Working with larger-scale farming systems is one of many tools to promote sustainable agricultural and rural development, and can directly support local communities and smallholder productivity – but this must be done right. When undertaken with appropriate safeguards and inclusion of small holders and communities as beneficiaries, large agribusiness can bring development benefits through economies of scale, market discipline, and accountability to consumers. Production at scale has the potential to lower the price for essential food; improve productivity and efficiency in the use of fertilizers and water; and enable investments in innovation that may be too costly for small farmers to adopt.
However, large-scale land acquisitions pose certain risks. The World Bank Group is especially concerned that large-scale land acquisitions do not disadvantage smallholder farmers, who depend on land for their livelihoods. The World Bank Group 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.
Working to protect the rights of land users, smallholder farmers
The World Bank (IBRD and IDA) interacts primarily with governments to increase agricultural productivity, strengthen land tenure policies and improve land governance. More than 90% of the World Bank’s agriculture portfolio focuses on the productivity and access to markets by small holder farmers. Ten percent of our projects focus on the governance of land tenure.
Similarly, investments by the International Finance Corporation (IFC), the World Bank Group’s private sector arm, including those in larger scale enterprises, overwhelmingly support smallholder farmers through improved access to finance, inputs and markets, and as direct suppliers. IFC invests in environmentally and socially sustainable private enterprises in all parts of the value chain (inputs such as irrigation and fertilizers, primary production, processing, transport and storage, traders, and risk management facilities including weather/crop insurance, warehouse financing, etc.). IFC due diligence and Performance Standards, which address issues ranging from environmental and social impacts, to labor practices, to assuring future livelihoods for existing users, apply in all cases. IFC’s Performance Standards were recently strengthened to address many risks associated with land investments and are widely regarded as best industry practice.
IFC investments made directly in the agricultural sector have already delivered substantial economic benefits, including helping provide jobs for 37,000 people, including 11,000 women, and reaching 4.2 million farmers (equivalent to 20 million people supported). In addition, IFC-invested companies are expected to source more than $4.6 billion of goods and services from local companies and contribute more than $287 million in tax revenues in FY12.
Having a strong anchor organization or supply chain intermediary achieves a multiplier effect in adopting new practices, setting standards, and expanding market access. For example, IFC provided $74 million in loans and equity to Jain Irrigation, India’s producer and distributor of drip irrigation equipment. Jain Irrigation introduced drip irrigation to India’s agriculture and has grown to become the world’s second-largest player in the micro-irrigation industry. The use of Jain’s drip-irrigation technology, which allows water usage to be cut by 40 percent, has resulted in water savings equal to the annual water consumption of more than 10 million households. In addition, it has tailored its business model to include the poor—creating a supply chain of 25,000 small farmers, 90 percent of whom work with less than one hectare of land. The use of drip irrigation has also led to efficiency gains that have raised annual incomes for small farmers by up to $1,000.
Working for policies that recognize all forms of land tenure
The World Bank supports and consistently recommends government policies that implement systematic land surveying and titling programs that recognize all forms of land tenure: public and private; formal and customary, including those of pastoralists or others with weak formal rights; collective and individual, including women’s’ rights; and rural and urban. At the same time, respect for customary and traditional land rights should be looked at dynamically, focusing on the shortcomings (e.g. women’s access to land) and striking a balance between what needs to be preserved and what needs to be changed.
The World Bank has supported government’s efforts to strengthen land policies and administration systems in member countries for over four decades. Since 1990, the Bank has provided finance of US$2.7 billion to more than 60 land administration projects around the world. At the request of individual countries, we provide support through information and research, and by working with governments to implement sound policies.
As of August 2012, we have 23 projects under implementation supporting improved governance of land tenure with IBRD/IDA commitments of US$ 964 million. There are 12 projects in Eastern Europe and Central Asia, 6 in Latin America and the Caribbean, 3 in East Asia and the Pacific, and one each in Sub-Saharan Africa and in South Asia. In addition, there are 23 projects which include a land tenure component (13 of which are in Sub-Saharan Africa).
- For many years in Nicaragua, the lack of an institutional and legal framework made it difficult for indigenous and ethnic community groups to have their rights and natural resources formally recognized and their territories demarcated and titled. Under the Land Administration Project, the World Bank helped to demarcate, title, and register 1 million hectares of land in the country’s Atlantic coastal region, and prepare territorial management plans with participation of the indigenous and ethnic communities and their leaders and authorities to guide future development efforts.
- In Indonesia, the Bank supported post-tsunami recovery efforts in Aceh through rapid community mapping and land registration and titling, introducing the concept of joint titling and gender recording. A total of 222,628 land title certificates were distributed to land owners after the tsunami, out of which 63,181 were given to women either individually or as joint owners with their spouses.
- In Bolivia, the Bank helped update the 1952 land reform law, establish a new tenure regime for indigenous people, and modernize the land administration system. As a result, 2.8 million hectares of land were surveyed and titled – of these, 588,000 hectares were for indigenous peoples’ communal territories.
Land governance – working to facilitate transparency and accountability
In addition, the Bank and several partners have developed the Land Governance Assessment Framework (LGAF), a diagnostic tool to assess the status of land governance at country level in a participatory process that draws on local expertise and existing evidence rather than on advice from outsiders. To date, LGAF assessments have been carried out or are under way in 13 countries (eight of which are in Africa).
Helping women achieve equal treatment in obtaining land rights
Women often have often difficulties in proving they own the land they work and live on. The lack of clear property rights denies them an opportunity to earn more for example by renting the property out or using it as collateral for loans. The Word Bank has helped women in Ethiopia, Honduras, Indonesia, Kosovo, Nicaragua, and Vietnam better understand their rights and secure clear land title to their properties, enabling them to get more out our their most important asset.
As Tashegu Woretaw, an Ethiopian widow from Gola Kebele tells, “I was not really interested in putting any long-term investment in the land. After getting the certificate, I planted eucalyptus and also prepared part of it for grass for fattening small stocks and oxen.”
Securing access to land for the poor
Securing access to land is critical for millions of poor people. Modern, efficient, and transparent land tenure policy is important in reducing poverty, and promoting growth and sustainable development. Security of property rights is central to preserving livelihoods, maintaining social stability, and increasing incentives for investment and for sustainable, productive land use.
- In Malawi, inequitable access to arable land, combined with insecure land tenure, unsustainable farming practices, and intense competition for resources have resulted in chronically low incomes and persistent poverty. To address these challenges, the Community Based Rural Land Development Project was launched in 2004 to generate greater opportunities for the poorest of the Malawi’s rural poor. By 2010, 15,000 poor families had access to land. Gross margins per hectare had increased ten-fold for hybrid maize from the pre-location phase.
- In Brazil, under the Land-Based Poverty Alleviation Project families formed groups that negotiated directly with willing sellers to purchase suitable properties. They then obtained financing and technical assistance to establish themselves on or near the land and to improve the productivity of the acquired properties. Thanks to the project, more than 55,000 poor rural families gained access to about 1.2 million hectares of land.
- In Bosnia and Herzegovina, systems for the registration of property rights had been in disarray since World War II and made worse following the 1992-1995 war. Informal development of large areas occurred because of the difficulty in getting permission to build or occupy property. It was very difficult to complete basic real estate transactions, develop property or to borrow money based on property as collateral. The World Bank-financed Land Registration Project contributed to a significant reduction of backlogs in property registration and more efficient customer service in many courts. Now 80 percent of all transactions are resolved in five days or less and mortgages are registered within a day in 16 of the 47 courts, including Sarajevo.
The World Bank is an active participant in Grow Africa, which is a partnership platform to accelerate investments for sustainable and inclusive growth in African agriculture, coordinated by the African Union, New Partnership for Africa's Development (NEPAD), and the World Economic Forum, under the umbrella of the Comprehensive Africa Agriculture Development Programme (CAADP). The first Grow Africa Investment Forum was held in Addis Ababa in May 2012. It attracted 270 top-level leaders from global, regional, and national businesses, African and other governments, international organizations, and civil society and farmers’ organizations. A total of 116 companies participated, including 49 African and 47 multinational companies plus 20 from other regions, such as Asia and the Middle-East. More than 60 companies signed letters of intent reflecting intended private investments of US$4 billion in African agriculture. This number reflects both the strong interest of the private sector to invest in African agriculture, as well as to do so in a sustainable and inclusive way supported by Grow Africa.
Voluntary Guidelines on the Responsible Governance of Tenure of Land
More recently, the World Bank Group has actively supported preparation and endorsement (May 2012) by the Committee on Food Security (CFS) of the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security (“the VGs”). The Bank is actively engaged with multiple partners (UN agencies, bilateral donors, civil society organizations) in supporting the implementation of the VGs at the country level through wide-spread dissemination, capacity building, financial support to policies and projects that enhance the governance of land tenure according to these guidelines. The World Bank Group considers these VGs as a major international instrument to guide specific policy reforms, since it provided an agreed framework for action, broad participation, and monitoring outcomes.
Recognizing the increasing interest in farmland, and the potential associated risks, the World Bank is working with partners to “retrofit” principles of responsible agricultural investment to 40 agribusiness investments to determine how application of the principles would have impacted the results.
The Principles for Responsible Agro-Investment (PRAI)
In 2010, the United Nations and the G20 asked the Food and Agriculture Organization of the United Nations (FAO), the International Fund for Agricultural Development (IFAD), the United Nations Conference on Trade and Development (UNCTAD), and the World Bank - in consultation with a broad range of stakeholders - to generate principles that could be used by both foreign and local investors and to help governments address the needs of vulnerable groups, especially small farmers. The PRAI process is led by the Committee on Food Security, and global consultations on the principles are continuing.
The Bank is working with governments and stakeholders through a number of concrete investment projects to operationally translate the Principles of Responsible of Agro-Investments and the Voluntary Guidelines into concrete sustainable and inclusive public-private partnership models which we expect will have significant positive effects on how governments facilitate private sector investments and how the private sector structures them. Grow Africa represents an African-owned, representative platform to share and discuss these operational models.