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By GRAIN On 21 February 2010
Al Amoudi, Ethiopia, Saudi Star
Saudi Star to Swallow 100,000sqm of Bishoftu Land and a Japanese firm is to build its 350m Br rice processing plant.
 Sheik Al-Amoudi
Saudi Star Agricultural Development Plc, the newest food growing company formed by Mohammed Hussein Ali Al-Amoudi, is to acquire 100,000sqm of land in Bishoftu (Debre Zeit) this week, its senior official disclosed.
Saudi Star is going to acquire the land for with a 60-year lease to establish a rice polishing and packaging plant in Bishoftu.
“We have not settled the price yet,” Haile Assegide, executive director of major investment projects at MIDROC Ethiopia Plc told Fortune. The rice processing plant is where it will polish or whiten the brown rice which is produced in Gambella. There will be another plant in Gambella where it will carry out the removal of husks.
Saudi Star, registered at the Ethiopian Investment Agency in August 2009 with a capital of 500 million Br, has received 10,000ht of land in Alwero, in the Gambella Regional State to grow rice using the Alwero Dam.
It also plans to acquire 250,000ht in the Gambella Regional State and various regional states to grow maize, teff, sugarcane and oilseeds.
The company contracted Satake International of Japan to set up the processing plant for 350 million Br. The civil and electromechanical work is expected to be completed in October 2010, according to the Executive Director.
“We hope to work and deliver in time,” Shoichi Tanaka, president of Satake Corporation, said after signing the agreement last Monday, February 15, 2010.
A German company and another Japanese company that had placed competitive bids were dropped in favour of Satake. The German company lost because the production capacity of the plant it proposed was only 20,000tn, while the other Japanese company lost because of its relatively narrower experience compared to Satake, which has been 100 years in the business.
Satake’s technology will allow Saudi Star to process 100,000tn of rice per annum. Within five to seven years, Saudi Star plans to increase this to one million tonnes annually if it gets all the land it intends to.
The rice will be packed in 25kg, 50kg and one tonne packages and the material will be provided by Unlimited Packaging Plc, MIDROC’s sister organisation found in Bishoftu.
Saudi Star recently paid 80 million dollars to Ries Engineering, sole agent of Near East Financial Corporation for the delivery of Caterpillar agricultural machinery and equipment.
By HILINA ALEMU
FORTUNE STAFF WRITER
Sheik Al-Amoudi
Addis Fortune | 21 February 2010
A Japanese firm is to build its 350m Br rice processing plant
Saudi Star Agricultural Development Plc, the newest food growing company formed by Mohammed Hussein Ali Al-Amoudi, is to acquire 100,000sqm of land in Bishoftu (Debre Zeit) this week, its senior official disclosed.
Saudi Star is going to acquire the land for with a 60-year lease to establish a rice polishing and packaging plant in Bishoftu.
“We have not settled the price yet,” Haile Assegide, executive director of major investment projects at MIDROC Ethiopia Plc told Fortune. The rice processing plant is where it will polish or whiten the brown rice which is produced in Gambella. There will be another plant in Gambella where it will carry out the removal of husks.
Saudi Star, registered at the Ethiopian Investment Agency in August 2009 with a capital of 500 million Br, has received 10,000ht of land in Alwero, in the Gambella Regional State to grow rice using the Alwero Dam.
It also plans to acquire 250,000ht in the Gambella Regional State and various regional states to grow maize, teff, sugarcane and oilseeds.
The company contracted Satake International of Japan to set up the processing plant for 350 million Br. The civil and electromechanical work is expected to be completed in October 2010, according to the Executive Director.
“We hope to work and deliver in time,” Shoichi Tanaka, president of Satake Corporation, said after signing the agreement last Monday, February 15, 2010.
A German company and another Japanese company that had placed competitive bids were dropped in favour of Satake. The German company lost because the production capacity of the plant it proposed was only 20,000tn, while the other Japanese company lost because of its relatively narrower experience compared to Satake, which has been 100 years in the business.
Satake’s technology will allow Saudi Star to process 100,000tn of rice per annum. Within five to seven years, Saudi Star plans to increase this to one million tonnes annually if it gets all the land it intends to.
The rice will be packed in 25kg, 50kg and one tonne packages and the material will be provided by Unlimited Packaging Plc, MIDROC’s sister organisation found in Bishoftu.
Saudi Star recently paid 80 million dollars to Ries Engineering, sole agent of Near East Financial Corporation for the delivery of Caterpillar agricultural machinery and equipment.
By HILINA ALEMU
FORTUNE STAFF WRITER
http://farmlandgrab.org/11308/print/
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INTERVIEW-Egypt's Citadel food unit eyes Ethiopian firm
Mon Feb 22, 2010
* Citadel unit Gozour eyes acquisition in Ethiopia
* Gozour has Sudan investment, eyes Kenya, Uganda
* Seeks more integration from farmer to shop shelf
By Humeyra Pamuk
CAIRO, Feb 22 (Reuters) - Egyptian private equity firm Citadel Capital's CICA.CA food unit is in advanced talks to buy an Ethiopian food firm in its bid to boost self-sufficiency in raw materials, the unit's chief executive told Reuters. Gozour's Mohamed El Rashidi did not name the Ethiopian company, but said talks could be concluded in four months. "It is a perfect fit for us," he said late on Sunday, referring to the Ethiopan market. "There are 80.7 million people in Ethiopia, with a heavy consuming base and 60 percent of the country's GDP (gross domestic product) is from food."
The move would follow the acquisition in November of a majority stake in a Sudanese biscuit and sweet maker by Gozour, the consumer foods business of Citadel, which manages $8.3 billion in investments. [ID:nGEE5AO0GQ]
"This company (in Ethiopia) operates in a market that hosts one of our main raw materials," Rashidi said.
The purchase would mean Gozour could start "contract farming" in Ethiopia, which Rashidi said involved financing farmers and in return reaching agreement to use the produce in factories in Egypt and eventually plants in Ethiopia.
Gozour has three primary lines of business: agri-foods and dairy, fast-moving consumer goods and intermediate industries such as flour milling and production of skimmed milk powder.
INTEGRATION
In addition to Sudan and Ethiopia, Rashidi said the firm's other areas of interest were Uganda and Kenya. "In these countries we take a platform because they're strategic for us in terms of raw materials," he said.
He said the firm would have to continue relying on some imports to supply its Egyptian plants but said it aimed to raise the number of its food lines integrated from farmer to shop shelf to protect it from global commodity price fluctuations.
"We will have a level of 50-60 percent self-sufficiency at the end of 2012 that eliminates a large part of the volatility of raw material prices," he said, adding Gozour now sourced about 28-30 percent of raw materials from its own production.
The global downturn has driven food prices off all-time highs hit in 2008 but they are still close to the peaks.
The Food and Agriculture (FAO) Price Index, which measures monthly price changes for a food basket composed of cereals, oilseeds, dairy, meat and sugar, was at a 15-month high in January and December but 20 percent below the June 2008 peak. [ID:nLDE6112B9] The company wanted to double its sales this year, after 30 percent growth in sales volumes last year, and boost profitability, Rashidi said without giving overall figures.
He said the food industry in Egypt needed better regulation to improve food safety in the most populous Arab country.
"The milkman passes by, brings the milk but you don't know where it's coming from," he said, adding branded players accounted for only 15-35 percent of Egypt's food industry. (Reporting by Humeyra Pamuk, Editing by Sharon Lindores)
© Thomson Reuters 2010 All rights reserved
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Karuturi arm in PE deal talks to raise $100m
By GRAIN On 9 February 2010 @ In Ethiopia, India, Karuturi Global Ltd, Standard Chartered |
VC Circle | 9 February 2010
Photo: Namas Bhojani for Forbes
BOBY KURIAN & MADHAV A CHANCHANI
Stanchart PE and an arm of Reliance Capital are among the players believed to be in the fray.
Karuturi Overseas Ltd, a subsidiary of world’s largest rose exporter Karuturi Global, is in advanced level of talks with private equity players to raise up to $100 million to fuel its expansion plans in Africa.
Banking sources told VCCircle that Standard Chartered Bank’s Africa private equity arm and a unit of Reliance Capital are in talks to invest in the Dubai-based Karuturi Overseas. Several other PE players and hedge funds are also in the reckoning to buy stake in the subsidiary.
Karuturi Overseas is the holding company for the Karuturi Group’s Africa operations, which has interests in floriculture and agriculture. The fund-raising talks were initiated back in 2008. The deal is taking time to close as there are issues regarding pricing and
structuring as Karuturi Overseas is a subsidiary of a listed firm, said one source familiar with the transaction.
The Reliance Capital arm may look at co-investing in Karuturi in order to limit its exposure. Karuturi is betting on the growth story that is developing in Africa, where many investors and corporates are buying and leasing land at relatively cheaper rates for crop production.
“While it is true we are raising capital, we are not in discussions with any PE player at present for a specific dilution in our Dubai subsidiary at the moment,” said Sai Ramakrishna Karuturi, managing director of Karuturi Global, in an email response.
Karuturi has acquired vast tracts of land in Ethiopia for its foray into agriculture, which it believes will be its next driver of growth.
The Bangalore-based company had earmarked a capital expenditure of $250-$300 million to fund its land acquisition in Ethiopia. While debt has been raised from the banks, the company now needs an equity infusion to meet the capex requirement. Karuturi bought around 311,700 hectares of land on lease in Ethiopia to start agricultural cultivation in a phased manner. It plans to grow crops like cereals, sugar and palm, which could be exported.
Karuturi, whose rose export accounts for most of its revenues right now, annually produces around 555 million stems of cut roses which are exported to markets like the US, Europe, Japan, Russia and Australia. It has an area of 239 hectares in countries like Kenya, Ethiopia and India under green house for this. The company became the world’s largest rose exporter after it acquired Ethiopia’s Sher Agencies for $68 million back in 2007. Karuturi Global reported revenues of Rs 445 crore and a net profit of Rs 117 crore for FY09.
http://farmlandgrab.org/11016/print/
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The new breadbasket of the world?
By GRAIN On 30 January 2010 - Ethiopia
Women water palm seedlings at the 300,000-hectare farm leased by Karuturi Global in Gambella, western Ethiopia.Women water palm seedlings at the 300,000-hectare farm leased by Karuturi Global in Gambella, western Ethiopia. Photograph: Mary Fitzgerald
The Irish Times | Saturday, January 30, 2010
As swathes of their country’s land is leased, cleared and prepared for food production by foreign companies, Ethiopians are divided over whether this constitutes ‘agro-colonialism’ or much-needed development, writes MARY FITZGERALD Foreign Affairs Correspondent
‘WHY ATTRACTIVE?” reads an Ethiopian government poster pinned to a wall at the rambling offices of the Gambella regional investment agency. Next to photographs of lush fields and a map showing huge tracts of land earmarked for investment comes the answer: “Vast, fertile, irrigable land at low rent. Abundant water resources. Cheap labour. Warmest hospitality.”
Gambella, a remote and sparsely populated region located where Ethiopia’s western tip borders southern Sudan, is in many ways an unlikely choice for investors. Its searingly hot, malarial lowlands, coupled with ethnic tensions that have at times erupted into violence, have given the region a somewhat forbidding reputation in Ethiopia.
But in the past year Gambella has become one of Africa’s biggest testing grounds for the growing phenomenon of land leasing, whereby investment firms and rich countries lacking sufficient arable land snap up huge swathes elsewhere to produce staple food crops. The trend has prompted accusations of “agro- colonialism” and “land-grabbing”, but some argue that it could hold the key to the continent not just feeding itself but also the world.
This new scramble for land is rooted in fears, amplified following the 2007-2008 global food crisis, that world food supplies may run dangerously low in the future. The UN’s Food and Agriculture Organisation (FAO) estimates that in order to feed the world’s projected population in 2050 – some nine billion people, up from six billion today – agricultural production must increase by a yearly average of at least 1 per cent.
“Humanity has never come to the brink of such crisis before . . . if there is a potential catastrophe for mankind, it is related to food,” says Sai Ramakrishna Karuturi, managing director of Karuturi Global, an Indian company which is the world’s largest producer of roses. Such apocalyptic calculations brought Karuturi, who runs flower farms in Kenya and Ethiopia, to Gambella as a prospective investor more than two years ago. He made an agreement with the regional government to lease 300,000 hectares – an area larger than Luxembourg – for 50 years at an annual rate of 20 birr (€1.12) per hectare to farm crops including maize, wheat, and rice. Karuturi predicts that, when operating at full capacity, the farm will employ 25,000 people and produce three million tonnes of cereal per year.
“We are on a mission to make a difference . . . when we produce three million tonnes it will be nearly half a per cent of the world’s cereal production,” he says. “How many people will have the opportunity to do something which meaningfully impacts on humanity like that?”
So far, almost 65,000 hectares of the land has been cleared of the forest that carpets much of the Gambella region. Bright-green John Deere tractors imported from India bounce over stubbly rows of turned soil (“The most potent I’ve ever seen – anything can grow here,” says one supervisor), while women from the nearby settlement of Elliah tend more than 100,000 palm seedlings at a nursery on the banks of the River Baro. Land is also being cultivated on a 10,900-hectare farm the company has leased near the central Ethiopian town of Bako.Investors such as Karuturi are promising to build infrastructure, including schools and health centres, where little or none exists, in addition to creating jobs and producing food for both the Ethiopian and wider African market as well as those overseas.
Haile Assegide is a former Ethiopian government minister who now serves as chief executive of Saudi Star Agricultural Development Plc, a company which was given 10,000 hectares in Gambella to farm rice for 60 years rent-free. He estimates that 45 per cent of the farm’s yield will be sold on the Ethiopian market. Saudi Star, which is owned by Sheikh Mohammed Al Amoudi, a Saudi Arabia-based billionaire who was born in Ethiopia and maintains close ties with the country’s ruling party, aims to increase its agricultural holdings in Gambella to 250,000 hectares. It has similar plans for the expansion of land it has leased in another part of Ethiopia. Assegide argues that the massive investment will result in employment for locals, and corporate tax revenue and foreign currency for the federal government.
He says the firm is also examining the possibility of handing over some of the land in Gambella to local families once it has been developed. “We are doing a study on it at the moment, but it will probably involve allocating one hectare per family,” he says. “It will be a type of outsourcing . . . Our interest is not only to harvest rice, wheat and corn, it is also to develop the region.”
BUT MANY IN Ethiopia and other African states experiencing this new land rush are wary of such pledges and wonder who exactly stands to benefit in the long term. Aid groups, including Oxfam, have raised concerns about the use of farmland to produce food for export from countries such as Ethiopia, which is reliant on aid to feed almost one-tenth of its population. Some critics worry that indigenous communities may be sidelined or exploited, while others warn of the environmental impact of decades of industrial farming.
Last year Madagascar cancelled a controversial agreement with South Korean company Daewoo Logistics that would have allowed the firm to produce corn and palm oil on 1.3 million hectares, around half of the country’s arable land. Public anger over the deal contributed to the collapse of the Madagascar government.
Merera Gudina, a political science professor and chairman of Ethiopia’s largest opposition grouping, is one of the sceptics. He says his party plans to make the issue a central plank of its campaign ahead of parliamentary elections due to take place in May. In addition to voicing concerns about the displacement of pastoralists from land which government officials claim is “virgin” territory, he questions the motives of foreign investors now scouting Ethiopia for suitable land.
“Will they just be using Ethiopia to feed their own people while Ethiopians go hungry? That is very worrying,” he says.
Ethiopia’s prime minister, Meles Zenawi, says that such agricultural investment will not take away from his government’s insistence on small-scale farmers being at the centre of Ethiopia’s development efforts.
“Where there is unutilised land that could be used by commercial farmers, then it makes sense for us to encourage private-sector commercial farming to develop this land,” he says. “Where commercial farming is promoted at the expense of small-scale farming, we believe that would be a disaster.”
Meles says he is under no illusions regarding the motives of investors. “We have to be aware of all the possible risks because there is not going to be any free lunch. The pioneers who are here to develop agricultural land are not philanthropists, they are businessmen out to get profit – which is fine so long as we too benefit as they do.”
Neither is he particularly worried about whether they produce food for the local market or export. “I assume they are bona-fide capitalists and so they will sell it where it makes more sense for them to sell. That is fine with me,” he says. “If they export their products to Saudi Arabia because is more profitable than Ethiopia, let them bring the dollars back and we will use the dollars to buy the type of products we need for ourselves from the international market . . . My hope and expectation is that we will feed Ethiopia through the produce of our small-scale farmers.”
Many in Gambella are adopting a wait-and-see approach. “Our region needs development, we know that,” says Omud, a clerk in his 30s. “It is too early to judge whether this will prove to be positive, negative or a mix of both.”
KARUTURI INSISTS THAT he is attuned to local sensitivities. His company turned down an offer by the regional government to relocate the Elliah settlement, he says, and next month it will bring electricity to the village for the first time.
“It is their land and we are the strangers, so we have to put in efforts to integrate and not make them feel alienated,” he says. “I keep telling my people we have to be very careful and sensitive in the way we engage with them.”
The company pays local workers a daily rate of 10 birr (56 cents) – which Karuturi compares to the going rate of eight birr for farm labour in Ethiopia – and it provides three meals a day on top of that. Asked about reports that Karuturi employees at the Bako farm have complained about their wages, he replies: “I could pay 50 birr and they would still complain. Who does not complain about their pay after all? . . . I am paying a meaningful wage – what more can I do? I am not a philanthropist sitting here to distribute my money.”
Karuturi’s land deal was agreed with the Gambella regional administration, but since then Meles has changed the rules. The Ethiopian constitution allows regional governments to manage their land – all land belongs to the state – but from now on all commercial farming deals must be negotiated through Addis Ababa.
“ we saw large-scale interest, we as a federal government felt that we had to take another step to make sure there are no mishaps,” says Meles. “We have to make sure that interact with one entity, that there is a process that is transparent . . . and which is with eyes wide open.”
Karuturi acknowledges the need for safeguards. “There will be concerns within the government that this should not be misused. That worry is unfounded in ] case,” he says. “We have no problem with any further assurances that the government wants, because we mean business. It’s a learning process for all of us, the entrepreneurs and the government. It’s new . . . the jury’s out.”
Mary Fitzgerald’s travel to Ethiopia was assisted by a grant from Irish Aid’s Simon Cumbers Media Challenge Fund
http://farmlandgrab.org/10708/print/
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Ethiopia on the verge of colony of many
31 January 2010Posted in: Ethiopia
Ethiopian farmers walk in their wheat field in Abay (Photo: Barry Malone)
Anyuak Media | January 31, 2010
By Kindeneh Mihretie
These days, most of us do not seem to have the patience to read an entire article. It is commonplace to hear friends complain about undue length of writings, be it opinion pieces or feature articles. The outcome is often that contributions on issues of existential challenge that require immediate attention end up being glossed over with essays on mundane subjects. Lest that be fate of this essay, herein below are the main points in one paragraph.
There is a massive “land grab” by foreign companies currently underway in Ethiopia, under the invitation of the regime in power. The move has settler colonialism written all over it. Indeed, it has already induced many in the international community, such as the UN, the EU, FAO to mention but few, to sound the alarm. Major news organizations that are otherwise notorious for their negligence of events pertaining to Ethiopia, have also described the move by echoing the word ‘colonialism’ one after the other. Ethiopians, who are supposed to carry the brunt of the consequence, are not however anywhere to be found in heeding the warning.
The main objective of this essay is therefore to draw the attention of fellow Ethiopians to the issue. So that it stays front and center in our contemporary political agenda, until we manage to mobilize the necessary popular pressure and try our best to stop it from taking effect. Similar measures of land grab in other countries, I should mention here, have led to popular outrages that delivered immediate results, ranging from cancellation of proposed deals in west Africa, to over throw of the regime in power in Madagascar.
In our case, beyond marveling at the sheer amount of land already disposed of and in the process of being grabbed, and what appears to be the near giveaway nature of the deals, news reports on the issue have so far fallen short of enlightening us on how exactly the doomsday is going to befall on us. This is partly because the nature and content of the contracts are shrouded in mystery, as the bargaining is conducted behind closed doors. The only journalist who seemed to have succeeded to get to the bottom of it is Jason McLure, a Bloomberg correspondent.
His report suggests that the regime in power stands to rip off hundreds of millions of dollars per year in the short run. His eye opening report also hints at how the myths, the PR machine of the regime is busy fabricating to counter criticism on the issue are too fragile to stand the least amount of scrutiny. No wonder then that the correspondent found himself thrown out of the country shortly after his report was published late last December.
In this essay, I will try to do a few things. First, by joining the bits and pieces of information that has already come out together, I will debunk the three major components of the justification, by which the regime in power tries to portray the deals as success in attracting desperately sought after foreign investment. These are ensuring food security, idleness of the land set aside for lease, and creating jobs. While nothing of these sorts trickle down to the masses, the real motive, I will proceed to show lies elsewhere.
Contrary to widespread assumptions that the regime in power is giving away land for no apparent attractive returns on its side of the bargain, I will show that as far as fattening the foreign bank accounts of the few in power is concerned, the ventures are gold mines. Even more than that, I will argue that the major motive of the regime in power in signing these deals is to ensure its indefinite hold on power, by turning the country under its rule, into a client state of powerful multinational corporations that have the potential to pull strings in their respective host nations whenever necessary on its behalf.
This of course will come at a huge cost to Ethiopia and Ethiopians. More directly, it will deny, at least three generations of the rural masses in and around the sites of the foreign holdings, any access to land and turn them into squatters, thereby instituting an agrarian system akin to settler colonialism, which needless to say, was the worst brand of colonialism. Indirectly, it will have a snowball effect in further complicating and exacerbating our existing woes as a nation. The deals will create external players who will find it necessary to meddle in our internal affairs in order to safeguard their interests.
Finally, if it is any help, I will also show that the “land grabs” currently underway are perhaps the best proof yet of the fact that the regime in power is surviving in an ideological vacuum. The two central pillars of its ideology have always been championing ‘the rights of nations and nationalities’ and promoting the economic welfare of the rural masses. It claims to have ensured the former, i.e., ‘the rights of nations and nationalities’ through a system of ethnic federalism whereby, all the major ethnic groups are given autonomy in their respective regional states. If so, whence does the mandate of the alleged agency of the federal government that gave away a huge chunk of Gambella, an area larger than the size of the entire nation of Luxemburg, to an Indian based company come from? As for the rural masses, the regime had always claimed to have stood guard of their small plots through a system of state ownership of land, so that bloody land grabbers would not make advantage of the peasant at difficult times of his need, such as famine. As a demonstration of its unflinching stance on the issue, the ruling party was consistently telling us that the land tenure system, which is set up under this rationale, would change only “’over the dead body of EPRDF”. Now that a state run agency is busy disposing of land, which used to belong to the rural masses, is it not fair for us to ask if EPRDF is already dead. Or shouldn’t the resurrected EPRDF tell us who make up its new constituency, if it is not the rural masses and ‘nation nationalities’ any more?
It is outright sale, not a long-term lease!
One of the things that stupefied observers invariably is the sheer vastness of the land the regime in power made available for foreign companies to grab. In one case alone Karuturi, a Bangalore based Indian company, has grabbed more than 300,000 hectares (741,000 acres) of land in Gambella. Correspondents of major media outlets have each come up with their own unit of measurement to give their audiences a sense of the size. The Bloomberg correspondent we have already met, compared it with the size of Luxemburg.
A reporter for The Guardian preferred to quote another manager working for Karuturi who proudly said, “It is 120 kilometers [75 miles] wide…Three hours to cross by Jeep.” A Japanese TV station impressed the size of the land upon its viewers by quoting another Karuturi manager who said that the entire land would take five months to cultivate. To give his Japanese viewers even a better sense of the size, the journalist added that it is 1.5 times the size of Tokyo. Karuturi has also leased land elsewhere in Ethiopia such as Bako. The Saudis on their part are trying to claim their share of the scramble chiefly through their surrogate, the billionaire Al-Amoudi. The Saudi team is operating with 15 billion dollars the government of Saudi Arabia set aside for companies to engage in agricultural ventures overseas. Al-Amoudi has also his own farming ventures for which he has already secured half a million hectares at various sites throughout the country. Other countries so far part of the scramble are Egypt and China.
As mentioned above, observers are also bewildered by what appears to be the giveaway nature of the deals. For example under the agreement, Karuturi does not have to pay a penny for the first six years for its holding in Gambella. Then it has to pay only 15 birr per hectare per year for the remaining 84 years of its 90 years lease. Reports show that similar land in other countries, for example in Indonesia, would cost more than 350 USD per hectare per year. Other incentives the foreign companies would enjoy include importing all their agricultural equipments and trucks duty free.
This makes it look like the land is given away virtually free of charge. That is until Jason McLure, the brilliant Bloomberg correspondent came around, who managed to snatch the most revealing statement so far about the deals from Omod Obang Olon, the president of Gambelle region, who the journalist found it necessary to add is “an ally of Meles”. Olom said that the companies pay the government of Ethiopia right now from “corporate income taxes and future leases”. This effectively means that the deals are on the spot sales than a lease! It means that, in the case of Gambella for example, the 90 years lease is calculated now and paid in advance, instead being spread over 84 years.
This means that the regime in power gets all the money while future generations would have no claim whatsoever on the land for the next 90 years!! That seems why there is virtually nothing known about the details of the deals. It is done without the knowledge and approval of the even the rubberstamp parliament! The lucrative nature of the venture for the companies is evident for example from the statement of Karuturi’s head who told the Bloomberg correspondent that he expects 100 million dollars annual earning from the Gambella farm alone.
The Myth of Food Security
While this is the reality, as indicated above, the PR machine of the regime in power is busy putting out list of myths to make the deals appear investments beneficial for the country. The most ridiculous of the claims is that the agricultural ventures of the foreign companies would ensure food security. In order to debunk this claim, it suffices to note that the regime’s invitation for the foreign companies came last year, at a time when the world was dealing with the worst food crisis in decades. The crisis was set off by the rise of grain in the global market. In some of the countries that are now investing in food production in Ethiopia, the crisis had led to outbreak of serious riots. In the aftermath of the crisis, countries like India and Saudi Arabia realized that while they have excess wealth in the form of cash, they do not have arable land to produce enough food for their population. In response, they set up funds, and announced list of incentives for companies that would invest in agriculture elsewhere in the world. In other words, outsource food production. That is how all the companies currently scrambling for land in Ethiopia found themselves here. It is therefore the worst perversion of reality to tell Ethiopians that companies operating under this background would solve local food shortage.
In other words, the base of the claim that these companies would contribute towards food security in Ethiopia is that they would supply their products to the local market. However, from all the available evidence, it is crystal clear that there is nothing in the deals that require them to do so. It is also interesting in this regard to look at the items these companies are producing. Karuturi’s 300,000 hectares of land in Gambella is exclusively reserved for the production of palm oil. China is mostly interested in producing sesame seeds. I am not quite sure if these names are familiar in local food markets any where in Ethiopia.
The Myth of Idle Land
The regime tries to counter criticism about the amount of the land in two ways. One is by comparing its size with the total amount of arable land in the country. In this case, it says that it constitutes only a fraction of the total arable land, which is 74 million hectares. In order to appreciate the problem with this claim, it is enough to make a trip to any part of northern Ethiopia. It is clear that farmland is so scarce that mountainous areas that cannot in any way be designated as arable, and should have been covered with trees, are cultivated all the way up to the hilltops.
In this connection, it is also worth mentioning here a recent BBC Television report. The report was entitled “Ethiopia attracting foreign investment” in construction and manufacturing sectors. However, in terms of manufacturing, all the correspondent could show was an Indian factory that is engaged in paper production! It did not occur to the journalist to ask, of all things why paper? If she did, I am sure she would have discovered the juicy fact that would wait the appetite of the keen investigative journalist. Which is that, the wood for the production of paper might be coming from forests the same company is clearing for its palm oil and other cultivations! This speaks volumes about the claim that the land is idle.
In general, experts in the field will tell you that there is no such thing as idle land in Ethiopia, or anywhere in Africa. Studies after studies showed that competition for grazing land and access to water bodies are the two most important sources of inter-communal conflict in most parts of Ethiopia populated by pastoralists. Indeed, in almost every case of recent land grabs involving foreign enterprises, there are complaints by locals that they lost access to grazing land and water. This is the case for example both in Bako and Gambella.
Even worse, some of the land now grabbed by foreign companies used to be teff field! It is mind boggling as to what justifies giving a land in the outskirts of Addis which used to produce teff, the staple diet of most Ethiopians to an Indian company to produce corn for export. Is the difference between teff and corn yield per hectare enough justification to jeopardize the supply of teff for the ever-increasing population of Addis Ababa? No wonder that the price of teff keeps sky rocketing. The residents of Addis have therefore to see corn shipped to India while they forego their staple diet due to excruciating price, a result of decreasing supply in the face of ever-increasing demand.
As for job creation, people in Gambella now working at Karuturi’s palm oil fields as daily laborers, have already started complaining that they were much better off working there own land. No sooner had companies started operating than complaints of inhuman treatment also started to surface.
Child labor is also a common practice. According to one report, China has even threatened to bring its own workers unless the locals behave themselves, by which it meant accept reduction to servitude and treatment as squatters in a land, which Gambellans thought, was their own.
They asked for it! The Regions had Begged for it!
A seemingly inconsequential interview Meles gave to the host of an online opinion journal recently has produced an interesting response to the question as to where the central government’s right to lease the land of regional states came from. Meles said that the regional states begged the federal government to manage the land for them, for they are too illiterate to do so.
He also blamed the whole deal as the fault of the stupid and ignorant peasant! Only he puts the word into the mouth of imagined critics of his regime. As such, his statement is reminiscent of colonialists who took away virgin lands of Africans by claiming that the perpetually lazy and backward native was not capable of making any good use of it.
The response is also interesting for it came from the ardent patron of the rural masses, who perceives his role as “saving the peasant from his own rationality”. In explaining the position of his party on land tenure, the unflinching position of Meles was always that land should and will always remain in the hands of the state, because private ownership would induce the peasant to sell his small plot when he finds himself under difficult circumstances, such as, famine. Hence, in order to save the peasant from a rational measure under irrational circumstances, land should always remain under state control. In short, in the good old days, Meles’ love for the peasant was such that, he would rather have the peasant die of hunger than see him, i.e., the peasant, humiliate himself by trying to save his life by selling his land.
Most of us had always known better than buying such garbage. The reality had always been that without land the regime was afraid of losing its tight grip on the rural masses.
In any case, that is not the issue now. The issue now is that the country is literarily on sale, hectare by hectare! And let there be no mistake, these multinational corporations are here to stay! The question is then, are we going to do something about it, or continue to sit idle and acquiesce?
The writer can be reached at
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http://farmlandgrab.org/10754/print/
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The scramble for land in Ethiopia
5 January 2010Posted in: Ethiopia ]
The Ethiopian Review | January 5th, 2010
(Ginbot 7 Editorial) — The World Bank, the IMF and the Ethiopian regime annual development reports have highlighted on Ethiopia’s higher GDP growth rate over the past 10 years, yet the UN development index and other indices [Misery Index] that measure the well-being of people have declined both absolutely and relative to many other African countries. The paradox of acute poverty and declining well-being of Ethiopians is found in various parts of the country and is pervasive across demographic groups. Today, to millions of Ethiopians, the heralded GDP growth and the empty promise of joining middle income nations has turned sour as a growing famine once again is engulfing Ethiopia.
In the last 18 years, bilateral and unilateral aid sources have written off about half of Ethiopia’s foreign debt and have pumped more than 30 billion dollars to induce economic development in Ethiopia. In its effort to appease donor nations and keep the flow of foreign aid, the deceitful regime in Addis Ababa has displayed its aspiration to agricultural modernization that focuses on food security and rural development. In spite of the multi billion dollar aid packages and development rhetoric from Ethiopia’s ruling minority regime, rural life in Ethiopia hasn’t changed from what it was at the turn of the last century [˜ 85% of Ethiopians live in rural areas].
Since 1991, the World Bank and the International Monetary Fund (IMF) have constantly urged the TPLF regime to liberalize the financial sector and change the country’s land tenure policy. In fact, most of the aid packages from these two international organizations were ear-marked towards the goal of economic liberalization and establishment of a free market economy. However, after 18 years of love affairs between the IMF and Zenawi’s regime, Ethiopia is one of the few countries in Africa that has not made progressive changes in its basic land policy while enjoying multi billion dollar aid packages in the name of liberalization.
The TPLF land policy has discouraged farmers from making long term investment on the land that they don’t own, and the resultant problems generated from the regime’s land policy have made it impossible for Ethiopian farmers to make use of productive agricultural technologies. Moreover, policies of ethnic federalism have limited the ability of farmers to access land in other regions.
Many research and scholarly studies show that land insecurity reduces the incentive to invest on land and limits the ability to transfer land. Moreover, empirical studies have also indicated that Ethiopia’s land policy is the single most important constraint to the nation’s agricultural development.
Over the last 18 years, many national and international organizations including Economic Commission for Africa’s (ECA) have repeatedly warned the ruling regime in Ethiopia, that land tenure along with the issue of governance were the most urgent areas requiring institutional transformation in Ethiopia. However, Zenawi and his ruling party have ignored advices, recommendations and warnings and made Ethiopia a nation of poverty in the middle of plenty.
The TPLF regime, the very regime that boasts to have dismantled communism in Ethiopia, has deliberately kept the communist land policy of its predecessor. To make things worse, the regime has eliminated the possibility of flexible application of policy by enshrining land policy in the constitution.
Today, to cover up its failed economic polices, Zenawi’s regime has adopted yet another perilous land policy that may have far reaching adverse consequences in the future food security of Ethiopia. A regime that has been parsimonious over the years to its own citizens has recently set aside over three million hectare of fertile land for foreign investors and governments that outsource farming to Ethiopia.
Ginbot 7 is extremely troubled by the scale and pace of the land grab in Ethiopia and has expressed its discontent to Ethiopians and to the international community. Ginbot 7 strongly opposes these secretive land deals that are being struck without the input of the Ethiopian people by an illegitimate regime. We believe that, instead of selling the nation’s fertile land and begging for food aid, the TPLF regime has to change its communist land policy and empower local farmers who have the potential to produce marketable surplus.
Ginbot 7 wants to send an unequivocal message to the land grabbers that any land deal that has not been agreed to by the Ethiopian people will not be honored by future elected governments.
http://farmlandgrab.org/10097/print/
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