Interest in farmland is rising and given commodity price volatility, growing human and environmental pressure and worries about food security, this interest will increase, especially in de developing world. But it comes at a cost.
“One of the highest development priorities in the world must be to improve smallholder agricultural productivity, especially in Africa,” writes Jürgen Vögele, director of the Agriculture and Rural Development Department at the World Bank in his preface of the report.
“Smallholder productivity is essential for reducing poverty and hunger. […] When done right, larger scale farming systems can also have a place as one of many tools to promote sustainable agricultural and rural development.”
Vögele notices that “actual or proposed large farmland acquisition by big investors have raised serious concerns about the danger of neglecting local rights and other problems.”
Large scale transactions
Compared to an average annual expansion of global agricultural land of less than 4 million hectares before 2008, 45 million hectares worth of large scale farmland deals were announced even before 2009.
Many of these deals have never been implemented and risks are often large. World Bank found that actual farming has so far only started in 21% of the announced deals. “Moreover, case studies demonstrate that even some of the profitable projects do not generate satisfactory local benefits,” Vögele writes.
Although deforestation associated with the expansion of the agricultural frontier has been a serious problem, the World Bank’s analysis shows that the projected increase in the demand for agricultural commodities over the next decade could be met by increasing productivity and farmland expansions in non-forested areas.
None of the African countries of most interest to investors is now achieving more than 30% potential yield on currently cultivated areas.
A major conclusion of the report is that access to a basic set of good information is essential for all stakeholders.
Good public information can help governments formulate policies, identify gaps in implementation and perform essential regulatory functions.
“Good information can also help investors effectively design and implement projects that respect local rights, are profitable and generate local benefits,” Vögele argues.