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Sep 08

New Research by Landesa on Forestland Acquisitions in China

October 17, 2014 — A new report by Landesa in collaboration with Rights and Resources Initiative (RRI) reveals that Asia Pulp and Paper (APP), one of the worlds’ 10 largest pulp and paper companies with over US$20 billion in assets, is facing deep challenges due to the illegality of its land acquisitions in China. The land rights conflicts arising from these acquisitions—if left unaddressed—pose serious risks to APP’s investments and operations in the country.

Findings from the report, Large-Scale Land Acquisition for APP Forest Plantations, show that there is much work to be done as the company delves into fresh efforts to improve the legality, transparency, and sustainability in its practices across the world—including the implementation of its Forest Conservation Policy (FCP) which is being implemented in partnership with The Forest Trust (TFT), an organization which helps corporations deliver more socially and environmentally responsible products.

Researchers from Landesa, working in collaboration with RRI, discovered a long line of violations of forest farmers’ individual property rights and livelihoods in APP-China’s forest land acquisitions dating back to the mid and late 1990s and the early 2000s. The research was conducted in February and September 2013 in randomly chosen villages in Guangxi and Yunnan, the two Chinese provinces where APP, with assistance from local governments, leased large areas of collectively owned forest land to establish eucalyptus plantations for paper and wood products.

APP cooperated with the researchers during the course of their field work, and reviewed the report. In a response published in the report, the company conceded the challenges it’s facing around its community leased lands in China, and disclosed that it is implementing an internal action plan to address the issues raised in the report. The plan includes establishing two pilot sites where APP’s current lease arrangements will be reviewed for understanding the issues across all of the company’s plantations in China.

Aida Greenbury, APP’s managing director for sustainability and stakeholder engagement said, “APP recognizes that these are first steps and that, as with the wider FCP, there is a longer journey ahead. Throughout this process, the company welcomes feedback from stakeholders everywhere, and will publish updates on its progress.”

The research reveals that despite a stated commitment to observing Chinese laws and regulations in all areas of its operations including land acquisition, APP failed to follow legal requirements when it acquired land rights from individual farmer households for its eucalyptus plantations during the 1990s and early 2000s. Furthermore, the attainment of Free, Prior, and Informed Consent (FPIC) by local peoples was universally ignored in acquiring land rights for plantations in both provinces where APP leased land. This included the failure to use FPIC with the many communities of Indigenous Peoples whose lands make up a substantial portion of APP landholdings.

Led by local government officials who were actively promoting industrial investment, farmers in APP’s acquired lands were forced to accept a blanket-government imposed annual rent below market price under what was apparently a compulsory acquisition program with no room for negotiation.

“Sadly, these findings present yet another case where community  land rights were abused by local governments’ devotion to the idea of quick-fix development, and the investors’ reliance on corrupt government officials to acquire land,” said Andy White,  Coordinator of RRI. “APP’s recent pledges to address the issues in their land acquisition practices exemplify just how critical it is for investors to adopt better due diligence, and ensure that all their investments respect the rights of the people that live on these lands. Ignoring human rights in the course of commercial development has annihilated communities and their forests across the developing world, and is beginning to cost investors worldwide.”

Rights get lost in race for development

The central government in China has taken decisive legal and policy measures over the past 35 years to secure and enhance farmers’ rights to farmland and forest land in order to reduce the income gap between urban populations and communities in mountainous forest areas. While encouraging development of a forest land rights market, these laws have particularly emphasized protecting farmers’ forest land rights and their property interests when such land rights are subject to acquisition by powerful enterprises.

“The extensive set of laws and policies that govern land rights in China definitely pose a challenge to many corporate investors investing in land,” said Li Ping, a Senior Attorney at Landesa who led the study. “But the only way to ensure compliance with the country’s comprehensive laws and regulations is to understand and then respect the rights of local farmers. There is just no excuse to forego this first and foremost step.”

However, many local governments have pursued a development agenda that sometimes does not comply with the central government’s policies.

These local governments, eager to profit from lucrative investments, often ignore the countries’ own laws in courting international investors. The report discloses a disturbing pattern of APP-China’s past reliance on strong local government intervention to acquire rights to collectively owned land, rather than direct dealing with farmers and the community organizations through market transactions, despite the fact that under Chinese law, any transfer of rural land rights must be voluntary and free from compulsion through a written contract.

In particular, the report highlights that APP-China’s acquisitions through government intermediaries were fraught with the following problems:

  • Farmers were neither able to reject the acquisition itself nor negotiate the terms of the transaction.
  • Indigenous Peoples’ rights and farming traditions were seldom respected in land acquisitions in indigenous areas.
  • The rights and voices of women farmers were completely ignored, despite their being at greater risk for misrepresentation and needing special attention in negotiations.
  • All of the company’s land transfer contracts in Yunnan province were entered into with village collectives, ignoring the legal obligation to deal directly with individual household land owners.

Recommendations for improvement

The report put forth several recommendations for APP to bring its activities in China fully in line with Chinese laws and policies, as well as emerging international standards regarding land rights. These recommendations, which were discussed with APP as it embarked upon its internal review, include:

  1. Institute a contract screening and correction mechanism for all standing APP land contracts immediately.
  2. Deal with individual land rights in full compliance with mandatory legal requirements.
  3. Improve acquisition of collectively managed land rights.
  4. Reform the rental determination mechanism to ensure farmers receive full market value of the acquired land rights.
  5. Make rental payments directly to farmers, rather than using intermediaries.
  6. Improve dispute resolution by promptly and effectively addressing farmers’ grievances.

An overarching recommendation also highlighted a need for APP to pay greater attention to the rights and roles of women across all of these six recommendations. Chinese laws clearly provide for the equal rights of women and men in contracting and operation of rural land including forest land, but women are at the greatest risk of being left out in negotiations over land transfer. The report suggests that APP-China can ensure women’s equal participation by applying a gender perspective in all aspects of its contract review and evaluation procedures.

Scott Poynton, Executive Director at TFT, said that his organization has been working with APP to get these recommendations implemented.

“TFT welcomes this report. We’re grateful that RRI and Landesa brought their extensive expertise to this case. The recommendations will help APP-China address the illegality of the land acquisitions and will help APP Group address a last remaining significant issue in its business. We see these findings as a way of getting to the bottom of what we know to be a serious challenge for communities and companies across the world.”

Andy White agreed.

“We appreciate APP’s seriousness in addressing these problems, as this recent commitment confirms that they want to remedy the actions that have harmed communities in the past,” concluded White. “It is crucial for companies and investors across the board to understand that without the consent and respect of the people living on the lands they invest in it, no business model can succeed in the long term—however profitable the short-term results may be.”

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