FAQS and Answers about the Global Land Rush

Estimates of the magnitude vary because many of these transactions occur behind closed doors and are not publicly disclosed.  Organizations rely on different methods of collecting and tabulating their data.  But even these varying numbers lead to the same conclusion:  the scale of this trend is enormous.

For instance, a 2011 report by the World Bank reported that data collected between October 2008 and August 2009 revealed deals covering 56.6 million hectares of land.  More recently, a January 2012 report by the International Land Coalition (ILC) indicates that, based on data from the Land Matrix project, large-scale land deals (those exceeding 200 hectares) reportedly approved or under negotiation from 2000 to November 2011 covered 203 million hectares of land.  This data indicates that the land rush is focused on Africa.  Of the 203 million hectares “reported,” approximately one-third, or 71 million hectares, represents transactions that are “cross-referenced” by more than one non-media source.  These numbers suggest that the precise scale of the land rush is difficult to determine.

Global Scale and Regional Focus

Source:  Land Matrix; Anseeuw, et al., at 24.

All stakeholders must understand the facts surrounding the global land rush in order to facilitate strategic investments that do not harm local communities.  However, misconceptions abound regarding this phenomenon and pose the danger of distorting policies for supporting socially responsible investments.  Articles and commentary on the land rush reveal six common myths:

• There is abundant empty land available for large-scale investment in Africa and other developing countries. Although some land may be underutilized, very little is vacant or unused throughout the year.  Local farmers may leave land fallow in order to improve productivity.  Seemingly “empty” land may actually be used during particular times by pastoralists or those engaged in hunting and gathering.  Generally, if land is fertile, someone is claiming it for use for all or part of the year.

• Investors can obtain secure ownership of land and avoid risks by negotiating solely with governments.  Local communities and individuals have legitimate rights to the land, although those rights may not be clear based on a review of formal legal documents. Thus, they must have a seat at the table when investments in their land are being discussed.  Moreover, where land rights are inadequate, unclear, and poorly governed, and where local communities are not consulted, the result may be aggrieved local communities that can pose substantial risks for investors.

• All or most of the investors are foreign.  In many countries, the majority of land investors are domestic companies and individuals.  Moreover, foreign investors sometimes partner with domestic entities.  Focusing only on deals involving foreigners might result in overlooking the many investments by politically powerful national and local elites that can cause great harm to local communities.

• In developing countries, large-scale mechanized farms are always more efficient than smallholder farms.  Small family farms are often more productive than large farms in more labor-intensive developing country settings.  Agricultural production, except in the case of planation crops that generally require coordination in production and processing, does not typically enjoy significant economies of scale.

• As currently implemented, investments in farmland typically benefit local communities.  A World Bank study of nineteen recent cases in seven countries found the contrary:  in many transactions, local communities often are left worse off by the investment.

• All large-scale land investments are “land grabs” by irresponsible investors that violate host country laws.  While this is sometimes true, in many cases land is acquired or leased consistent with local law.  The law, however, is often vague or insufficiently protects the rights of smallholder farmers, particularly women.

Recent research and media reports have revealed several troubling features related to the global land rush.  If these large-scale investments are to benefit all stakeholders, especially local communities, the practices outlined below must be corrected.

• Investors and governments have ignored land rights, especially informal ones.  Too often governments resort to expropriating land held by small farmers and others, often without proper process or compensation.

• Consultation with local rights holders is not meaningful:  local communities lack the information needed to make a proper assessment of risks and benefits.

• Many contracts are inadequate and mostly unenforceable.  They provide inadequate compensation and limited access to dispute resolution if agreements are violated.

• The process for accessing land lacks the transparency necessary to hold governments and investors accountable.  The lack of transparency can also lead to corruption.

Large-scale investments involving land, particularly when carried out without good governance, can adversely affect poor and vulnerable populations and increase the risk to investors and governments.

These land deals can result in a loss of access and rights to land, water, and other natural resources and to the displacement of individuals and communities.  This in turn has a severely adverse impact on the livelihoods and food security of poor and vulnerable populations.  Displacement and reduced livelihood opportunities can lead to increased potential for conflict over scarcer resources.  Furthermore, these transactions can also cause environmental damage such as land degradation, depletion of water resources, and elimination of forests.

Because women are already generally more vulnerable than men in their access to and ownership of land and their ability to access any land compensation that might be awarded, the land rush can have particularly negative impacts on women’s land rights and related negative effects on social and gender relations.

Finally, these transactions pose risks to investors and governments:  they can create an anti-market backlash that has a negative impact on the investment climate.

Although the land rush presents many economic, social, and environmental risks, it also has the potential to provide benefits to local communities, investors, and governments.  By combining outside capital, technology, and market access with poor farmers’ land and labor, investment in the developing world’s land can improve rural livelihoods, advance broader development goals, and earn financial returns.

Such benefits cannot be realized, however, unless governments and investors take steps in the arena of land tenure policy and practice—in particular to address land governance shortcomings—to increase positive outcomes and reduce harm.  Moreover, the benefits may be better realized if investors partner with local communities by investing in smallholder farmers rather than acquiring their land.  This investment model can lead to substantial increases in productivity and in farmers’ standards of living.

There is promising movement among multilateral organizations, the private sector, and other joint public-private initiatives in the development of guidelines and principles for good land governance and for responsible investment in agriculture.  However, still missing are practical tools that can translate broad policies into actionable standards that will be implemented and honored by investors, developers, and governments and that can reduce the adverse impacts of these investments and protect the rights of vulnerable populations.