It has urged for promoting contractual arrangements between TNCs and local farmers such as contract farming. It has also called for appropriate domestic legal framework and for promoting investment contracts between the host government and foreign investors. Investments in local infrastructure such as trading houses and logistical infrastructure should be undertaken. Integrated policy approach including policies related to infrastructure, competition, trade and R&D should be designed.

Supporting the on-going land-grab movement, it has suggested development of a set of internationally agreed core principles for largescale land acquisitions by foreign investors for agricultural production. UNCTAD feels that such would help to address the problem of crowding out of local farmers, protection of indigenous people and environmental degradation.

To encourage FDI inflows in developing countries, the developed countries should reduce their import tariffs, non-tariff barriers and farm subsidies.

The UNCTAD's World Investment Report (WIR)-2009 has located green pastures for global investors in agriculture and food sectors in developing countries with a view to arrest the declining trend in global foreign direct investment (FDI) flows. This is the first time that UNCTAD in its WIR has particularly mentioned agriculture sector.

Global financial and economic crisis has severely impacted global FDI flows worldwide. It has affected all modes and components of FDI. The report estimates global FDI inflows fell 14% from $1.97 trillion in 2007 to $ 1.69 trillion in 2008 and is expected to fall to below $1.2 trillion in 2009. “Recovery is expected to be slow in 2010, reaching no more than $1.4 trillion, but gathering momentum in 2011 to approach $1.8 trillion,” the report says.

UNCTAD's prescription in its WIR-2009 is, however, qualitatively different from that in its recent Trade and Development Report-2009 where it has called for a complete overhaul of the global financial and economic system and has blamed the predominance of excessively deregulated purely financial activities over real productive activities as responsible for the current global financial and economic crisis. UNCTAD's call for an aggressive push for promoting FDI inflows in in agriculture and food sector in its WIR-2009, following the same existing pattern, therefore, amounts to double speak.

According to UNCTAD report in 2008, FDI inflows to developed countries fell by 29% to be at $962 billion, while that in Africa, Latin American countries, South Asia, East Asia, Southeast Asia, West Asia and least developed countries reached record peaks. In Africa it increased by 27% to be at $88 billion, that in Latin American countries increased by 13% to be at $144 billion, that in South Asia, East Asia and Southeast Asia increased by 17% to be at $298 billion, that in West Asia increased by 16% to be at $90 billion and that in least developed countries increased to a record peak of $33 billion.

On an average in 2007-08, developed economies garnered 63% FDI inflows, while developing economies garnered 31% FDI inflows and southeast Europe and CIS countries had only 6% FDI inflows. The US remained the largest recipient country, followed by France, China, UK and Russia. India ranks 13 in the list. The entry of Russia and the return of China to the list of top five recipients are symbolic of the changing FDI landscape of 2008.

However preliminary data for more than 90 countries reveal that FDI inflows plummeted in all regions in early 2009. Africa, which experienced a six-year FDI boom and reached a peak of $88 billion in 2008, has witnessed a fall in FDI inflows by about 67% in the first quarter of 2009. In the first quarter of 2009 FDI inflows to southeast Europe and CIS countries fell by 46%. This follows a 26% rise in FDI inflows in 2008 for a total for the year of a record of $114 billion. FDI trends diverge widely in the Western Hemisphere - up in South America and down in Central America and the Caribbean.

Compared with the same quarter of 2008, FDI inflows fell by 46% in developed countries in the first quarter of 2009, that in developing countries fell by 39% and by 46% in transition economies.

The UNCTAD report pins hope on reversal of FDI flows in South Asia, East Asia and Southeast Asia. FDI outflows by West Asian Sovereign Wealth Funds (SWFs) may gain importance in 2009, while inward investment to the region may fall. Lower FDI flows to and from developed countries are reshaping global FDI inflow pattern. In this context, UNCTAD report hopes South-South FDI inflows, particularly in food and agriculture sectors, which is now on the rise, would give a new dimension in the future.

According to WIR-2009 largest TNCs are adversely affected by the global financial and economic crisis. Cross-border mergers and acquisitions have declined sharply. FDI by SWFs rose by 16% in 2008 to $20 billion. The value of their cross-border merger and acquisitions - the predominant form of FDIs by SWFs - shot up 44% to $14.8 billion. Cross-border merger and acquisition data in the first half of 2009, however, suggests that SWFs are also being strongly impacted by the crisis as exports from their home countries are declining.

The UNCTAD report, advocating the case for TNCs involvement in agriculture, cleverly markets this concept by top 25 TNCs in agribusiness in 2007 were from the developing countries. It says that in some developing countries, share of contract farming in output is high - 75% of poultry production and 35% of soybean production in Brazil, 90% of cotton and fresh milk production, 50% of tea production and 40% of rice production in Vietnam and 60% of tea and sugar production in Kenya.#