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Guidelines Could Help Improve Farmland Deals

A draft of the first-ever international code of conduct for farmland deals should be ready by the end of the year, the head of the United Nations’ International Fund for Agricultural Development said.

The draft document will lead to more discussion about how to ensure deals benefit host nations, as well as those seeking to buy or lease cropland, to ensure food security, Kanayo Nwanze, president of IFAD, told Reuters.

“We have the Kimberley framework for mining, so why don’t we put together a framework in the agricultural sector?” Nwanze said, referring to the Kimberley Process used to try to prevent trade in “blood diamonds” that finance civil conflicts.

IFAD, which funds agricultural development in poor countries, is working on the guidelines with the UN’s Food and Agriculture Organization, the UN Conference on Trade and Development, and the World Bank, Nwanze said.

Gulf states, South Korea and other countries caught short last year when food prices spiked to record levels have since sought to secure farmland arrangements in Africa and other regions – deals that some have characterized as “land grabs.”

Rich countries have long been involved in agriculture in Africa, Nwanze said, citing plantations for cocoa in Ivory Coast, rubber in Liberia, and tea in East Africa.

“What we are talking about is not new. It has always existed,” said Nwanze.

The colonial-era land deals had benefits for local economies, he said. “It also brought infrastructure, roads, schools, clinics to those communities. So what are we doing today that is different from what we did then?”

Done properly, farmland deals can bring new technology to African nations and create opportunities for local farmers to grow and sell crops, he said.

“There are potential benefits. And there are countries that will lose in the process, because of a shift in the types of trade,” he said.

Last year’s food price crisis, which sparked riots and hoarding, helped galvanize political will to invest in smallholder farms to try to combat the root causes of hunger and poverty, Nwanze said.

“People … now have clear linkages between food security and national security,” said Nwanze, who was slated to meet with the interagency team working on the Obama administration’s global food security initiative while in Washington.

Rich countries have pledged more than $22 billion to help small farmers in poor countries grow more food.

“We have quite a few countries that have confirmed their commitments, so we’ll see,” Nwanze said.

IFAD has received a 67 per cent increase in support from its donors, giving it $3 billion for funding its work for 2010 through 2012.

It will take a sustained commitment by donors and by leaders of African nations to boost food security in the continent, he said, noting it took decades for China and India to raise agricultural production.

“I would hope by 2020, the Rwandas and the Ghanas and the Tanzanias will still be the countries we talk about,” he said, referring to African nations taking steps to improve agriculture.

Cargill Seeks Expansion Into India

Cargill, the U. S.-based agribusiness and trading company, plans to expand its operations in India, a top company official said Oct. 27.

But Senior Vice-President Paul D. Conway told Reuters he saw fragmented local markets and policy uncertainty as risks.

“The biggest challenge that we face in India has been the difficulty of doing trade between the states,” he said in an interview.

In India Cargill’s main business interest lies in cooking oils and sugar – net imports for India.

He said it was difficult to select locations for investments due to the lack of uniformity between local trade policies.

He said investors in the commodities sector would prefer a low tariff regime in India to bring in goods and services.

Conway added Indian exporters can better tap the overseas market potentials by reorienting focus to consumer preferences, besides meeting the global quality norms.

“Some of the retails, whether in Western Europe or North America, will only stock produce that conforms to a certain specifications,” he said.

Conway said if India wants to supply global markets it needed to harmonize its food standards with global norms.

He said the policy of banning grain exports as a tool to ensure food security by emerging economies served to discourage investment.

Countries like Vietnam and Ukraine have imposed curbs on grain exports as part of a strategy to ensure local supplies.

“Such a step does not help but destabilizes medium-to long-term food policies,” he said.

India also imposed curbs on grain exports over the last two years to check rising trend in food prices.

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