February 3, 2015

Guest Commentary – Protecting Local Land Rights in Agricultural Investment: A Path Towards International Consensus

By Tim Fella, Land Tenure and Conflict Advisor, USAID
 
There is an emerging global consensus that responsible agricultural investment requires agribusinesses and governments to recognize and respect local land and resource rights. This week in Berkeley, California the US Government will hold its second public consultation to inform its National Action Plan for Responsible Business Conduct. One of the main themes emerging from the dialogues to date is a focus on agricultural investment and land tenure.
 
Addressing concerns around land rights is important because when property rights are undocumented, poorly understood, or unaccounted for by investors and governments, land-based investments of all types—public and private, foreign and domestic, large and small—are less sustainable, less inclusive, and more likely to cause harm to local populations living on and using the land. Involuntary expropriations, evictions, and the loss of livelihoods, which have received increasing media and scholarly attention, are examples of some of the threats local people face when land-related due diligence is not conducted properly. Investors also face risks—financial and reputational—from projects that fail to take these rights into account.
 
A growing awareness of the social and economic costs of poorly planned agricultural investments underscores the need to change the way projects are designed and implemented. However, understanding who has what rights to which pieces of land—and ensuring those rights are respected—can be extremely difficult, and investors often fail to take local land rights into account. In many countries, rights to land and resources are governed by complex and overlapping systems of customary practices and formal laws, and governance structures are weak or poorly functioning.
 
In order to help investors and governments improve the way in which land transactions occur, the international community recently agreed to a set of guiding principles for responsible agricultural investment and responsible governance of land tenure. While these high-level principles represent a watershed consensus and an important statement of priorities by the international community, various investors—agribusinesses, financial investors and lending institutions, governments, and small-scale food producers—have expressed the need for more specific practical guidance to help them execute these guiding principles, and ensure that investments are more sustainable and less risky.
 
Development organizations are stepping up to meet this demand. Late last year, my organization, the US Agency for International Development (USAID), released a draft practical guide for responsible land-based investment, designed primarily for commercial agricultural investors. A technical committee chaired by the French Agency for Development and French Ministry of Foreign Affairs has issued the French cooperation guide to due diligence for agribusiness projects that affect land and property rights. The African Union and the United Nations Economic Commission of Africa, through their joint Land Policy Initiative, have also released a set of guiding principles on land-based investments in Africa.  And the UN Food and Agriculture Organization, in cooperation with the OECD, is in the process of developing due diligence guidance for responsible agricultural supply chains that will also address land issues.
 
These documents are complementary and provide specific suggestions on best practices in responsible land-based investing. USAID’s operational guidance, for example, covers a range of critical issues, including what constitutes effective due diligence, how to conduct community consultations, what to consider during contract negotiations, and the need for transparent grievance mechanisms. The French cooperation guide, among other useful features, presents a list of key questions that investors can use to analyze a country’s framework for land governance and identify potential weak spots. The hope is that this guidance will help investors navigate the complex property rights environments in the developing world and create more sustainable, profitable projects that lead to positive outcomes for all affected parties.
 
The recent proliferation of operational guidance is an encouraging trend—a clear response to an urgent need—but more work remains to be done. Under the New Alliance for Food Security and Nutrition, partners have begun to identify gaps and synergies between these various documents, and to work toward the development of a comprehensive set of harmonized guidance for investors and other stakeholders in the land sector. The agricultural sector can also learn from the extractive sector, which has been grappling with similar tenure issues for years, and has developed good models for community benefits agreements that respond to local needs and desires.
 
USAID is pleased to be a part of these efforts. Developing clear and practical guidance that investors can put into practice helps achieve our broader goals of promoting sustainable economic development that enhances food security and nutrition and reduces extreme poverty. We look forward to continuing to engage with our partners in the ongoing global dialogue on this important issue.

About

The Global Food and Agriculture Program aims to inform the development of US policy on global agricultural development and food security by raising awareness and providing resources, information, and policy analysis to the US Administration, Congress, and interested experts and organizations.

The Global Food and Agriculture Program is housed within the Chicago Council on Global Affairs, an independent, nonpartisan organization that provides insight – and influences the public discourse – on critical global issues. The Council on Global Affairs convenes leading global voices and conducts independent research to bring clarity and offer solutions to challenges and opportunities across the globe. The Council is committed to engaging the public and raising global awareness of issues that transcend borders and transform how people, business, and governments engage the world.

Support for the Global Food and Agriculture Program is generously provided by the Bill & Melinda Gates Foundation.

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