Iowa State criticized for involvement in foreign land investment

Borrowed from Bizroo.ro

The Oakland Institute released a report Tuesday condemning an international land development project involving Iowa State University. Several advocacy groups and media organizations, including Dan Rather Reports and the Sierra Club, have been critical of the potential project and have called on the companies to kill the land deal because they believe it will be detrimental to the people of the land.

Several Iowa-based companies are working on this controversial land investment deal in the sub-Sahara African country of Tanzania. AgriSol Energy LLC and Summit Group are attempting to work out a deal with the Tanzanian government that would allow them to lease land in the western part of the country for agricultural development.

Iowa State University conducted research in early 2011 for the Agrisol to aid in the land development. However, the project has continually been referred to as a “land grab,” by media outlets and advocacy organizations, or a scheme that aims to take land out from under Tanzanian people for large companies to develop.

The investment companies claim they aim to develop the fertile land in the rural areas of the western region of the country. However, NGOs and media outlets have alleged that refugees and peasant farmers are currently occupying the land AgriSol hopes to acquire.

AgriSol Energy Tanzania Limited, a joint venture between AgriSol Energy LLC and Serengeti Advisers Limited, claims the land investment is for the benefit of the local economy and aims to make Tanzania an agricultural powerhouse.

“Our objective is to create a large-scale agriculture zone dedicated to producing staple crops and livestock that will help stabilize local food supplies, create jobs and economic opportunity for local populations, spur investment in local infrastructure improvements and develop new, transparent markets for agricultural products,” according to the AgriSol website.

It also claims that profits gained from the farms will provide for co-op organizations and community investment

However, Anuradha Mittal, executive director of the Oakland Institute, an international advocacy organization, vehemently believes the investors’ intentions are not in the Tanzanians’ best interests.

“If you look at the business plan, even if they just planted with corn, at the prices of corn this year, they would be making a net profit of over $300 million a year,” she said. “And that they have all kind of strategic investor status that they are demanding, that means they don’t have to pay import duties, they don’t have to pay property taxes, they can repatriate their profits. So basically you leave nothing in the country.”

Mittal is not alone in her skepticism of the project. Several agricultural development experts are also not confident in its success.

“For one thing, there’s no question that this is a land grab,” said Dennis Keeney of the Institute for Agriculture and Trade Policy and former head of the ISU’s Leopold Center. “They’re getting huge tracts of land that will not be beneficial to the Tanzanian people.”

He said he was worried about the effect farming will have on the land as well, especially given the fact that row crops like corn and soybeans are extremely taxing on the soil.

“Odds are they’re going to have a hard time supporting an irrigated crop like corn or soybeans,” he said. “The secondary effects are always different than what you think they might be.”

ISU professor emeritus Neil Harl, who is an expert in agricultural law and has worked extensively in agricultural development projects, says one of his primary criticisms is that there is a lack of transparency within the business plan, and it is difficult to gauge the role of the companies.

“If [AgriSol] would please give a little more insight into the objective of the project, we would be more at ease, particularly in light of the involvement of an educational institution,” Harl said.

According to Harl, one of the most important questions is whether the project is designed for long term. Also, it is not clear what the design is, and he said he is unsure whether it aims to maximize corporate returns or to help Tanzanians.

Harl stated that in situations like this, the crops are typically for export and that capital is rarely funneled back into the country. Another criticism is that there is very little infrastructure in the country, especially with regards to irrigation, roads and railroads – all of which would have to be built by tax money, levying an even heavier burden on the Tanzanian people.

“This is a bit worrisome to these people. How is this project going to benefit them, if it does?” he said. “It isn’t creating a model a typical displaced person can use.”

AgriSol countered the argument, claiming it would work directly with the farmers, according to its website.

“Yes, small farmers will be consulted during the next phase of our project’s development. We have just completed our feasibility analysis and preliminary planning, which included a series of listening sessions and a workshop led by us, to solicit local input from political, university and technical leaders at the national, regional and district levels. Twelve key needs were identified by our fellow Tanzanians at that workshop and will be incorporated into our program.”

Accordingly, Mittal is critical of Iowa State’s role in the project.

“This is an investment where investors are going in with a state university very actively involved in it…and they’ll be displacing people who have been living there for 40 years,” she said. “There are a few things that stand out. One is the business plan. They’re paying almost nothing, it’s like 50 cents or whatever for the land.”

It its report on the project, the Oakland Institute claims that as many as 160,000 people are going to be relocated on behalf of the project.

“People are not happy about being moved. They are being told they will have $200 dollars when they move and that’s when they’ll become a citizen,” Mittal said. “Their citizenship is based on them agreeing to moving away and dismantling their own homes. So there’s no relocation plan other than something that sounds very harsh.”

Keeney, too, said he was worried about the fate of the potentially displaced people.

“They’re just going to have to go wherever they’re told. It’s not going to be a good outcome,” said Keeney. “It just seems to be the way people treat those they have power over.”

David Acker, ISU associate dean of global agricultural programs, sees things much differently. He was the prime contributor in Iowa State’s role on the project.

“I think “feasibility study” is not the correct word, I would describe it as pre-planning activities,” Acker said of the university’s involvement.

His previous work in Tanzania made him to want to work alongside the Tanzanian people, and therefore he spent time in the country doing research for the project. Acker conduced listening sessions with the Tanzanians and developed a list of 12 areas the Tanzanians thought an agribusiness should contribute to in order to be socially responsible.

The list included programs like community trust funds and AIDS education, which he presented to AgriSol. However, when it came to actual land studies, they had hired consultants outside of Iowa State, according to Acker.

“What I wanted to do was to figure out a way to bring some investment to Tanzania that would help Tanzanians,” Acker said. “Okay it’s going to make some money for investors, otherwise hey, that’s why they call them investors. They don’t want to go and give money away. They’re looking for a way to make money, but they want to file money back in.”

However, Acker is critical of the Oakland report because he claims the areas that contained refugees were not actually being considered by AgriSol.

“If these plots were ever under consideration, they are not now,” he said. “That’s an awful thing to even consider. If you did find a set of business people who were willing to have anything to do with kicking refugees off the land, who would want to have anything to do with them? Not me personally, not Iowa State.”

The acquisition of the land is also controversial due to Tanzanian laws on land ownership. Currently, Tanzanian law prohibits ownership of land within its borders by anyone who is not a Tanzanian citizen. AgriSol plans to avoid the issue by leasing the land from the government instead of purchasing it.

The final piece of the controversial puzzle is the conflict of interest presented by Bruce Rastetter’s role in the projects and his position as president pro tempore of the Iowa Board of Regents.

“At first I was very concerned because they were stepping in a role they couldn’t win,” said Keeney.  He claimed that ISU’s decision to step back from the project was a result of the potential fallout of the conflict of interest being exposed to the public.

“They were worried about the curtain coming up on this one and it not looking good,” he said. “Whether or not ISU would have done it whether he was involved or not is another question. We may never know the answer.”

Rastetter would not speak regarding the project, but in a disclosure statement issued by Rastetter on May 1, 2011, he admitted there was a conflict of interest.

“I am a shareholder in Agrisol Holdings, which is working with the College of Agriculture at Iowa Sate University on a Tanzania Ag Project. Previous to becoming a regent, Agrisol provided a scholarship commitment and travel expense reimbursement for travel to TZ. I additionally have 3 gifts to Iowa State University and the University of Iowa,” the statement said.

Given the conflict of interest, Iowa State chose to step away from direct involvement in the project, only offering to provide basic advisory information in the future.

“Iowa State had to look at its role and say ‘as much as we’d like to be involved with this, it would be a conflict of interest, or at least perceived as a conflict of interest if we were working on an investment that one of the regents was involved with,’ ” Acker said.

However, Iowa State will still be able to provide information on past projects to help advise investors, just as it would with other NGOs and other companies.

“We can’t be involved anymore and that’s a key point. What can we do to be to be helpful that doesn’t involve a direct involvement?” Acker said. “We would basically share any of the information we have on Uganda(a previous development project) and our approach there, hand over the blueprints, it’s public information.”

He is still confident in the project.

“Even if we think it’s a good project, there’s no way we could be involved directly in it,” Acker said. “I have my personal regrets because I feel like we could have done something good, but I think we did the right thing by stepping back.”

Acker also wanted to counter the argument that there were currently no plans, on behalf of Iowa State or AgriSol, to be involved in other areas. According to Acker, AgriSol was given list of 30 parcels of land in Tanzania, places with the refugees were on the list, but they discarded them because they learned the Tanzanian government had not given them accurate information after doing their own investigation.

“That’s probably the sorest point because that became the focus of Dan Rather. It’s a black eye for the AgriSol people,” Acker said. “They’re investors and they want to make money there’s no question about that, but to be considered to be kicking poor people off the land… You can dislike an investor, but I think they felt that that was kind of a cheap shot.”

Acker said he and the university would be very happy to work with any party as long as they have a commitment to sustainable livelihoods.

“All I can say from Iowa State’s point of view is that we have never considered working in those areas, and would never consider it,” he said. “Our commitment was to sustainable rural livelihoods of vulnerable farmers, vulnerable farm families. I didn’t see our role being involved in the profit aspect of it.”

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