In September 2011, Oxfam International presented the report “Land and Power”, which discusses the local implications of the global rush for fertile land by companies, and argues that international companies can and should assume responsibility for protecting local rights when deciding to invest in land (see attachment).This report has generated wide media interest and questions have also been asked in parliament. LANDac, the IS academy on land governance and the Ministry of Foreign Affairs invited Oxfam to present the report. Next, three organisations and initiatives that support Dutch private sector interest in developing countries, with financial support from BuZa were invited to comment on the report. These are AgentschapNL, FMO and IDH.
Following an introduction by Frits van der Wal (DDE), Monique van Zijl (Oxfam Novib) presented the key findings of the Land and Power report (see attachment).
Peter van Poortvliet (AgenstschapNL) agreed that companies have to act in a responsible way. AgentschapNL mainly works with small and medium scale enterprises. They seek to encourage responsible and profitable investments by making a careful analysis of project proposals as well as the track record of companies. They explore whether companies understand the land tenure situation n the country where they plan to investand check their permits or titles. AgentschapNL has a corporate social responsible policy and also monitors performance in the field. Moreover, in their experience farms of max about 150 ha are manageable and have a high production per unit of land. One example of a project that was not approved was a proposal for cultivation of 80.000 ha. The investor proposed to cut down the forest and then plant jatropha.
Marina Pannekeet (FMO) told that the investor, whose plan was to deforest 80.000 ha, also had approached FMO and that FMO had turned down the proposal. FMO works with larger companies and more substantive investments. Like AgentschapNL, FMO also analysis the business proposals and checks the track record of the company. FMO uses therein standards developed by the International Finance Cooperation (IFC) as a guide for assessing development impacts. FMO observes that national standards are often less demanding. FMO is sensitive for ‘reputational risks’ and is particularly careful with respect to displacement by the investor. FMO then explained how land tenure issues are addressed in Sierra Leone. Here, a company plans to cultivate 14.000 ha sugarcane to produce ethanol. Some people had to be displaced who have been compensated, also with a plot of land elsewhere, with soil preparation being undertaken by the company. The company also invested in registration of informal rights of the smallholders surrounding the plantation. This ”good neighbourship” adds to the initial investment costs, but is regarded as essential for the long term sustainability of the business (“license to operate”). Finally, frequent monitoring by FMO is part of the agreement with the investors.
Dave Boselie, from IDH explains that IDH does not yet have specific policies that make links to cross sector issues like climate change, food security and land governance issues. IDH has a data base of all ongoing activities and companies involved, but no data are collected that feed indicators on land use (or food security). In the various IDH sector sustainability analyses land grabbing has not yet come up as the first matter of concern.
Boselie also argued that the importance of land tenure depends on the type of commodity that is produced. Flowers and vegetables are generally grown on a smaller scale operation than oil palm, coffee, soy, or forestry. Moreover, a focus on enhancing productivity per unit of land, which applies in many of the pillar programs of IDH, reduces the need for expansion. If some regulation is needed, IDH prefers working through existing private sector standards, round tables and multi stakeholder initiatives. Despite the fact that these private ordening mechanisms might show shortcomings one should not try to capture the problems by bringing all responsibility under public ordening, laws and regulation in an era of shrinking government budgets and a diminishing apparatus. Finally, IDH is prepared to work with coalitions of the willing, including former “bad guys” who might have been pushed by NGO activists, public pressure and customer pressure to adjust their business model and business practices.
Discussion: Issues brought up during the discussion were amongst others, the role of NGOs, public sector and private sector in addressing land grabiing; the role of countries like China in large scale land acquisitions for food crops; the role of governments in protecting rights and ensuring a conducive business climate; the importance of acknowledging informal rights (not just formal rights), compensation policies; how to deal with land for which there are multiple claims etc.
Thea Hilhorst of KIT/LANDac summarised the discussion around the three questions formulated in the invitation for the lunch meeting.
1. What is the importance of large-scale land acquisitions for the Dutch Private sector?
– Large-scale land acquisitions are internationally recognized as a potentially problematic issue as it may undermine food security and can become a flashpoint of conflict and poor governance.
– It is happening and requests for funding are being made. This type of investments may increase but the degree of importance is difficult to assess.
– General agreements that (international) companies should assume responsibility in their sourcing polieis themselves (agribusiness), when financing investments that also entail land acquisitions.
– Policy coherence is required to link rights to investments (e.g. between EL&I and BuZa as well as at the international level (e.g. around the OECD guidelines and IFC performance standards for example)
2. what are preconditions for sustainable large-scale investments in land?
– Due diligence – companies should check tenure rights thoroughly (land, other natural resources, water)
– Free and prior informed consent needs to be done seriously (more investment in methodology development, capacity building and exchange of lessons learned is needed)
– The public sector has an important role to play as this is about land rights, which may have to be guaranteed by the state (e.g. by issuing land (use) titles/certificates). Moreover, governments have a role in promoting development but also a responsibility to protect the rights of (vulnerable) citizens.
– Power relations are important and therefore smallholders need to be organised and allowed a respected voice (collective action)
– Robust social and environmental impact assessments; Ecosystems services of landscapes may need to be protected; thish may require a more careful allocation of sites to investors
– Careful assessments of businesses and companies (dare to say no); regularly monitoring of agreements
3. How can the Dutch public and private sector contribute to the respect for local rights and that this type of investments will also benefit local people
– Promote business models that consider the incorporation of smallholders and promoting the local economy as part of core business, not as corporate social responsibility.
– Privilege investment upstream in the value chain that benefit smallholders too over investments in primary production; as well as input supply firms that also offer capacity development
– Aim for the development of economic clusters and corridors, instead of scattered individual farms.
– Build on existing standards and guidelines (OESO, IFC, commodity round tables)
– Use international standards; aim for a raise to the top, not to the bottom.
– When NGOs or private actors are not able to agree on a certain issue, they can always appeal to the Dutch embassies for assistance (not only financial). The role of the embassies in partner countries is also to go in dialogue with local authorities.
– NGOs are strengthening of the voice of local civil society and enhancing the quality of local governance.