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Tim Hanstad Headshot

The Myth of Cheap Land

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A severe drought in the Horn of Africa is forcing millions of people into starvation, leaving many with no option but to flee their land in search of food.

Meanwhile, the push to remake large swathes of the African continent into super-sized farms isn't helping.

This convergence of tractors on so-called available land, driven by rising food prices and a growing demand for biofuels, has caused uproar. Recent research and reports in the media have also brought these "land grabs" to the forefront, prompting calls that the trend be halted because it will deliver nothing but more poverty and insecurity to developing countries.

But trying to stop the land rush is like trying to stop the earth's rotation. There are powerful forces at work that make this unrealistic.

Moreover the calls miss the fact that these investments in developing countries' farmland can benefit all parties -- if the necessary legal infrastructure is developed and enforced.

The current problem is this: many investors are most attracted to countries with weak land tenure laws and institutions because they offer an ease of entry. Investors can quickly and quietly negotiate with government officials in the capital or with village chiefs for thousands of acres, without having to worry or even consider the people who currently use or reside on the land.

Often the expectation is that locals, many of whom have been working the land for generations but don't have legal title, will reap benefits on the new commercial farms: more secure employment, better housing, and an income that is not tied to fickle rains. But those jobs are often seasonal, low-paying, and scarce. Moreover, because there is often no record of who was displaced or whose resource was expropriated, there is also no way to earmark the jobs -- or compensation for that matter -- for those directly affected.

Displaced by this farmland fire sale, the newly homeless and landless can be left without means to support themselves or their families. Some may be forced to become migrant laborers, their children unimmunized and uneducated by virtue of their itinerant life. Marginalized, they are susceptible to the siren's call of extremism.

But land rights that are unclear, weak, and poorly governed are not only a problem for the poor, they are a danger for most investors as well.

Supporters say there is no safer investment in the third millennium than land, but they ignore the risks of buying land of uncertain provenance.

Investors should take note: where land rights are weakest, investments are likely precarious. And governments would do well to consider the fact that unclear property rights create conditions ripe for conflict and instability.

Consider the cautionary tale of Korean giant Daewoo, which sought to lease 3.2 million acres in Madagascar, more than one quarter of the country's farmland. Daewoo lost its investment and the country's president, Marc Ravalomanana, was thrown out of office shortly after approving the deal.

If we want the commercial land acquisition trend to be successful and sustainable -- and we should in the interest of food security and stability -- governments and investors must establish an environment that produces sustainable, long-term benefits for all.

Toward this end, governments must provide a legal and policy framework that establishes and protects secure land rights. This means providing land titles where appropriate, reconciling customary and formal land tenure systems, and ensuring that people understand their land rights and can protect them. Only then can agricultural investments succeed for the long-term.

Governments that lack either the will or the capacity to roll out secure land rights to their populations needn't be off limits. Investors can ensure socially and legally legitimate and sustainable investments by insisting on transparent contracts that respect the rule of law and traditional land rights.

The first step in this process is conducting land tenure impact assessments, which should be as routine as environmental impact assessments. These will help investors direct appropriate benefits to those affected.

This is not charity. It is not even corporate social responsibility. It is just proper risk assessment and good business.

In the much the same way that The Forests Dialogue, has brought together representatives of all parties to create international standards for the management of forests around the world, we can do the same for responsible development of global farmland.

The alternative -- a bitter harvest -- is both morally and fiscally disastrous for all.