Foreign Direct Investment in Agriculture: Land Grab or Food Security Improvement?

“Large-scale acquisition of land by foreign investors” is the correct term for a process where the verdict of guilt is often quicker than the examination. But is there something really new about land grab except in its extent? In comparison with colonial and post-colonial plantation operations, should foreign investors today behave differently? We generally accept coffee and banana exports as pro-growth and pro-development, just as for cars, beef and insurance. What then is wrong with an investment contract allowing the holder to buy a farm and to export wheat to Saudi Arabia, or soybeans and maize as cattle feed to Korea, or to plant and process sugar cane and palm oil into ethanol for Europe and China? Assuming their land acquisition was legal, should foreigners respect more than investment contracts and national legislation? And why would they not take advantage of the legal protection offered by international investment law and treaties, not to speak of concessional finance, infrastructure and technical cooperation by a development bank, or the tax holidays offered by the host state? Remember Milton Friedman’s often-quoted quip: “The business of business is business!” And why would the governments signing those contracts not know whether and which foreign investment projects are best for their country, and how to attract them? This chapter tries to show that land grab, where it occurs, is not only yet another symptom of regulatory failures at the national level and a lack of corporate social responsibility by certain private actors. National governance is clearly the most important factor. Nonetheless, I submit that there is an international dimension involving investor home states in various capacities. The implication is that land grab is not solely a question whether a particular investment contract is legal or not. This chapter deals with legal issues which seem to have largely escaped the attention of both human rights lawyers and, especially, of investment lawyers. I address this fragmentation between different legal disciplines, rules, and policies, by asking two basic questions: (i) Do governments and parliaments in investor home countries have any responsibility in respect of the behaviour of their investors abroad? (ii) What should they and international regulators do, if anything?