Gambelatoday - Neo-Colonial” Dangers of Land Deals in Africa

Africa, the world’s most famished continent, cannot currently feed itself. It depends on foreign markets. In a majority of African countries, their average real per capita income is lower than they were two or three decades ago. The average per capita calorie in take has now fallen, below minimal nutritional standards. The United Nations- Food and Agriculture Organization (FAO) has repeatedly warned of catastrophic food shortages. The FAO recently estimated that of Africa’s 750 million people, more than 270 million suffer from some form of malnutrition associated with inadequate food supplies. Whereas the severe famine of 1973-74 took the lives of hundreds of thousands and left many more with permanent damage from malnutrition, its geographic impact was limited to the Sahelian belt that stretches below the Sahara from Cap Verde, off the coast of Senegal in the west, across the continent to Ethiopia. By contrast, in 1982-84, and again in 1987-88, 1991-94, and in 2008-09, the food crisis become much more widespread, with more than 30 countries threatened by severe famine, including, in addition to the Sahelian nations, Ethiopia, Zambia, Tanzania, Malawi, Uganda, Botswana, Mozambique, Zimbabwe, and Angola. The Ethiopian govt. has already declared famine on 20^th November, 2009. Food and Agriculture Organization (FAO) Chief Jyack Diyof says, ‘more than 0ne billion (one-sixth) people are hunger today in the world.’

Africa may be known for decrepit infrastructure and corrupt governments problems that are being steadily alleviated but land and labour come so cheaply there. Emergent African Agricultural Land Fund, started last year, is investing several hundred million dollars into commercial farms around the continent. In a country like Ethiopia, farmers put in backbreaking effort, but they yield about a third as much wheat per acre as do Europe or Chile. Ethiopia, like all of Africa, is full of such opportunities, which is one reason the World Bank says that investing in agriculture is one of the most effective ways to speed economic development on the continent. Yet agriculture has historically been a tiny item in foreign aid budgets. For years, governments, private foundations and donor institutions like the World Bank have been urging African governments to fill the spending gap with private investment. Now, at the very moment a world food crisis has come along, creating the perhaps fleeting possibility of an influx of capital into African agriculture, some of the same organizations are sending conflicting messages. The Food and Agriculture Organisation, for instance, co-sponsored a report calling for a major expansion of commercial agriculture in Africa, but the organisation’s Director General has simultaneously been warning of the “neo-colonial” dangers of land deals.

Ethiopia has 74 million hectares of land that is said to be suitable for agriculture out of its total area of 111.5 million hectares. However, less than 15 million hectares is currently in use. Foreign investors use their land at a time when their people face the spectre of mass starvation. About 10 percent of the more than 80 million people who live in Ethiopia suffer from chronic food shortages. This year, because of poor rains, the U.N. World Food Programme warns that much of East Africa faces the threat of a famine, potentially the worst in almost two decades. Traditionally, the model for feeding the hungry in Africa has involved shipping in surpluses from the rest of the world in times of emergency, but governments that are trying to attract investment say that the new farms could provide a lasting, noncharitable solution. Ethiopia might seem an unlikely hotbed of agricultural investment. To most of the world, the country is defined by images of famine: about a million people died there during the drought of the mid-1980s, and today about four times that many depend on emergency food aid. According to the World Bank, as much as three-quarter of Ethiopia’s arable land is not under cultivation, and agronomists say that with substantial capital expenditure, much of it could become bountiful.

One focus of agricultural investment in Ethiopia is the region of Gambella, near the border with Sudan. The World Bank says it has more than four million acres of irrigable land. Since the world food crisis, Meles, a former Marxist rebel who has turned into a champion of private capital, has publicly said he is “very eager” to attract foreign farm investors by offering them what the government describes as “virgin land.” An Ethiopian agriculture ministry official recently told Reuters that he has identified more than seven million acres. The government plans to lease half of it before the next harvest, at the dirt-cheap annual rate of around 50 cents per acre. The government’s pliant attitude, along with Ethiopia’s convenient location, has made it an ideal target for Middle Eastern investors like Al-Amoudi. The Saudi delegation, which included Abdullah bin Ahmed Zainal Alireza, minister of Commerce and Industry and three other Saudi Ministers, had representatives from 50 large Saudi companies. On the other hand, from seven African countries, including Ethiopian Prime Minister, Rwanda, Djibouti and Somali President, Kenya, Tanzania, Uganda’s to government officials’ representatives were represented at the exhibition. A newly formed Al-Amoudi company, Saudi Star Agricultural Development, announced its plans to obtain the rights to more than a million acres in the apparent hope of capitalizing on the Saudi government’s initiative to subsidize overseas staple crop production. At a pilot site in the west of the country, he is already cultivating rice. In the Rift Valley region, another subsidiary is starting to grow fruits and vegetables for export to the Persian Gulf. The 2000 acre enterprise currently produces food for the local market, but there were plans to irrigate with water from the lake, and to shift the focus to exports. A couple of workers who get only nine Birr or around 75 (dollar) cents each day. Al-Amoudi’s plans raise a recurring question surrounding investment in food production: who will reap the benefits?

Karaturi Global an Indian company with agricultural interest in the Gambella Regional State of Ethiopia, requested, in early November, that the Ministry of Water Resources authorized it to use the Baro River to irrigate crops for its intended agricultural development project. The company had applied for 300,000 hectors land in Ethiopia, but the Investors Support Directorate at the Ministry of Agriculture and Rural Development, which handles large tracts of land for regional states, granted it 40,000 hectors, agreeing in principle to give it the 300,000ht it requested depending on its initial performance. The master plan for the Baro Akobo river basin, prepared by MoARD in 1997, indicated that the water in the basin could irrigate 50,900ht of land. The estimated budget to develop the water resources in the area, as indicated in the master plan, was 378.4 million dollars. This land is to be suitable for cotton, sugarcane, maize and sorghum, as well as a number of other grains. This company has so far taken the largest plot of land. The company has allocated 250 million dollars for its Gambella project, which it says will be its largest investment in Ethiopia. It says that the company is ready to grow maize, rice, sugarcane and palm tree products on 11,000ht. The company says that its total investments could reach 4.3 billion Birr, more than half of it going to agriculture, including horticulture. It also plans to invest in the metal industry. The Baro River, a tributary of the White Nile, serves local communities for transport and fishing in addition to regulation Gambella’s temperature. It is also the only navigable waterway in Ethiopia and was once used as a port due to its access to the Nile. Sai Ramakrishna Karuturi, head of an Indian commercial farming company says, “It is emerald green, the whole place is fertile and they have only 200,000 people down there. Earlier this year, Karuturi signed an agreement with the government to lease close to 800,000 acres on which he will grow rice, wheat and sugarcane, among other crops. Karuturi told me he does not have to export the food to make money; there is plenty of profit potential in the East African market. He has flown in John Deere tractors, agricultural experts from Texas A&M and commercial farmers from Mississippi to help him get things going. He says he is raising 100 million dollars in capital from private equity firms for the first phase of the project, which he estimates will ultimately cost well over a billion dollars.

According to the International Institute for Environment and Development; as of earlier this year, the Ethiopian government had approved deals totaling around 1.5 million acres, while the country’s investment agency reports that it has approved 815 foreign financed agricultural projects since 2007, nearly doubling the number registered in the entire previous decade. The South Korean conglomerate Daewoo Logistics had signed an agreement to take over about half of Madagascar’s arable land, paying nothing, with the intention of growing corn and palm oil for export. Popular protests broke out, helping to mobilize opposition to Madagascar’s already unpopular president, who was overthrown in a coup in March 2009. Development economists and African governments say that if a country like Ethiopia is ever going to feed itself, let alone wean itself from foreign aid, which totaled 2.4 billion dollars in 2007, it will have to find some way of increasing the productivity of its agriculture.

Paul Collier of Oxford University, an influential voice on issues of world poverty, published a provocative article in Foreign Affairs in which he argued that a “middle and upper-class love affairs with peasant agriculture” has clouded the African development debate with “romanticism.” Approvingly citing the example of Brazil where masses of indigenous landholders were displaced in favour of large-scale farms. Collier concluded that “to ignore commercial agriculture as a force for rural development and enhanced food supply is surely ideological.” In Ethiopia, Al-Amoudi and other foreign agricultural investors are putting Collier’s theory into practice. Near the southern town of Awassa, in the shadow of a soaring Rift Valley escarpment, sits a field of waving corn and a complex of domed greenhouse, looking pristine and alien against the natural backdrop. On an overcast July morning, dozens of labourers were at work preparing the ground for one of Al-Amoudi’s latest enterprises: a commercial vegetable farm. Jan Prins, managing director of the subsidiary company that is running the venture for Al-Amoudi, originally from the Netherlands, said that Ethiopia was arid but was surprised to learn when he came to the country that much of it was fertile, with diverse microclimates. The Awassa farm is one of four that Prins is getting up and running. Using computerized irrigation system, the farms will grow tomatoes, peppers, broccoli, melons and other fresh produce, the vast majority of it to be shipped to Saudi Arabia and Dubai. He assumed to expand into growing other crops, like wheat and barley, the latter of which can be used to feed camels.

A variety of factors-some transitory, like the spike in food prices, and others intractable, like global population growth and water scarcity-have created a market for farmland, as rich but agricultural resource deprived nations in the Middle East, Asia and elsewhere seek to outsource their food production to places where fields are cheap and abundant. Because much of the world’s arable land is already in use-almost 90 percent, according to one estimate, taking out forests and fragile ecosystems-the search has led to the countries least touched by development, those in Africa. According to a recent study by the World Bank and the United nations Food and Agriculture Organization, one of the earth’s last large reserves of underused land is the billion acre Guinea Savannah zone, a crescent-shaped swath that runs east across Africa all the way to Ethiopia and southward to Congo and Angola. Foreign investors-some of them representing governments, some of them private interests- are promising to construct infrastructure, bring new technologies, create jobs and boost the productivity of underused land so that it not only feeds overseas markets but also feeds more Africans. More than a third of the continent’s population is malnourished. They have found that impoverished governments are often only too welcoming, offering land at giveaway prices. A few transactions have received significant publicity, like Kenya’s deal to lease nearly 40, 468 hectares to the Qatari government in return for financing a new port, or South Korea’s agreement to develop almost 1,000 square kilometers in Tanzania. But many other land deals, of near-unprecedented size, have been sealed with little fanfare.

Investors who are taking part in the land rush say they are confronting a primal fear, a situation in which food is unavailable at any price. Over the 30 years between the mid-1970s and the middle of this decade, grain supplies soared and prices fell by about half, steady trends that led many experts to believe that there was no limit to humanity’s capacity to feed itself. But in 2006, the situation reversed, in concert with a wider commodities boom. Food prices increased slightly that year rose by a quarter in 2007 and skyrocketed in 2008. Surplus producing countries like Argentina and Vietnam worried about feeding their own populations, placed restrictions on exports. American people, if they noticed the food crisis at all, saw it in modestly inflated supermarket bills, especially for meat and dairy products. But to many import-dependent countries like in the Middle East, South Korea and Japan- the spectre of hyperinflation and hoarding presented an existential threat. When some governments stop exporting rice or wheat, it becomes a real, serious problem for people that do not have full “self-sufficiency,” said Al Arabi Mohammed Hamdi, an economic adviser to the Arab Authority for Agricultural Investment and Development. Hamdi said that the only way to assure food security is to control the means of production. Hamdi’s agency, which coordinates investments on behalf of 20 member states, has recently announced several projects, including a tentative 250 million dollars joint- venture with two private companies, which is slated to receive heavy subsidies from a Saudi programme called the King Abdullah Initiative for Saudi Agricultural Investment Abroad. The main fields of investment for the project would most likely be Sudan and Ethiopia, countries with favourable climates that are situated just across the Red Sea. Another partner, Mansour bin Zayed Al Nahyan, a billionaire member of the royal family of the emirate of Abu Dhabi, who has shown an interest in acquiring land in Sudan and Eritrea. Over time, Al-Amoudi, a Saudi Arabia-based oil and construction billionaire and one of the world’s 50 richest people, who was born in Ethiopia and maintain a close relationship with the Ethiopian Prime Minister Meles Zenawi’s autocratic regime, has used his fortune and political ties to amass control over large portions of Ethiopia’s private sector, including mines, hotels and plantations on which he grows tea, coffee, rubber and jatropha, a plant that has enormous promise as a biofuel. Since the global price spike, he has been getting into the newly lucrative world of food trade.

The Saudis, rich in oil money but poor in arable land, were grouping for a strategy to ensure that they could continue to meet the appetites of a growing population. There are basically two ways to increase the supply of food: find new fields to plant or invent ways to multiply what existing ones yield. Robert Zeigler, an eminent American botanist, runs the International Rice Research Institute, which is devoted to the latter course-employing science to expand the size of harvests. During the Green Revolution of the 1960s, the institute’s laboratory developed “miracle rice,” a high yielding strain that has been credited with saving millions of people from famine. Zeigler went to Saudi Arabia hoping that the wealthy kingdom might offer money for the basic research that leads to such technological breakthroughs. Instead, to his surprise, he discovered that the Saudis wanted to attack the problem from the opposite direction. They were looking for land. In a series of meetings, Saudi government officials, bankers and agribusiness executives told an institute delegation led by Zeigler that they intended to spend billions of dollars to establish plantations to produce rice and other staple crops in African nations like Mali, Senegal, Sudan, and Ethiopia.

The developing world, where the poor spend between 50–80 percent of their income on food, there were food riots in 15 countries in 2008; global warming is turning arable land into desert; freshwater is dwindling; and the really big problem that contributes to all the others-the world’s population is growing by 80 million hungry people a year. The United Nations Food and Agriculture Organisation estimates that in order to feed the world’s projected population in 2050, some nine billion people; agricultural production needs to increase by an annual average of one per cent. That means adding around 23 million tones of cereals to the world’s food supply next year, a little less than total production of Australia in 2008.

The hyperinflationary spiral that caused the world food crisis had multiple causes. The harvests in 2006 and 2007 were the worst of the decade, hedge funds and other players in the commodities markets appears to have driven up prices and government subsidies for biofuels encouraged farmers to grow crops that ended up as ethanol. A recent World Bank study says that large-scale export agriculture in Africa has succeeded only with plantation crops like sugar and tea or in ventures that were propped up by extreme government subsidies, during colonialism or during the apartheid era in South Africa. It is unfortunate that the World Bank has never had strategies, policy or structure for the development of African agriculture. African agriculture did not get enough recognition until now, despite the fact that it has a significant contribution to food security and job creation for Africans.

One important and the best example may be suitable for Africa. The government of Qatar, in addressing its food security concerns, has chosen to concentrate on investing in existing agribusiness rather than just acquiring land for large-scale farming. That is just one of many ways to invest in farming without removing the African farmers. A cooperative scheme under which a group of around 300 Ethiopians, working plots of 4-10 acres, were getting into export agriculture. During the Ethiopian winter, they grew green beans for the Dutch market. The rest of the year, they cultivated corn and other crops for local consumption. The land had been irrigated with the help of a non-profit organization and an Ethiopian commercial farmer named Tsegaye Abebe, who brought all the produce to market. The agricultural products the strategy should consider include vegetables, fruits, silk production, dairy and poultry, as well as wheat, maize and barley. The agriculture sector includes features like irrigated year-round production, small-scale processing of dairy products, vegetables and providing shorter marketing chains for consumers, and producers may be benefited through technical assistance, drip kits, poultry, and fruit trees and work in group gardens.