A recently published Oxfam briefing paper, Smallholders at Risk, challenges a number of mainstream assumptions about the role of private-sector investment in developing country agriculture. The conventional wisdom from the World Bank and other powerful actors is that private investment in the sector will benefit smallholders and enhance food security.
Oxfam’s research shows that, even in cases where private investors claim to be investing “responsibly”, the outcomes can nonetheless be harmful to food security and smallholder livelihoods. This happened in the cases the organization examined in Paraguay, Guatemala, and Colombia involving large-scale private investments in soy, oil palm, and maize that displaced farmers, degraded the environment, and contributed to hunger.
The general response to this kind of outcome has been to promote voluntary initiatives that encourage more responsible investment. A spate of recent initiatives explicitly seek to promote responsibility among investors in the sector: the responsible agricultural investment (RAI) principles currently being developed by the Committee on World Food Security, the Principles for Responsible Agricultural Investment (PRAI) promoted by the World Bank and UNCTAD, as well as a range of other initiatives including commodity specific certification schemes.
These efforts aim to ensure that private sector investment avoids the kind of pitfalls that Oxfam’s research highlights. But voluntary initiatives alone are unlikely to make much of a difference, no matter how strongly they are worded.