farmland acquisitions is observed to equate to a sizeable proportion of suitable and ‘available’ land – in Ethiopia and Ghana up to 43 % and 62 %, respectively – illustrating a high potential risk of competition with socially and environmentally valuable land uses.

Moreover, as a result of weak domestic regulatory enforcement, the emphasis on crops that poorly serve local market needs, and the fact that most of the acquired land originates from the customary land domain, often without due compensation for local land users and typically at bargain rental rates (which rarely exceed US$ 10 per ha), few tangible avenues for domestic benefit capture exist.

The study highlights several sub-Saharan countries which are increasingly at risk of becoming net importers of the costs of external resource scarcity. This not only calls into question the distributional effects of globalisation, but also the effectiveness of global market governance.

Concrete efforts to curb these threats have though been, and are being, developed, such as the EU Renewable Energy Directive and various host country sustainability policies and crop and sector specific certification systems. In practice, however, many of these initiatives lack any legislative force or monitoring and enforcement mandate.

Current efforts to discourage bad practice on the ground has therefore had limited effect. Effectiveness has been undermined by host country capacity constraints, the limited adoption of ‘hard’ sustainability standards in consumer markets, poor commitment by banks to mainstream and implement responsible financing policies, and a lack of coordination between the different systems of governance.

Ironically, the recent upsurge in the number of voluntary certification schemes is in fact also increasing the ease with which farmland investors are able to greenwash unsustainable production practices. This is enabled by the increasing opportunity to shop for schemes that best align with the investor’s strengths and weaknesses, as is highlighted in the CIFOR study on the recently approved sustainability schemes under the EU Renewable Energy Directive.

Clearly, more effective and integrated governance architectures will be required to manage these distributional distortions. Given the geopolitical relevance of the phenomenon, the current priority  must be to enhance market accountability through tighter supply and demand regulations. This cannot be achieved without greater transparency within the financial sector and more rigid import standards in large (emerging) consumer markets.

In parallel, greater complementarities need to be explored between the various governance instruments – for example, between consumption standards, responsible financing policies, certification systems, and host country policy frameworks – and provide them with the necessary legislative backing. This is where normative guidelines, such as the various codes of conduct, could potentially be useful to help ensure underlying principles are aligned.

This new publication is part of CIFOR’s research program on Forests and Governance and was sponsored by the European Commission.

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Topic(s) :   Food security Food & diets Rights