Farmland - The new breadbasket of the world?

The new breadbasket of the world?

30 January, 2010 | By MARY FITZGERALD

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.”

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Mary Fitzgerald’s travel to Ethiopia was assisted by a grant from Irish
Aid’s Simon Cumbers Media Challenge Fund

Courtesy