International Bar Association | 29 July 2013
The global land grab
Rising demand for agricultural commodities has led to a ‘land grab’ in some of the world’s poorest countries. IBA Global Insight assesses the legal implications and the prospects for the developing world.
In 2008 riots erupted in cities across the developing world. Throughout 2007 and 2008 food prices had rocketed, bringing millions of people into hunger. High price events are not uncommon in agricultural markets, but what distinguished this period was the jump in not just one, but in almost every major food commodity simultaneously.
The phenomenon struck at the staples on which the world’s poor survive. From Haiti to Thailand, Bangladesh, Egypt, Côte d’Ivoire, Senegal, Cameroon and Afghanistan, they took to the streets. Shortly before the boom started, 830 million people went to bed hungry every night. Afterwards, for the first time in human history, it was more than a billion.
Combined with the shrinking appeal of other assets in the wake of the global economic crisis, the hike in food prices sent investors scurrying in search of agricultural land. Prior to 2008 the annual expansion of agriculture globally was around four million hectares; before 2009 had ended, deals had been announced for more than 56 million hectares across the developing world. More than 70 per cent took place in Africa, largely in impoverished, sub-Saharan states.
As the deals began to bear fruit, stories emerged of rural people being forced from their land at the barrel of a gun; of millions dispossessed to feed the demand for commodities in the developed world. The phrase ‘land grab’ gained currency.
In the immediate aftermath, it was almost impossible to discern the true scale and impact of thousands of deals, often negotiated in opaque circumstances. Were the abuses simply anecdotal, or did they reflect a deeper and more ominous trend? Was the ‘land rush’ an artificial bubble driven by speculation, or had the world entered a new, dark phase in the fight against poverty and hunger?
A disaster for poverty alleviation
In a 2011 report that attempted to fill the need for empirical data, the World Bank warned of ‘immense’ institutional gaps in the countries that had been targeted. ‘Too often, they have included a lack of documented rights claimed by local people and weak consultation processes that have led to uncompensated loss of land rights, especially by vulnerable groups,’ it wrote.
Many countries suffered from a litany of governance weaknesses that created an inability to properly consider the impacts of land deals, ensure that they were equitable, or build in social and environmental safeguards. ‘All this implies a danger of a “race to the bottom” to attract investors,’ the Bank warned.
By April 2013, the clearest picture yet had emerged. A coalition of development organisations published a report based on a comprehensive database of large-scale land acquisitions globally since 2000.
It found that the ‘land rush’ of 2009 was very real and had targeted many of the world’s poorest states. Most deals took place in countries with high levels of hunger, yet had the intention of exporting food to far wealthier countries. The displacement of rural communities and the dispossession of their farms was a common feature, with scant compensation or benefits in return. For food security and poverty alleviation, it was a disaster.
Although it had slowed since the peak of 2009, the report found, the land grab had continued.
Agriculture and the global challenges
The nature of agricultural development over the coming decades will play a decisive role in a distinct set of global challenges.
At a conservative estimate, the task of feeding a growing population will bring six million hectares into production each year to 2030. If the pattern of agricultural expansion in the 21st century is continued, this will lead to tropical deforestation, rising greenhouse gas emissions, conflict over increasingly scarce water resources and increased malnutrition among poor populations.
Contemporary environmental crises have made the task of managing the food crisis far harder, by creating competing demands for land and commodities. The demand for biofuels to meet renewable energy mandates in wealthy countries contributed to the spike in crop prices. Indigenous people in tropical forested countries also face the specter of a ‘green grab’ – the acquisition of forests to ‘offset’ carbon emissions by avoiding deforestation.
There is a growing, irrefutable consensus that a cornerstone of the solution to all of these crises lies in securing land rights for rural communities. In May 2012, the UN Committee on World Food Security (CFS) endorsed the Voluntary Guidelines on the Responsible Governance of Tenure. The Voluntary Guidelines promote tenure rights as a means of eradicating hunger and poverty.
Announcing the agreement, the Director-General of the Food and Agriculture Organization of the UN, José Graziano da Silva, said: ‘Giving poor and vulnerable people secure and equitable rights to access land and other natural resources is a key condition in the fight against hunger and poverty.’
Conversely, analysis by the International Food Policy Research Institute has found ‘a definite [inverse] correlation between access to land rights and hunger’.
The historical evidence suggests that its importance lies not only in ensuring development is pro-poor, but as a precondition of successful development. It played a decisive role in enabling several countries during the 20th century to embark on rapid economic transformation without falling prey to the ‘resource curse’ – a fate that now threatens those worst affected in 2009.
In How Asia Works, published this year, the academic and journalist Joe Studwell argues that the rapid economic transformation of northeast Asian states like China, Japan and South Korea in the 20th century was predicated on the support for small-scale, household farming. This model, he says, created the groundwork for the export-oriented manufacturing sectors that enabled them to flourish, leaving counterparts like Indonesia in their wake.
‘In contrast to Northeast Asia, Southeast Asia became a beacon for what not to do if you want economic transformation,’ Studwell told the Astana Economic Forum in May this year. ‘Despite many announced plans for land reform, governments allowed landlordism and scale farming to continue despite the presence of vast numbers of under-employed peasants capable of growing more.’
Today China’s progressive land tenure reform programme is being undone with a vengeance by debt-ridden local governments. But in the late 1970s it laid the groundwork for the economic trajectory we are still observing.
Equally, in Thailand and Vietnam, the clarification of property rights and technological support for small farmers has had ‘a major impact on poverty reduction’, according to the World Bank. ‘It also illustrates that increases in production are by no means contingent on large-scale land acquisition,’ the Bank found in the 2011 report Rising Global Interest in Farmland.
But in February 2013, a report by the Rights and Resources Initiative (RRI), a coalition of more than 120 organisations advancing tenure reforms, observed that in attempting to replicate the economic successes of Brazil and China, many developing nations were failing to heed this historical lesson. While these successes had been predicated on property rights and support for local enterprise, poor nations were now ‘surrender[ing] economic and political control of their land and resources, in effect, replicating economic systems created during the colonial era driven by resource extraction and export’.
Faced with what RRI called ‘a fork in the road’, many nations were being seduced into making the wrong choices as ‘[a]gribusiness, miners, loggers, and other industrial investors continued to market their endeavors to developing nations as the shortcut to prosperity’.
Nothing as profound as land grabbing
Alfred Brownell is President and founder of the Association of Environmental Lawyers of Liberia (Green Advocates).
‘I’ve never seen anything as profound as land grabbing,’ he says. ‘It’s a crime that has to be defined in international law, because it attacks the very poorest. It’s a crime against humanity.’
Against a backdrop of land grabbing across sub-Saharan Africa, Liberia stands out. According to local analysts, some 75 per cent of the country’s area has been carved up and allocated to companies for mining, logging and agriculture.
The two largest known deals were concluded in 2009 and 2010, with Malaysian giant Sime Darby, and Golden Veroleum, a New York-based investment vehicle created by Indonesian firm Golden Agri Resources. Both cover 220,000 hectares and were intended to produce palm oil for export.
‘The investments are a massive assault on poor, traditional indigenous people,’ says Brownell. ‘They can’t teach their young ones about their history and culture, their water supplies dry up, they can’t produce food. They don’t have access to medicine. It’s completely destroying their culture. It’s an outright assault on their ability to survive.’
In 2013 the fate of Liberia’s rural poor hangs in the balance. Its president, 2011 Nobel Peace Prize laureate Ellen Johnson Sirleaf, has instituted a major reform of land tenure. But, large-scale and inequitable resource exploitation continues to take a heavy toll on its indigenous, forest-dependent communities.
Deals such as that with Sime Darby pose a genuine threat to stability in a country that has only recently emerged from more than a decade of civil war. By late 2012, 95 per cent of the cases before the country’s Supreme Court concerned land. The Chair of the nascent Land Commission warned that the disputes could ‘take the country back to crisis’ if not handled properly. ‘Land dispute threatens peace,’ he said.
Brownell says that the government is institutionally incapable of either negotiating with major companies like Sime Darby or Golden Veroleum in a way that safeguards Liberian people, or monitoring the implementation of the projects.
‘Their financial might is too massive,’ he says. ‘There’s no way they can regulate this.
‘They don’t have a clue what’s happening in the field. They don’t have the capacity to monitor, to ensure compliance or enforce laws against them. The company is effectively left to govern itself.’
Growing recognition for indigenous land rights
A 2011 analysis by Owen J Lynch, a professor at the University of the Philippines College of Law, found a growing recognition of indigenous land rights in international and domestic laws. Examining both laws and judicial cases, Lynch found ‘an extraordinary number of legally supportive developments on international and national levels’.
‘As such, it can now be credibly asserted that international law, including international customary law, mandates legal recognition of native/aboriginal title,’ Lynch wrote. ‘Whether policy makers, political leaders and economic elites respect and implement this emerging and hopeful new international legal norm remains to be seen’.
Lynch told IBA Global Insight that while he is confident the positive trend has continued since 2011, there remains a disconnect between international law and de facto practice, with governments failing to enforce those progressive laws to which they are signatories.
‘Law is an important part of the ingredient, but it’s not sufficient without enforcement,’ he says. ‘Enforcement is a question of political will. Without political will who cares what the law says.’
Liberia is a case in point. A legal review of the contracts signed with both Sime Darby and Golden Veroleum found that the Liberian government had failed in its duty to ensure that the terms protected the human rights of affected communities. This failure placed the government in violation of legally binding international commitments relating to customary rights and natural resources.
Lynch notes that national laws recognising and reciprocating obligations made internationally are more meaningful than international laws themselves. He cites the growth of civil society in developing countries as a significant factor in improving enforcement.
Yet for Brownell, there is continuing concern over whether national laws are sufficient either.
‘In the last few years in Liberia we’ve learnt how to script what donors want to hear,’ he says. ‘So if we have a problem with land, what should we do? We draft legislation on community rights. We’ve ticked the box. But there’s still a serious land problem. Ok, we’ll have a Land Commission. We’ve ticked another box. But the land grabs continue.’
In a phenomenon that has a distinctly international dimension, and with target states like Liberia ill-equipped to deal on an equal footing with huge multinational corporations, Brownell says there is a dire need for international legal measures that are enforceable.
‘What we have are voluntary standards. I think there’s a need for the international community to rise to the occasion.
‘We have the [World Bank] IFC’s principles, the [CFS] Voluntary Guidelines, the African Commission on Human and Peoples’ Rights, but these are not very strong. You have to have binding measures.’
Kirk Talbott works on the United States Agency for International Development’s (UNAID) tenure programme as an attorney and land rights specialist with Cloudburst Consulting Group. He cites the CFS guidelines as an important step that will bring ‘more coherence and forge legally enforced standards to uphold land tenure rights’.
‘The Voluntary Guidelines are a first step toward incorporating the standards into international law – a self law, in a sense,’ he says. ‘We need to get declarations built into regional fora like ASEAN [Association of Southeast Asian Nations], to work at international and local levels in a concerted way to fight for these rights. But we’re not there yet.’
Peter Maynard is Managing Partner of Peter D. Maynard Counsel & Attorneys, and co-editor of the forthcoming book reporting on the second phase of the. It examines the impact of the financial crisis on poverty and the role the legal profession can play in ameliorating those impacts. Maynard, who chairs the Task Force, recognises the need for a ‘multidimensional’ approach to improve corporate governance while strengthening the negotiating powers of governments, to ensure they have the ability to enter agreements that safeguard the interests of the people they represent.
‘The governments themselves certainly have to increase the tools they have at their disposal for negotiations,’ he says. ‘We have to look at the problem from a multidimensional perspective. Corporate governance has a role to play, but we have to beef up domestic frameworks and improve the approach of governments to negotiations. And international trade frameworks must also be addressed.’
Maynard believes that the presence of government lawyers within the IBA can play an important role. He notes that a number of IBA lawyers are working pro bono on issues related to Liberia, and that the question of money laundering, for example, has drawn the interest of lawyers from Nigeria. These factors are indicative of the role the IBA can play within the sector, and in its interrelation with broader drivers of poverty that are being addressed by the Task Force.
Indonesia: limited usufructuary rights
On 16 May 2013, the Indonesian Constitutional Court struck one word from the Forestry Law. It was a ruling that was a long time coming. ‘It’s like the Latin saying that water wins from a stone, not by force but by falling continuously,’ wrote one leading scientist. ‘Good things come to those who wait,’ said the Secretary-General of the leading indigenous peoples’ organisation, succinctly.
The word – ‘state’ – had, since the passage of the law in 1999, placed the forests of some 40 million indigenous people under the control of the national government. The ruling eliminated a troublesome ambiguity and made for the first time a clear distinction between ‘state forests’ and ‘customary forests’.
The ambiguity had enabled the state to grant leases to plantation, logging and mining companies in customary forests, while the indigenous people exercised only limited usufructary rights – enabling the holder to derive benefit from the property. For indigenous people it had devastating implications.
Over the past 20 years, Indonesia and neighbouring Malaysia have met almost all of the rapidly growing global demand for palm oil. In response to growing demand for processed fats and biofuels, the area of oil palm plantations more than doubled in Indonesia between 1997 and 2007, from 2.9 million hectares to 6.3 million hectares.
While it has proved dramatically successful in generating rural jobs and improving livelihoods for those involved in effective smallholder schemes, the dominant model has been the ceding of large areas to plantation companies. These have disproportionately targeted indigenous forests on the islands of Sumatra, Borneo and, latterly, Papua New Guinea. The dispossession of these communities has fostered a simmering human rights crisis that has exploded occasionally into bouts of violence, and drove deforestation rates to the highest in the world.
At the heart of the problem lies a plural legal structure in which the customary or adat laws of indigenous communities sit uneasily alongside state law. Under the pre-independence Dutch administration, a dualism existed between colonial and adat law. But post-independence state laws have often ignored or overridden adat.
According to Henri Subagiyo, Executive Director of the Indonesian Center for Environmental Law, the problem is not the coexistence of differing legal structures per se, but the supersedence of adat law. ‘Because legal pluralism in Indonesia is weak pluralism,’ he says. ‘When dealing with customary law and state law, the law of the state is more powerful. It can be seen that the indigenous people and their rights are constitutionally recognised, [but only] if not contrary to applicable law.’
The Forestry Law was a profound example of this. The offending provision read: ‘… customary forests are state forests located in the areas of customary communities’. In effect, it recognised customary rights but subjugated them to state control.
Challenges remain to ensure that the ruling is implemented, not least through the local legal delineation of customary forests. A key obstacle is the rampant corruption that plagues natural resource management and subverts sensible government; Indonesia is very far from properly recognising the role of small-scale farming and lags behind other Southeast Asian neighbours in granting rights.
‘The drive and economic returns for large- scale exploitation of land and natural resources is very high,’ says Nonette Royo, an attorney and the Executive Director of the Samdhana Institute. ‘It is closely linked with the political ambitions of local and national leaders and their parties. Conversely, there is very little economic valuation of the contribution of rural communities and local people.’
Agricultural transformation or business as usual?
On the eve of the Group of Eight (G8) talks in 2012, Barack Obama announced a $3bn commitment from major companies to support projects that would assist small farmers. The initiative, branded the New Alliance for Food Security and Nutrition, would boost farmers’ incomes and lift 50 million out of poverty.
A core objective was to raise yields in Africa, which could substantially relieve the additional burden on land; the World Bank estimates that none of the sub-Saharan states targeted by investors in 2009 were achieving more than 30 per cent of their potential on cultivated land. For that, the private sector was needed.
‘A basic reality is that you’ve never seen agricultural transformation occur without active and direct engagement of the private sector, and that certainly will be true in sub-Saharan Africa,’ the director of USAID told Reuters.
The New Alliance will play a leading role in determining if and how private sector investment will support fragile tenure reform processes in countries like Liberia. Yet credible concerns have been raised over whether the agreements signed between the G8, companies and African states in fact support the exact reverse – more land grabs.
Under the New Alliance, Côte d’Ivoire, for example, has signed a deal that gives French grain trader Louis Dreyfus the rights to 100,000 to 200,000 hectares for rice production. Another, an Algerian company, is reportedly targeting 300,000 hectares.
In its analysis of the agreements with target countries, the NGO Grain found ‘no policy commitments… to protect peasants and pastoralists from the growing number of land grabs taking place.’ The New Alliance promoted a voluntary approach to regulating investments, merely asking partners to ‘take into account’ the CFS’ Voluntary Guidelineson tenure.
A paper released in May by CIDSE, an alliance of 16 Catholic development agencies, expressed deep concern over the New Alliance’s emphasis on private sector investment. It warned that it both fell short of what is needed to eradicate hunger and ‘could potentially undermine progress towards that end’.
The New Alliance is not alone in lacking coherence, or indeed in failing to support the kind of agricultural reform that it has recognised the need for.
In 2012, Oxfam identified a surge in development institutions lending money through financial intermediaries, such as private equity funds and banks. The model prioritised financial returns over safeguards, despite the fact that many of the institutions had explicit poverty reduction mandates. Among them was the World Bank’s International Finance Corporation (IFC), which was subsequently found by its own ombudsman to have made investments without the ability to track whether they were doing poor people harm or good.
The World Bank claims that its substantial, and increasing, investments in agriculture are a vital part of the mix, which are helping smallholders increase productivity and reach market. Oxfam contends that there is insufficient transparency and safeguards to ensure the benefits are felt by the poorest people, and has made as yet unsuccessful calls for the World Bank to temporarily freeze investments.
The shortcomings in the IFC’s investment model was laid bare in 2009, when an audit by its ombudsman found that it had failed to mitigate the social and environmental risks of investing in the oil palm sector in Indonesia. The audit found that IFC staff were aware of unresolved land disputes with local communities, but still decided to make loans and investment guarantees to Wilmar – one of the world’s largest palm oil trading firms.
The audit contributed to a decision by the World Bank to carry out a comprehensive review of its support for the palm oil industry. Wilmar, by contrast, has continued to be embroiled in rights abuses, in one case enlisting Indonesian police to systematically evict communities.
If the reforms that have taken seed with the Constitutional Court decision bear fruit, Indonesia’s indigenous people may one day be protected from such practices. But while such delicate governance processes evolve, poor rural people will need as much protection as possible from land-hungry corporations. Whether they will receive it, in Indonesia, Liberia or beyond, remains uncertain.
Tomasz Johnson is a freelance journalist and can be contacted at [email protected]