EAST ASIA WORKING GROUP

OXFAM Campaign Consultation Workshop9-11 November 2010Bangkok, Thailand

Outline of the Discussion•Brief Background of the Study

•Drivers of Investments

•Issues and Concerns

•Recommendations

Background• Foreign farmland investments in SEA is now

new. Multinational companies of established large plantations to grow food and non-food products such as banana, pineapple, timber, and rubber.

• But in recent years, we have witnessed the rise in number and magnitude of investments by foreign entities

• IFPRI’s global estimates – 15-20 M hectares of farmlands have been subject to negotiations over the last few years

• What is alarming is that the details of these transactions are not publicly accessible.

Background•The research was carried out in selected

SEA countries (Cambodia, Lao PDR, Indonesia, Myanmar, Vietnam, Malaysia and the Philippines).

•Focused on land-related investments in the cereals sector

Drivers of Investments—Foreign Governments

• Food price spike in 2008• Projected increase in food demand with the

growing population• Projected scarcity and high cost of

agriculture labor • Ensuring food safety• Tapping on Carbon markets• Strategy to pursue geo-political objectives• Proximity of investments and availability of

productive resources to allow viability of agriculture investments

• Cultural and religious ties

Drivers- Foreign Investors

•Profit•Speculative endeavour•Some directly receive support from the

governments•Locating production in a foreign country

will also do away with strict quarantine regulations, rules of origin and other technical barriers to trade that are being strictly imposed on imports.

Drivers- Host Governments•Source of much needed capital and

foreign exchange through land rentals•Create employment for residents•Develop infrastructure and promote

technology transfer•Benefit from ODA that comes with these

investments

Drivers- Local Stakeholders

•Usually carried through with the support of local partners

•Undertakes business endeavours with less financial risks

•Share in the profits or rents

Land Investment Modes•Outright Purchase of Lands - only

Malaysia allows foreigners to directly acquire agricultural land.

•Lease – the period of lease vary, from 25 – 99 years with option of renewal. Lease rates vary by country and project.Ex. In Myanmar, rental fees for fallow lands devoted to perennial crops range from US$3 - 6 per hectare/year, while lands planted to crops in the dry zone are charged US$6 - 16 per hectare/year

Land Investment Modes•Contract growing - the engagement of

farmers and entities to produce certain commodities and raw materials for the agribusiness firm. Example: “2+3” scheme in Lao PDR where the farmer contributes land and labor and gets 70% of the income from the venture

•Anchor firms – combination of lease and contract growing arrangement

•Joint ventures – co ownership of agribusiness firms

Issues and Concerns• Displacement of occupants• Exploitative and one sided contracts• Exploitative employment terms• Negative effects on nearby communities• Policy incoherence and inconsistency• Implications on food security• Opportunity costs to farmers and rural

communities• Effects on the environment• Monitoring of compliance with investment

conditions and commitments• Lack of transparency• Possible Impacts on ASEAN Trade and Food

security• Race to the bottom to attract investors

Recommendations

• Coherent foreign investment , land use and environmental protection policies

• Strengthen property and land registration and titling system

• Protection for small landowners and producers• Equitable profit sharing and employment

arrangements• Organization of small farmers and landowners• Strict enforcement of local rules and regulations,

proper monitoring of compliance• International and (regional) code of conduct• Role of civil society• Governments have primary responsibility to

support their agricultural sector not foreign investors