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From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Thu May 05 2011 - 11:14:06 EDT
Ethiopian Government Slashes Karuturi Global Land Concession by Two-Thirds
By William Davison -
May 5, 2011 3:52 PM GMT+0200
<http://topics.bloomberg.com/ethiopia/> Ethiopia slashed the size of
<http://www.bloomberg.com/apps/quote?ticker=KARG:IN> Karuturi Global Ltd.
(KARG)'s land concession that was larger than Luxembourg on concern it was
too big for a single company to manage and to enable an annual migration of
antelope, the government said.
The amendment, which reduced the concession by two-thirds to 100,000
hectares (247,105 acres), was made in consultation with Bangalore-based
Karuturi six months ago, Esayas Kebede, head of the Agriculture Ministry's
land investment support directorate, said in an interview in
<http://topics.bloomberg.com/addis-ababa/> Addis Ababa, the capital.
Karuturi's chief executive officer denied the concession had been reduced.
"We have not received any recent updates on the Karuturi agricultural
business in Ethiopia," said Archit Singh, an analyst at Globe Capital Market
Ltd., which has a "strong buy" rating on the company's stock. "I am not
aware of any change in the lease size," he said by phone from
<http://topics.bloomberg.com/new-delhi/> New Delhi yesterday.
Ethiopia, the country that came to symbolize Africa's inability to feed
itself in the 1980s, has transferred about 350,000 hectares of agricultural
land in the Gambella, Benishangul-Gumuz and Southern Nations regions since
September 2009, according to the Agriculture Ministry's website. Investors
include companies from Ethiopia, <http://topics.bloomberg.com/india/>
India, <http://topics.bloomberg.com/china/> China,
<http://topics.bloomberg.com/saudi-arabia/> Saudi Arabia as well as
Ethiopians living abroad. A
<http://www.ethiopian-gateway.com/eaportal/node/836> table on the ministry's
website shows Karuturi's allocation is 100,000 hectares.
"Three hundred thousand hectares is a huge area of land. Nobody can manage
it," Esayas said on April 29. "Therefore, Karuturi should get a rational and
manageable plot of land based on its own capacity and our monitoring and
evaluation capacity."
'Baseless'
Karuturi Chief Executive Officer Sai Ramakrishna Karuturi said reports
claiming the government reduced the concession "are completely baseless."
The company is developing 111,700 hectares of agricultural land, while
200,000 hectares "continues to be with us as part of the concession and will
be developed in a phased manner," he said in an e-mailed statement today.
Karuturi shares fell 2.4 percent to 12.25 rupees today. The stock has
dropped 47 percent so far this year.
The company, which has invested $100 million in Ethiopia so far, plans to
have 65,000 hectares in production this year and sell its first harvest in
October mainly within Ethiopia and to other East African nations, Karuturi
said in an e-mailed statement in February. The company is growing crops
including rice, <http://topics.bloomberg.com/palm-oil/> palm oil, sugar
cane and cereals.
Mapping
The boundary of Karuturi's land wasn't accurately mapped when it was first
leased by the Gambella Regional Government in 2009, Esayas said. All similar
land deals are now handled by the directorate in the Agriculture Ministry,
he said.
"They signed an agreement without any coordinates or delineation of the
land," he said. "As a federal government, we should correct that mistake."
Part of the reason for the amendment to the concession was to create an
8,000-hectare corridor through Karuturi's land for a one-million strong
migration of white-eared kob, a type of antelope, Esayas said.
The annual movement from <http://topics.bloomberg.com/southern-sudan/>
Southern Sudan into an area that includes Gambella National Park, which was
given a new boundary in March, is the second-largest mammal migration in
Africa, Cherie Enawgaw, an ecologist at the <http://www.ewca.gov.et/>
Ethiopian Wildlife Conservation Authority, said in a phone interview from
Arba Minch in southern Ethiopia on May 2.
China, India
Among other investors in Ethiopian land are
<http://www.dafengyuan.com/about.asp> Hunan Dafengyuan Agriculture Co., a
Chinese company, which is developing 25,000 hectares to grow sugar cane in
Gambella, a fertile state with a relatively low population density,
according to the ministry.
<http://www.bloomberg.com/apps/quote?ticker=SPTI:IN> Spentex Industries Ltd.
(SPTI), a Delhi- based yarnmaker, is growing cotton in the northwestern
region of Benishangul-Gumuz, also on 25,000 hectares, it said. Shapoorji
Pallonji & Co. of India has 50,000 hectares to grow biofuels in the same
region.
Almost all rental fees range from 30 birr ($1.76) to 158 birr per hectare a
year, according to the Agriculture Ministry.
Critics of Ethiopia's land policy, including <http://www.grain.org> GRAIN,
the Barcelona-based advocacy group, have argued that domestic farmers are
being dispossessed and the country shouldn't rent land cheaply to foreign
investors to grow cash crops when about 13 percent of its approximately 80
million people still rely on food aid.
Ethiopia is prepared to lease 3.6 million hectares of an available 74.5
million hectares of suitable land if it gets "real investment," Esayas said.
The government of <http://topics.bloomberg.com/africa/> Africa's
second-most populous nation, which bars private land ownership, says the
investments will provide technology, jobs, improved
<http://topics.bloomberg.com/food-security/> food security and export
revenue.
Major investors may receive more land if performance evaluations, which are
done monthly, meet the ministry's requirements, according to Esayas.
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