Food Security, WTO and FDI in agriculture

Given that the fundamentals of WTO rules regulating agriculture had been designed for a period when the prices of agricultural commodities were relatively low, the question of whether or to what extent the multilateral trading system could contribute to food security in radically different and volatile market circumstances is contentious. The two most relevant WTO disciplines in the context of a food crisis, namely those relating to food aid (when prices are low) and to export restrictions (imposed by many countries during the crisis) are arguably weak. Hence against the background of the current Doha negotiations, this project will assess the regulatory challenges facing the world trading system in relation to global food security.

On the other hand, one of the most striking policy responses to the food crisis came in the form of a new type of foreign direct investment (FDI) in agriculture. Some capital-endowed, food- and feed-importing countries, such as South Korea, China and Saudi Arabia are now investing in large FDI projects in low-income countries such as Madagascar, Mozambique and Ethiopia. The potential implications of these projects for food security have been controversial in public and policy debates. Some analysts and activists argue that such FDI projects are emerging as a new tool predominantly serving the interest of the investor which may come at the expense of food security of the host country. This form of FDI has been termed “land grabbing”. On the other hand, some argue that there is an urgent need for investment in agriculture in developing countries, especially in Africa. If FDI takes place within a sustainable, social and environmental framework, it could bring enormous benefits to the host country. In this context, through empirical case studies in selected countries in Sub-Saharan Africa, this project will also examine the social, economic and environmental aspects of new forms of FDI in agriculture.