International investment in developing country agriculture—issues and challenges

The recent surge of international investment in developing country agriculture has generated considerable debate. Some of the largest transactions involve investors from the Gulf States purchasing or leasing land in poor, food-insecure African countries, to grow food that will be exported back to the investing country. Unlike the investments of the past, these are resource-seeking rather than market-seeking, and involve acquisition of land and actual production rather than looser forms of joint venture. Investing countries appear to be driven by food security concerns, including price volatility and market risks faced by large food importers. Host countries have been equally keen to attract such investment, for various potential benefits—but there are concerns about whether these benefits will be realized, and about lack of community involvement in the decision process. This paper discusses the nature and driving forces behind these investments, and the economic, political, institutional, legal and ethical issues they raise for host countries, investors and the international community. The paper suggests that alternative approaches might be as effective, and more acceptable, than long-term leases or outright purchases. Further, an international initiative (voluntary code of conduct, guidelines, statement of principles etc.) could highlight host country interests and also guide investors toward socially responsible investment.