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Symposium 2012

Proposal - Land Grabbers Can Profit from Doing the Right Thing

The Challenge

Inequality has increased substantially in many countries in recent decades. Spectacular gains in the incomes and wealth of the richest fraction of the population often contrast with severe poverty in ...

Inequality has increased substantially in many countries in recent decades. Spectacular gains in the incomes and wealth of the richest fraction of the population often contrast with severe poverty in the same country. Inequality of outcomes often goes hand in hand with inequality of opportunities, as poor people endure various forms of social exclusion, including unequal access to education and health care, high rates of youth unemployment or precarious work and an absence of social recognition.

The Problem: In the current land grab phenomenon, foreign investors are acquiring large tracts of land both in developed countries, such as the United States and Australia, and developing countries, such as Sudan and the Philippines. While governments in the developed world generally ensure that foreign investment firms respect human rights and the environment, governments in the developing world too often fail to protect their citizens or simply look the other way. For these reasons, many humanitarian and environmental groups would like to put a stop to land grabbing. However, considering that billions of dollars and the food and energy security of powerful nations are involved, the land grab is unlikely to stop. Nevertheless, with the right incentives, we could not only solve many of the problems associated with land grabbing, but turn it into an opportunity to fund propoor development in the parts of the world that need it the most. For more information on the land grab, please read my article at http://educationgoesglobal.com/landgrab.

The Solution: Product certification gives consumers confidence that whenever they see a certification label, they know they are getting a higher quality, healthier, more socially or environmentally responsible product. Certified products are those which have been submitted to an investigation in which a government or independent body verifies that they meet a set of standards. The producers which submit their goods to the certification process do so because they believe that it increases the goods’ value – and usually they are correct. Many consumers are willing to pay a premium for certified products. Certified organic and certified fair trade are both very successful examples of certifications for foods. Why not create a certification scheme which guarantees agricultural products grown on “grabbed” land are produced in a socially and environmentally responsible manner? As these products are mostly sold in uppermiddle and high income countries, it is reasonable to assume that at least a portion of the consumers in these markets would be willing and able to pay a premium for certified products. This premium would be the incentive for the investors to “do the right thing.” The criteria for certification would include the following:

  • The rightful owners of the land consented to its sale (or lease) and were appropriately compensated.
  • The land is used in a sustainable manner; proper precautions are taken to mitigate harm to the environment and human health. Communities are compensated for any harm to human and environmental health and their access to water is not disrupted.
  • Communities are involved in the decision making process in the planning stage and are integrated into the developer’s value chain in the execution stage (i.e. locals are offered jobs operating the farm and supporting businesses) so that communities share in the fruits of the investment. Individuals whose livelihoods are negatively affected by the development of land are offered job opportunities or compensation greater than their loss.
  • The developer invests in local food security. Forms of assistance may include extension services to local farmers, low/no interest loans and improved technologies, among others. Additional criteria could be added as seen fit in order to address as many issues of the land grab as possible and encourage the most meaningful investment in pro-poor sustainable development.

Implementation: The first step is to conduct market research to demonstrate that consumers are willing to pay a premium for certified goods. Once a willingness to pay is established, the second step would be interaction with stakeholders such as communities that have received foreign agricultural investments and agricultural development firms, which would help refine and add detail to criteria as well as generate ideas for pro-poor investments. The next step would be to secure the involvement of a non-governmental organization (or several organizations) with the capacity to conduct the investigations necessary to the certification process. Finally, in order to create demand for certified products, we would need to organize awareness campaigns which would inform the markets about land grab issues and how buying certified products will help. Agricultural development firms could be approached to fund these campaigns as they are basically advertisements for certified goods. Once developers see that there is a market for certified goods, they will adopt more responsible practices so that they can obtain certification. The great hope of this idea is that eventually awareness of the issues will make goods with this certification so popular that obtaining the certification, and thus adopting responsible practices, will become a license to do business for would-be land grabbers.

Question by Paula Fortes: @aaron congrats to the well developed argument we have here, however, what kind of institution would be ahead of this whole process? And what means would it have to finance itself?
How would these criteria for certification of the “responsible manner” be chosen and estabilished since it also includes many of the concepts of quality and protection of enviroment that exist and have achieved no global concensus? On the whole, who or what is going to “take the first step” to implement the whole process? An institution? In behalf of whose interest? The communities?

Answer by Aaron Shoresman: Thank you, Paula. I mentioned briefly that a non-governmental organization (or a number of organizations) would conduct the investigations necessary to the certification process. From my work in international development, I know that there are many reputable non-governmental organizations working in agricultural and rural development in the developing world. We would approach organizations such as these which have the manpower and expertise (both in agricultural/rural development and in the specific region) to travel to communities to verify that the criteria for certification are being met. Ideally the certification scheme would be funded by any number of donor agencies. The following pdf has examples of such agencies: http://www.developmentex.com/attachments/donor_list.pdf. If donor funds are insufficient, perhaps a fee could be charged to the developers who wish to obtain certification. Of course we would make it clear to them that the fee simply covers our operational expenses and in no way guarantees that they will be certified.

Regarding the criteria for certification, the criteria I listed are actually quite similar to the principles for Responsible Agricultural Investment (RAI) which have been agreed upon by the European Union, Food and Agricultural Organization of the United Nations, G8, G20, IFAD Japan, Switzerland, United Nations Conference on Trade and Development, United States and World Bank. For more information on RAI, visit http://www.responsibleagroinvestment.org/rai/node/232. However, I do not suggest that the criteria that I listed or principles of RAI are perfect. I think you are right that not all communities will agree on what “responsible development” should look like. In the end, I think that only experience and interaction with stakeholders can show us what the criteria should be. I think that developing good criteria will be an art of being general enough to encompass the vast majority of definitions of “responsible development” while being specific enough to ensure that the objectives of the certification are achieved. Regarding who takes the first step in the process, I would love to be involved. In fact, I intend to conduct the market research to show that consumers will pay a premium for “responsibly grown” goods. My background is in international development and I have a large social and professional network that includes individuals who have worked for agricultural investors as well as individuals who work for the type of development firms and NGOs that would be necessary partners in the implementation of the certification scheme. If funding could be obtained, a relatively small team of people like myself could secure the involvement of the right NGOs who can facilitate interaction with communities in the early stages and later on conduct the investigations that are necessary to the certification process. The aforementioned team could later on coordinate the efforts of the various NGOs, interact with the developers, raise awareness of land grab issues and other tasks necessary to the success of the certification scheme.
I hope I answered your questions. If not, feel free to ask more!

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