Foreign acquisitions of farmland in Africa and elsewhere have become the focus of concern. Many observers consider them a new form of colonialism that threatens food security of the poor. David Hallam argues that investments could be good news if the objectives of land purchasers are reconciled with the investment needs of developing countries. For more information visit: http://www.fao.org/economic/es-policybriefs © FAO: http://www.fao.org

1. FAO – Trade and Markets Division
Food and Agriculture
Organization of the
United Nations
International Investments in
Agricultural Production
David Hallam
Deputy Director, Trade and Markets
Division, FAO
Presentation at the international conference “Land Grab: The Race to the
World’s Farmland”, Woodrow Wilson Center, Washington, DC, 5 May 2009

2. Washington, 5 May 2009 2International Investments in Agricultural Production
FAO – Trade and Markets Division
Food and Agriculture
Organization of the
United Nations
Outline
 Trends and patterns of investments
 Motivations for investments
 Impacts of investments
 Policy implications
 Outstanding issues

3. Washington, 5 May 2009 3International Investments in Agricultural Production
FAO – Trade and Markets Division
Food and Agriculture
Organization of the
United Nations
Trends and patterns
 Not a new development but increasing trend
 Focus of investments: agricultural production
 Investors: mostly private sector, but governments involved
 Investing countries: Gulf States, China, Republic of Korea
 Destinations of investments: Africa, also Latin America
 Nature of investments: land acquisitions
 Size of investments: large

4. Washington, 5 May 2009 4International Investments in Agricultural Production
FAO – Trade and Markets Division
Food and Agriculture
Organization of the
United Nations
Motivations – Investing countries
 Differs between type of investor
 Food security
• Natural resource constraints – land and water
• Waning trust in international food markets
 Biofuel production
 Portfolio diversification

5. Washington, 5 May 2009 5International Investments in Agricultural Production
FAO – Trade and Markets Division
Food and Agriculture
Organization of the
United Nations
Motivations – Host countries
 Need for investment
 Financial gains of asset transfers rather small...
 ...but broader developmental benefits

6. Washington, 5 May 2009 6International Investments in Agricultural Production
FAO – Trade and Markets Division
Food and Agriculture
Organization of the
United Nations
ODA to agriculture
0%
2%
4%
6%
8%
10%
12%
14%
1980 1985 1990 1995 2000 2005

7. Washington, 5 May 2009 7International Investments in Agricultural Production
FAO – Trade and Markets Division
Food and Agriculture
Organization of the
United Nations
Impacts of international investments
 Economic, political, social and environmental impacts
 Potential positive effects of investments
• Technology transfers and employment creation
• Food production and food security
• Diversification and development of value-added production
 Potential negative effects of investments
• Social rights issues
• Transparency, governance issues and sovereignty
• Environmental issues
 Overall mixed record on foreign direct investment in
agriculture

8. Washington, 5 May 2009 8International Investments in Agricultural Production
FAO – Trade and Markets Division
Food and Agriculture
Organization of the
United Nations
How to achieve a win-win situation?
 Onus mostly on host countries
 Encourage inward investment
 Create receptive domestic sector
 Improve trade policy commitments
 Increase consistency with food security strategies
 Establish clear property rights
 Limit adverse social and environmental impacts
 Ensure land use rights and compensate stakeholders

9. Washington, 5 May 2009 9International Investments in Agricultural Production
FAO – Trade and Markets Division
Food and Agriculture
Organization of the
United Nations
Wider policy implications
 International codes of conduct
 Global corporate social responsibility
 International investment agreements
 Dispute settlement
 WTO disciplines

10. Washington, 5 May 2009 10International Investments in Agricultural Production
FAO – Trade and Markets Division
Food and Agriculture
Organization of the
United Nations
Some outstanding issues
 Investing country issues
• Why direct land investments?
 Host country issues
• Policy and legal frameworks to minimize risks and
maximize benefits
 International issues
• Reconcile interest of investors with investment needs
of developing countries

11. Washington, 5 May 2009 11International Investments in Agricultural Production
FAO – Trade and Markets Division
Food and Agriculture
Organization of the
United Nations
More information
For more information, please visit:
http://www.fao.org/economic/es-policybriefs