Roundtable on Responsible Agricultural Investment

Jose W. Fernandez
Assistant Secretary, Bureau of Economic, Energy and Business Affairs
Washington, DC
April 25, 2010

Opening Remarks

Good afternoon and welcome. I’d like to thank all of you for your commitment and the work of your organizations in addressing the issues up for discussion today. But I’d like to begin with a special acknowledgment of the MCC Director, Daniel Yohannes, for his welcome and hospitality. I’d also like to express appreciation to Ambassador Cousin, here from Rome, who first proposed this event and was the driving force behind it.

Among our participants, we are honored to have Florence Chenoweth, Minister of Agriculture for Liberia; Lual Deng, State Minister of Finance and National Economy from Sudan; and Stephen Wasira, Minister for Agriculture, Food Security and Cooperatives of Tanzania. We are pleased That Jacques Diouf, Director General of the Food and Agriculture Organization (FAO), is able to be here today. And, I would also like to recognize Ambassador Tony Hall from the U.S. Alliance To End Hunger. We especially look forward to your insights, and want to recognize your leadership on key pieces of the puzzle in the global effort to advance food security.

I would also like to express appreciation for our co-hosts, the Government of Japan and the African Union Commission. I want also to acknowledge the substantive work that has been done by the FAO, IFAD, the UNCTAD, and the World Bank Group since the September meeting. The work ahead of us depends on contributions from individual governments, international organizations, civil society and other non-governmental organizations, and other partners around the globe. Your representation and participation here are essential to our work on this important issue.

This event brings perspectives on best practices and lessons learned from not only recipient and investor countries, but also from civil society representatives and the private sector. We want to emphasize the critical importance of hearing today from countries that are destinations for foreign investment in agriculture, to share their experiences on this important issue. We want to encourage more information sharing and a candid exchange of views that will feed into the broader discussions that are taking place in a variety of fora around the world.

Now you’ve all heard the numbers. According to the United Nations, global demand for food, feed, and fiber will likely double by 2050 as the world’s population approaches 9.1 billion. The Food and Agriculture Organization (FAO) estimates that total agricultural investment must increase by 50 percent to meet anticipated global demand, requiring net agricultural investment of $83 billion annually in developing countries. Most of this capital will need to be mobilized from private sources, domestic and foreign, and given the competition for private capital, these investments are most likely to flow to countries with good governance and welcoming investment climates. But equally important is that investment be transparent and responsible.

What do we mean when we say “responsible agricultural investment?” Essentially, we are talking about investments that are done transparently and take into account the property rights of the poor, smallholder farmers and customary users of state-owned land, and that also give full consideration of the impacts to communities and to the environment.

The fundamental features of a sound agro-investment climate – clear land and resource rights and title, openness to foreign investment, national treatment, transparency, and so on – are largely the same for the agricultural sector as for other economic sectors. We believe any effort to promote best practices in investment should acknowledge and strengthen recipient countries’ technical capacity for analysis and evaluation of the costs and benefits of potential investments, and their citizens’ capacities for negotiating equitable deals.

I hope that we are able to discuss in detail today what tools and information are available for all stakeholders to create positive outcomes for both investors and recipients, consistent with the principle of support for country-led food security planning.

And now, I would like to turn the floor over to my colleague from Japan, Mr. Kenji Hiramatsu, followed by Ambassador Ali of the African Union.

Closing Remarks

I would like to express my appreciation for all of you participating in today’s event. We wanted to provide a forum that would allow governments, the private sector, civil society, and international organizations to come together to discuss responsible agricultural investment. I believe we achieved that.

One of the most important aspects of today’s discussion is that we all agree that we need to better understand the facts surrounding the recent surge in large-scale international agricultural investments. We need to hear the results of research and case studies done by FAO, UNCTAD, IFAD and the World Bank, so we can respond as governments and organizations based on solid information and not hearsay. I think we all agree that their insights and expertise will be extremely important as all the parties – governments, the private sector, and civil society – consider how best to move forward. I believe that this important discussion has helped focus the issue and will guide us as additional consultations are undertaken by the four organizations.

The importance of investment cannot be underestimated. And yes, while we need to acknowledge and respect the market principles that govern investment decisions, we also need to encourage investors and recipients to put in place policies that are transparent, equitable, pro-growth, and environmentally sound.

The next step should be to ensure that this broad, consultative process continues. As we have seen today, the dialogue is enriched by hearing from a variety of voices. There is considerable work that needs to be done in developing how best to proceed on these issues and also in looking at what governments in developing countries need, to be able to analyze, evaluate, and negotiate large-scale investments in agriculture. These are issues USAID, the Millennium Challenge Corporation, and others in the U.S. Government are already involved in with many of your governments and organizations. And as some of the participants noted, the issues are not just with foreign investors: domestic investors may have the predominant role in investing in a country’s agricultural sector.

We also need to raise awareness of and a commitment to best practices. It well may be that voluntary investment principles can help host communities and countries structure land deals and other types of investments to welcome that investment, while protecting the existing rights holders. We agree that more needs to be done to help define those rights, especially in developing states.

In closing, I would also like to extend my best wishes for the work many of you will undertake in the World Bank’s conference starting tomorrow on land policy and administration. Enjoy your stay in Washington. I would also like to note the work that will go on over the next 2 days in UNCTAD’s Investment Commission in Geneva. Please continue the dialogue and your good work.