Facilitating Smallholder Farmers’ Market Access
In the OIC Member Countries
118
BOX 4: KEY POLICIES AND PRACTICES FOR REPSONSIBLE AGRIBUSINESS INVESTMENT
A recent World Bank report surveyed 39 large-scale mature agribusiness investments in Sub-Saharan Africa
and southeast Asia to assess how to organize and manage such investments in the most socially, economically,
and environmentally responsible ways. The positive impacts of agribusiness investments cited by local
stakeholders included specific benefits tied to the investments. Job creation was high on the list. Some
outgrower schemes provided markets for 150,000 contract farmers. Other agribusiness investments brought
improvements in infrastructure—roads, water supply, and health. The most frequently mentioned negative
impacts involved losing access to land and water resources. For investment projects that acquired land, more
than 35 percent of the stakeholders interviewed said that losing access to land was a negative effect of the
project, and about 10 percent mentioned the loss of access to water. Investors often complained about host-
country policies, regulations, and poor infrastructure.
Other notable negative outcomes included disputes between investors with formal land rights and those with
use-rights. In some cases, the land acquisition conditions and process were opaque. When problems arose, no
mechanism was in place to investigate the causes and offer redress if needed.
The report lists a number of key policies and practices for government, investors, and civil society to maximize
the benefits and minimize the negative effects of large-scale agribusinesses.
GOVERNMENT
• Rigorous prescreening of potential investors’ experience, financial capacity, and technical capabilities.
• Obtaining commitments from foreign investors for social development programs, employment, and other
benefits to the host country, as well as a detailed schedule for the development of operations.
• Ongoing monitoring of investors’ agreements and commitments.
• Monitoring consultations and social and environmental impact assessments (SEIAs), but not conducting
them on investors’ behalf.
• Clear, transparent regulatory framework for land acquisition (purchase or lease), consultations,
resettlement, and compensation.
• Formalized local community tenure rights under a proper land registry system.
• Approval of foreign investment applications in line with capacity to screen and monitor investors.
• Encourage phasing of investments, rather than mega-land deals (for example, provision of an initial
allocation of land, with further allocations contingent upon successful development).
• Monitoring and enforcement of adherence to environmental and water regulations.
• Encouragement of innovation (new crops, technology, and so on), but not initially on a large scale.
• Reducing red tape and creating an enabling environment for foreign investment and the development of
domestic industry.
INVESTORS
• Early engagement and consultation with surrounding communities, including previous and existing users of
the land.
• Transparency about the operation and ongoing dialogue with external stakeholders, including a formal
grievance procedure.
• Social development programs that reflect local communities’ development visions.
• A financially inclusive business model.
• Proper conduct of SEIAs and integration within business models.
• Setting of and adherence to realistic expectations about the pace of development of operations; use of land in
accordance with commitments.
• Phasing of the investment—applying for and successfully developing a parcel of land before seeking a larger
allocation.
• Fair and adequate remuneration, contractual conditions, and training for employees and outgrowers.
• Resolution of the business model prior to introducing outgrowers.
CIVIL SOCIETY
• Engagement with investors to help them forge partnerships with marginalized groups and ensure that
relevant stakeholders are included in decision-making processes.
• Assistance to local communities is well organized; communities understand their rights and how to exercise
them.
• Monitoring conflicts between investors and stakeholders and constructively drawing attention to issues.
Source: World Bank 2014g:xix.