Investing, not grabbing

Globe and Mail | Thursday, Nov. 19, 2009

Editorial

There should in general be international freedom to buy and sell farmland, but where property rights are not clear, these should be formally settled, giving the benefit of the doubt to those who are actually cultivating it - such are among the principles that ought to guide standards for foreign direct investment in agricultural land, which are being drafted by the United Nations Food and Agriculture Organization, the World Bank and the International Fund for Agricultural Development, as announced at the FAO's World Summit on Food Security in Rome this week.

What some people pejoratively call "land grabs" have increased in the past few years. Broadly speaking, some of the world's newly rich nations find themselves farmland-poor. In March, a lease agreement for 1.3 million hectares between the government of Madagascar and Daewoo Logistics Corp. of South Korea provoked a coup d'état, and the subsequent political settlement has still not been fully resolved.

About half of Madagascar's arable land was at stake; the very fact that the state had, or purported to have, a legal right to rent it out illustrates the weaknesses of property rights in much of the Third World, the fragile status of those who work the land, and the potential for political corruption.

A Saudi Arabian acquisition in Indonesia and a Chinese one in the Philippines have miscarried for similar reasons.

Civil war may have been averted in Madagascar, but the events there vividly show that foreign investors in farmland need to pursue their enlightened self-interest. Corporations should welcome the goals of the FAO, the World Bank and IFAD in developing guidelines and should hope that the proposals will benefit both investors and the peoples of the countries invested in.

Canada is touched by this discussion, too. Alberta, Manitoba, Prince Edward Island and Saskatchewan all have relevant land-ownership restrictions. But then all Canadian provinces draw upon long traditions of property rights and they all provide systems by which title to land is registered. On free-trade principles, the restrictive provincial statutes should be repealed. Moreover, it would be a stretch to argue that farmland is a strategic resource that ought to be protected under the Investment Canada Act.

International farmland-investment standards of the kind being worked upon are much needed. But agricultural agencies such as the FAO are not equipped to establish good property-rights regimes in the developing world. A world summit on security of property would do quite as much good as this week's conference in Rome.
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