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News Story
4 April 2014

How to Make Responsible Agricultural Investments in Developing Countries Effective?

A growing population as well as the growing role of biofuels has set the trend for increased demand on agricultural production systems. Meeting future food and energy demand on limited land area requires intensification in production and, hence, increased investment in the agricultural sector. At the same time, such issues as land degradation, social conflicts, and competition for natural resources have an impact on the success of any investments in agriculture. They must include socio-economic and environmentally sustainable considerations. Therefore, establishment of the globally shared rules for responsible agricultural investments would be highly beneficial for future agricultural development.

On March 25th 2014, the Swedish FAO Committee together with Swedish Ministry for Rural Affairs and with SIANI’s organizational support invited representatives from the Swedish International Development Cooperation Agency (Sida), the International Land Coalition, and the African Bioenergy & Biofuels Business Assessment (ABBBA) to share their views on international guidelines and principles for responsible agricultural investments.

The event highlighted key issues, such as land tenure rights, transparency and inclusiveness of the land deals, as well as conflicts between smallholder and large-scale agriculture, as well as launching the publication; “Responsible Agricultural Investments in Developing Countries: How to Make Principles and Guidelines Effective”. This publication is the 9th discussion paper in the Swedish FAO Committee’s publication series. It was prepared and presented by the author, Kjell Havnevik, an independent researcher. The seminar, as well as the publication will serve as a contribution to Sweden’s position in the process of developing responsible agricultural investments within the Committee on World Food Security, and fall under the CFS-RAI Consultation process. The final negotiations of the principles take part in the second part of May 2014 in Rome.

Sweden is taking an active part in the formulation of the global RAI principles: “This process is a priority for the Swedish Government and we are working to ensure that the principles encourage investments that increase productivity and growth in a sustainable way, without disadvantaging vulnerable groups or the local population”, – says Magnus Kindbom, State Secretary at the Swedish Ministry for Rural Affairs and the President of the Swedish FAO Committee.

Margareta Nilsson from Sida, stressed that good governance and enhanced institutional capacity in the countries where institutions are weak are important for the establishment of an impartial system. “Sida has for many years supported small-scale farmers’ tenure rights by establishing land right certificates and strengthening producer organizations to improve among others their access to markets. The challenge now is how to find financing for scaling up these successful measures, and Sida is looking at possibilities for cooperation with the private sector”. She also suggested creation of pressure on supply chains as a mechanism of influence to “irresponsible” investors, and pointed out that Sida is currently looking into ways of “canalizing large scale investments to smaller projects”.

Following the logic of the RAI principles, Madiodio Niasse, Director of the International Land Coalition, placed food security by protecting existing arable land and securing water availability at the heart of the framework for responsible agricultural investments and suggested to focus investments on national food security strategies. Important ways to move forward were supporting efforts in securing land rights, increasing transparency in large transactions, reducing larger acquisitions than needed due to low land prices, and ensuring responsible conduct of private sector companies (including Swedish and European), in developing countries. In line with Sida’s representative, he stressed that the enforcement of the rule of law is a necessary requirement as well as the need to work towards consensus on RAI, followed by effective implementation.

While presentations and discussion focused on land tenure, participants agreed that agricultural investment covers a much broader range of issues.  Not the least of these is finance and risk management.  Large-scale investment is often carried out by people with a limited knowledge of sustainable agricultural production systems. Bo Göransson from ABBBA, pointed out, “Money is there, but is not being used. Banks and donors are risk averse and the small actors do not have the capacity to design, let alone finance projects. Lack of secure land tenure laws, the perception of political and other risks scare the businesses out. The result is low level of investments, in a situation when both big and small agriculture need big investments”.

Most participants agreed that the draft of the RAI principles was positive and comprehensive, however criticized it for being too vague and general. Kjell Havnevik, the author of the discussion paper explained “There is a need to promote interdisciplinary understanding of critical issues, and to include smallholders in the investment processes, considering their key role as food producers in low/middle-income countries. The principles should be based on new and existing knowledge, and be concrete in specifying the potential for smallholder agriculture in attaining the RAI objectives. Furthermore, they should stem from the pre-condition terms for large-scale investments in agriculture”.

Havnevik continued “the RAI principles and the suggested associated guidelines for their implementation should be the basis for development policies and strategies for investments on the ground. However, it is important to understand that, while working on this process, the issue we are dealing with is much deeper than a set of rules. We have to work across sectors and learn to understand the conditions, needs, features and potentials and respect the different parts”.

Download the “Responsible Agricultural Investments in Developing Countries: How to Make Principles and Guidelines Effective?” discussion paper

Download “Responsible Agricultural Investments in Developing Countries: How to Make Principles and Guidelines Effective?” Discussion Paper

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