IFI governance


Call for freeze on World Bank ‘land grabs’

6 December 2012

As Oxfam called on the World Bank to freeze large-scale land acquisitions, the Bank’s new agriculture strategy remained under wraps. Concerns have also been raised about ongoing initiatives on ‘climate-smart agriculture’ and the development of Doing Business in Agriculture.

The controversy around the World Bank’s involvement in ‘land grabs’ continues (see Update 81). An October report by international NGO Oxfam, ‘Our land, our lives’: Time out on the global land rush, called on the Bank to temporarily “freeze its own land investments and review its policy and practice to prevent land-grabbing”, referring to its role as an investor, advisor and standard setter. According to Oxfam, since 2008, 21 formal complaints have been brought to the Bank by communities claiming to have had their land rights violated. Oxfam dismissed claims by the Bank and others that much of available land is unused as “a myth”, since “much of this land was already being used for small-scale farming, pastoralism and other types of natural resource use.” Barbara Stocking, chief executive of Oxfam GB, said that the Bank “is in a unique position to help stop land grabs becoming one of the biggest scandals of the century.” It asked the Bank to review the extent to which existing policies, activities and safeguards: ensure transparency on land deals; respect and uphold the principles of free prior and informed consent (FPIC) for all affected communities; promote land rights and good land governance; and promote food security and preserve the environment and natural resources.

The Bank rejected the call for an investment moratorium and claimed that it “does not support speculative land investments or acquisitions which take advantage of weak institutions in developing countries or which disregard principles of responsible agricultural investment”, but acknowledged “that in many cases, practices need to ensure more transparent and inclusive participation in cases of land transfers”.

The call for a freeze echoed the Bank’s 18-month moratorium on lending to the palm oil sector in 2009, following a controversial investment by the Wilmar Group in Indonesia (see Update 76, 67). However, troubles in the palm oil sector continue, with two new cases in the past year relating to palm oil companies registered by the Compliance Advisor/Ombudsman (CAO), the accountability mechanism of the Bank’s private sector arm, the International Finance Corporation (IFC). One is a third investigation of the Wilmar Group in Indonesia (see Update 79), and the other against Corporación Dinant in Honduras, which has been implicated in forced evictions and violence (see Update 82).

NGO GRAIN has also highlighted the Bank’s role in land grabs, pointing specifically to the roles of its Multilateral Investment Guarantee Agency (MIGA) and the IFC. In an October report, GRAIN highlighted the IFC’s 2009 $75 million investment in the US Altima One World Agriculture Fund, registered in the Cayman Islands, which it says is responsible for buying up vast areas of farmland in Latin America and converting it into soybean monoculture. The report says the Altima Fund is also pursuing farmland acquisitions in Africa and Eastern Europe. Furthermore, MIGA has provided political risk insurance to companies, such as Chayton Capital, a UK-based private equity fund spending $300 million in agribusiness ventures in six African countries. This includes a 14-year lease on 20,000 hectares of land in Zambia, however, the firm denies involvement in land grabs. In March, CEO Neil Crowder told the BBC World Service: "The World Bank has underwritten our assets for political risk … we pay a premium for insurance and they guarantee against expropriation.”

Agriculture plans under cover

Meanwhile, the Bank’s Agriculture Action Plan for 2013-15 remained under wraps (see Update 80, 79). An unpublished May concept note clarified that the Bank does “not plan to have external consultations on the Action Plan document itself, but will continue with consultations on various elements during its implementation”. The Social Justice Committee of Montreal, a Canadian NGO, has been raising the alarm about the process. Director Derek MacCuish said “This plan is being developed in the midst of controversy over land use, land grabbing, increasing demand for food, for both humans and livestock, and bio-fuels, yet the Bank doesn’t seem to think it warrants a consultative process. The lack of openness in the process is appalling.”

According to the concept note it will “build on the foundation put in place and long-term directions set over the last three years, while responding to the evolving global context”. This includes “more attention to the emerging issues of food prices and associated risk management; climate-smart agriculture; fostering broad private sector investment to spur growth and trade; and to broaden partnerships.” The focus on climate-smart agriculture includes “increasing carbon storage on farmland”, which according to the Bank is a “tested and approved methodology” which “offers new opportunities for farmers”. However, according to the US-based NGO Institute for Agriculture and Trade Policy, the methodology is far from proven, with the farmers involved in a Kenya pilot yet to receive any payment for the carbon credits (see Update 79, 77). It calls for “much more exhaustive, public and inclusive debate about carbon-market based approaches and their appropriateness for small farmers, food security and sovereignty”.

Several new initiatives indicate the Bank’s current priorities. In late September, the Bank announced a $1.2 million contribution towards a new global partnership to support up to 10 countries in Latin America, Africa and Asia “that are adopting, or are considering the adoption of agricultural biotechnology”, with an aim to “strengthen the capacity of developing countries to make their biosafety regulations more efficient and harmonised.” The Bank expects the grant to stimulate an additional $6.5 million in investments from the public and private sectors.

Following the controversial Doing Business rankings (see Update 83), the Bank is also developing Doing Business in Agriculture (DBA), which received official backing at the G8 meeting in May. According to the Bank’s concept note, DBA aims to “develop a set of indicators of the laws and regulations affecting agricultural business in countries around the world … to stimulate reforms in the legal and regulatory environment for agriculture across countries, ultimately improving smallholder productivity, agribusiness development and rural standards of living.” However, German NGO Urgewald criticised its “top-down approach” and expressed concerns that “it will pave the way for big business in agriculture and ignore smallholder needs.” No exact timetable has been confirmed, but the concept note indicates an official draft of DBA methodology by September 2013, with the first report ready by November 2014.

Furthermore, in June, the G20 launched the $100 million AgResult initiative, a “results-driven funding model that rewards innovators”, set up to address “global challenges in food security and agriculture by generating market-oriented solutions”, to be administered by the Bank. The Bank has also advised Africa to remove trade barriers in its October report Africa can help feed Africa, finding that a competitive food market will help poor people most. However, an October report by Gender Action has criticised how IFIs, including the Bank, has increased food insecurity in Zambia, by pushing policies, such as trade liberalisation, privatisation and removal of subsidies and price controls, that reduced incomes of subsistence farmers, the majority of whom are women.