Land Acquisition in Zambia

Due to the effects of food price crisis of 2007-2008, there was growing concern among the nations about the food security. There was surge in demand for food products by the food importing countries and subsequently food-producing countries imposed some restrictions on the food exports of food grains. In order to meet the growing demand of food and face increasing pressures on natural resources and water scarcity, the countries with land and water constraints needed an alternative means of producing food. Acquisition of farmland in the developing countries by these countries seeks to ensure food security. More on the land acquisition drive) These investments are not driven by the notion of comparative advantage in the large-scale production of indigenous crop (Mann and Smaller; 1; January 2010). The higher oil prices in 2007-2008 were another driver, which triggered interest of developed countries to acquire land for energy crops. Global financial crisis also encouraged investors to invest in foreign lands. The value of both food and fertile land was set to increase, making them an attractive new investment. Budgetary resources in developing countries may not be enough to meet infrastructural investment required to use the land to its potential. Some developing countries are seeking foreign investment to exploit their surplus land which is currently unused or under-utilized. This may lead to creation of jobs in rural areas and there may also be investment in health and education sector. Technology transfer by the investor countries may lead to increase in farm productivity. However these investments are not without trade offs. There are concerns about the impact on local poor people, who lack access to and control over land on which they depend. There can be local unemployment because of projects with imported workforce and high degree of mechanization. It will also lead to increase in regional land prices through soaring competition with regard to acreage and resources, and thus less access of land to poor people. Foreign investors can also emerge as strong competitors to local producers, especially small households. There is also risk of land conflicts in territories without well defined land titles (Bicker and Breuer; 37; April 2009). In some cases, the land leases are justified on the basis that the land being acquired by the foreign investor is â€Å"unproductive† or â€Å"underutilized. † However, there may be that the land is being used by poor for purposes such as grazing animals and gathering fuel wood or medicinal plants. These uses tend to be undervalued in official assessments because they are not marketed, but they can provide valuable livelihood sources to the poor. †(Von Braun and Meinzen-Dick; 2; April 2009) Large-scale land acquisitions may further jeopardize the welfare of the poor by depriving them of the safety-net function of this type. There can be misappropriation of arable land, displacement of indigenous people without compensation and migration to cities. So it is crucial to ensure that these land deals, and the environment within which they take place, are designed in a ways that will reduce the threats and facilitate the â€Å"win-win† situation for all the parties involved. According to Sustainable development innovation briefs (January 2010), â€Å"There are three sources of law governing foreign investment in agricultural land. 1) Domestic law 2) International investment contract 3) International investment agreements (IIAs) According to Ministry of Agriculture and Co-operatives of Republic of Zambia, Zambia has the best surface and underground water resources in Africa, with many rivers, lakes and dams. Sharing borders with eight countries, Zambia is centrally situated as a gateway to both southern and central Africa. This location is strategically advantageous by placing Zambia in a position to exploit the growing regional markets of SADC and COMESA, and be an active participant in regional and international agriculture trade initiatives (Source: The best of Zambia). Even with resource endowment for development of a wide range crops, livestock, and fish given the diversity of its agro-ecological zones, there was lack of cultivation because initially labour was forced toward mining sector. Urbanization kept the people to cities only. There was lack of infrastructure and utilities in rural areas which imposes a higher social cost in moving towards agriculture sector. The policies which took place were directed towards the development of mining sector, neglecting agriculture. It is generally seen that the developed countries are mainly with expanding industrial sector. These developed countries have initially accumulated the surplus in agriculture sector and then invested that surplus for expansion of industrial sector. So there is need to develop agriculture initially. Zambia is rich in mineral resources. To explore the potential there is need to develop agriculture sector. In Zambia, most farmers are insecure in the ownership of the land they work in. Less than 5% of them have leasehold title for their land. Most farmers pay rent to titleholders or have some kind of sharecropping arrangement with the title owners. Others depend on land owned either by the government or private owners, or on council or forestry land for their living. Those living in areas of customary land use do not need to be consulted before mining operations are allowed, and are usually not even aware of the possibility of placing land disputes before the Lands Tribunal (MacCuish and Frankel on behalf of Halifax Initiative Coalition). The efforts of the Agriculture Department to mark off ownership and use of agricultural areas were hindered by the lack of information about who owned the land. According to report of Global Times ( 9 September 2009), The Zambian government is to devise measures that would smoothen and quicken the acquisition of title deeds by prospective land owners, this was done in a bid to empower the less privileged people to own land in the country. The poor people can use land as collateral for them to access loans for land development. According to Ministry of Agriculture and Cooperatives of Zambia (26 January 2010), â€Å"Out of 75 million hectares land of Zambia, 43 million hectares (53%) is classified as medium to high potential for agriculture production. So far only 6. 02 (14%) of agricultural land is currently utilized. Irrigation total potential is 2. 7 million hectares out of which about 156000 hectares is under irrigation†. Framers are given a good price for grain but due to lack of market access the move is outweighed by poor infrastructure. Zambia endowed with rich natural resources needs investment by foreign investors to strengthen Zambia’s economic muscle (Zambia Mail dated May 11, 2010) Acquisition of land by the foreign investors is controversial and carriers many risks. Foreign investment can also be made through contract farming and out-growers scheme or joint venture or provision of infrastructure by the investor country. (David Hallam; 6; December, 2009) According to FAO (2001), â€Å"Contract farming can be defined as an agreement between farmers and processing/marketing firms for the production and supply of agriculture products under forward agreement, frequently at predetermined prices. The arrangements also invariably involve the purchaser in providing a degree of production support through, for example, the supply of inputs and provision of technical advice. The basis of such arrangements is a commitment on the part of the farmer to provide a specific commodity in quantities and at quality standards determined by the purchaser and a commitment on the part of the company to support the farmer’s production and to purchase the commodity†. In contract farming, farmers have to loose some freedom over the choice of crops they want to grow. The main commodities produced by small-scale farmers in Zambia under contract farming arrangements are cotton, tobacco, coffee, sugar, paprika and fresh vegetables. Of late honey, livestock (pigs and dairy cattle) and organic products are also coming up. Likilunga; 3; December 2005) Nevertheless, joint ventures between foreign investors and local producers or their associations as partners might offer more spillover benefits for the host country. Mixed models are also possible with investments in a large-scale core enterprise at the centre but also involving outgrowers under contracts to supplement core production. Some governments have been active in encouraging foreign involvement in such enterprises, as in the Tanzanian sugar sector or the so-called â€Å"Farm Blocks† in Zambia (David Hallam; 6; December, 2009). Zambian government has embarked on a programme to open up viable farm blocks in various parts of country to be involved in primary production and value addition. In Farm Block Development, Government has to provide basic infrastructure such as road, bridges and electrification. The design of Farm block is as follow. There is one core venture of 10,000 Hectares with commercial farms of 1000-5000 Hectares and small holdings of 30-300 Hectares. (Ministry of Agriculture and Cooperatives of Zambia; 26 January 2010). The type of business model to be adopted depends on certain characteristics of the economy i. e. olitical and social conditions, specific circumstances, the commodity concerned etc. Land acquisition and commercialization of agriculture is favorable, when economies of scale are important or there is need for investment in infrastructure. Contract farming or outgrower scheme is desirable when there in need to involve small landholders, but in contract farming care should be taken that contracts are properly implemented and there is no exploitation of smallholders by the big firms. The litigation process in Zambia takes too long and therefore enforceability through litigation process is costly and therefore not resorted to. There is weakness of enforceability when contract is breached. Donor funding forms a big part of Zambia’s spending plan (The Africa report; October 2009). China, India, South-Korea and oil-rich gulf countries with land and water constraints are turning to Africa as food security blanket. Saudi Arabia is interested in area of agriculture in Zambia. China is proposing to acquire 5 million acres of land to grow jatropha. Jatropha is a perennial plant, which can be used as biofuel. Plantation have yield after 2-3 years. In the short run there will be loss but in long run there will be gains. Income generated from plantation will vary from year to year. Growing Jatropha needs long term investment, which is vulnerable to risk due to uncertainty in price, yield, labour cost and rate of interest. Biofuel can provide hedge against climate change. Jatropha can also be used as a substitute for expensive kerosene, fertilizer and diesel. It needs less water so there is no need of major irrigation facilities. Jatropha can be planted during spare time in idle or fallow land, for which lot of officially unused land and degraded bush land seems available. Cultivation of Jatropha on abandoned agricultural, deforested or degraded land has the potential to improve the nutrient content of the soil and reduce erosion. Thus, this may improve the value of the land. However, the expanding use of land for the Jatropha production, even though it is marginal land, could mean that people living in the area would have to find other places for collecting firewood, herbs and fields for pasture land etc. So the selection of land for production should be done very carefully. Land grab in Africa mainly for biofuels has serious implications for food security. This however but it depend on the ownership of the land and how much space the production of Jatropha takes up. Biodiesel is mainly used by developed countries. If the price of food grains increases, then the people in developing country will suffer. Food security could even decrease where land and water resources are commandeered by the international investment project at the expense of domestic smallholders or where foreign investments push up land values. There can also be worst case scenario that there is production of 100 unit’s energy biodiesel from the inputs of 127 unit’s energy. The advertising that agro-fuels will assist farmers is based on the notion that the decisions about the use of the land remain decentralized within the country. Farmers should be given free will to decide how to plant Jatropha to produce oil for lamps or sop or bio-diesel for their vehicles. But the scenario set up by the large corporations is not what is desirable. There is usurpation of huge tracts of African land for overseas consumption and if they ruin the ecosystem, they conveniently make a move to other areas (MS Zambia Newsletter August 2009). Production of Jatropha is mainly done by the Out grower schemes. It is found that mostly there were no formal contracts for production. Even if contracts exist, there was no enforcement. Even farmers are not satisfied with Outgrowing system. Firms promise to endow the farmers with technology but fail to turn up again to provide information on technical issues. Production is targeted toward export and fails to benefit Zambian people. This can be confirmed by the fact that there exist no refineries in Zambia. There is need to set up a monitoring committee which can observe that all the contracts taking place are implemented. Strict actions should be taken if contracts are not enforced. The land grabbing has become very sophisticated and the poor are bound to suffer. There is need to lobby government for some policy changes. Civil societies should come up for the benefit of small holders and there is need to sensitize and assist the poor access and legally own land. Building the capacity of small scale farmers and their organizations to be part of the new agribusiness dispensation through direct investments as well as in partnership with foreign investors is desirable. There is need to empower the rural communities’ access and communally own land through ‘Community land titles’ to protect them in the future land concessions. (MS Zambia Newsletter August 2009). There is need by government to put more conducive environment by setting up â€Å"small claims courts’. There is need for further training of small-scale farmers so that they can develop skills in negotiating for good prices for their commodities. (Likilunga; 12; December 2005) â€Å"Extensive control of land by other countries can also raise questions of political interference and influence. (David Hallam; December 2009). Government maintains secrecy in the deals involving foreign investors. This lack in transparency undermines government accountability and gives an opportunity for corruption. Some recently reported land deals were associated with allegations that investors had paid cash or in-kind contributions to business or other activities run by high government officials or even the president in a personal capacity (e. g. Hervieu, 2009), even where private ownership is formally recognized most of the land is controlled by state (Cotula, Vermulen, Leonard and Keeley; 69; 2009). It has been seen that incomes are very unevenly distributed in Zambia. â€Å"Bottom 80% of populations in terms of earning are reported to have acquired only 31. 3% of total income, while the top 20% of population claimed 68. 87% of total income†. (Zambian Economist, 31 May, 2008). Non availability of written agreement on land acquisition has created disputes in some settlement area. A vigorous consultative process on land acquisition has to be adopted o minimize these land disputes. It is required to have all the deals in the written form. Appropriate Resettlement policy should be in place and adequate compensation should be give to the displaced farmers. Farmers generally practice subsistence farming and the land of cultivation is scattered. Most of the rural population keeps on migrating within the country. The liberalization of the agriculture sector and other reforms in Zambia, were accompanied by the decline in cultivated land and maize production. The proportion of households selling to the market and concentration of serves in central areas was also reduced. (Sangrario Floro and Schaefer: 84; fall 1998). With privatization, subsistence farmers have to move out. Before the reforms, Government bore all the transportation expenses both within and between regions and gave huge fertilizer subsidy so the prices of food grain as same for all producers. After reforms of 1990s, it was found that the cost of production has increased drastically because of high transportation costs and removal of subsidies for fertilizer, forcing farmers to sell at farm gate only. Thus the supply to market was nil. Evidence can be taken from the copper mines in Zambia, which was privatized in 1991. Large tract of land was required for development of new mines. There was often negotiation with local chiefs for land. Local people were persuaded on the trust that they will be relocated to other areas. Most often interest of local people was in variance with that of investors. Sometimes the local chiefs enter into secret deals with investors and accepted bribes as an inducement to persuade their subjects to acquiesce to investors’ demands. Impact of large scale mining on local community has been negative. There were social conflicts, destruction of livelihood, dislocation and displacement of local communities and environment degradation (Simutanya, ISS paper 165; July 2008). In case of foreign investments, it is noticed that Zambians were not given many job opportunities and people were placed from permanent to rolling contracts leading to casualization of labour. If agriculture land is given in foreign hands, it can lead to similar consequences. Foreign investors are driven by profit motive. They generally us capital intensive techniques driving labour out of work force. They also try to minimize wages to capture more profits in their hands. Profit, rather than having any impact on Zambia economy, is placed in banks or re-invested in companies outside the country. But it is also seen that with privatization, all workers came as a union, there was increase in the minimum wages. It can also be expected from agriculture sector. If all agricultural workers work in a huge tract of land then even they can coordinate themselves and demand for better wages and better working conditions. ). The economical benefits were also marginal, leading to large inequalities. In 2009, more than 80% of Zambia’s foreign exchange earnings and 15. 9% of GDP came from copper mining. (iol. co. a: Zambia copper mines: More local benefits urged; April 2010). In 2006, the contribution of mining to PAYE[1] was 54%, to VAT[2] was 45% and to employment generation was 58%. (Source: Zambia Development Authority). But Zambia fails to influence World market prices. (Source: www1. america. edu) Fluctuations in copper prices can impact the whole economy. So there is need to develop agriculture sector also as a safety net. But in which direction policy should be made is yet to be decided. The policy recommendations should be such that it should not affect the social and environmental climate of the country.