Alternatives to large-scale land acquisitions
The IAWG has identified and carried out research on alternatives to large-scale land acquisitions, including inclusive business models. These may be more likely to generate sustainable benefits for investors and local communities than large-scale land acquisitions. Inclusive business models generally require a long-term horizon and “patient capital”.
In this model, investors source produce from farmers. Contract farming can have numerous benefits for small-scale farmers, such as increased access to markets and continuous control over their land. However, contracts have to be crafted carefully to guarantee that both the interests of investors and small-scale farmers are upheld. UNIDROIT, FAO and IFAD have jointly developed a Legal Guide on Contract Farming that provides useful guidance in this regard.
In this model, the investor usually owns and manages an estate plantation, which is often close to the processing plant. The investor sources parts of the produce from small-scale farmers.
A World Bank study suggests that nucleus-estate schemes have a higher likelihood of success than large-scale plantations or smallholder stand-alone schemes.
Working with farmer groups
In either contract farming or nucleus-estate schemes, working with farmer groups can have numerous benefits.
IFAD and Technoserve highlight that such arrangements can reduce the cost of delivering services such as extension, inputs, farmer management and transport.