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From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Mon Oct 11 2010 - 08:45:42 EDT
<http://www.africaintelligence.com/ION/politics-power/2010/10/09/eprdf-banks
-on-outsourcing-food-production,85707998-EVE> EPRDF banks on outsourcing
food production
Indian Ocean Newsletter
October 11, 2010
_____
A new activity is starting to make a splash, as a consequence of the rise in
the price of cereals on the world market and the dearth of agricultural land
in many countries: outsourcing food production. The government of the
Ethiopian People's Revolutionary Democratic Front (EPRDF) was one of the
first in Africa to take up position in this sector by awarding long-term
leases to large extents of arable land to foreign companies wanting to
cultivate agricultural products for export. To be as competitive as
possible, the EPRDF even accepted to rent this land for a very low price.
This so-called "offshore agriculture" began to spread throughout the country
at high speed, without nevertheless contributing any significant amount to
the State budget. At the same time, food production for the internal market
is still not enough to feed the whole Ethiopian population.
Al Amoudi, pioneer in agriculture outsourcing. Already strongly implanted in
the industrial sector in Ethiopia where he is by far the largest foreign
investor, the Saudi magnate Mohamed Hussein Al Amoudi was the first to sniff
out the good deal that is offshore agriculture. He persuaded the King of
Saudi Arabia that he could help cut the country's bill for importing cereal
into the kingdom by producing, for example, rice in Ethiopia for the Saudi
market. His company Saudi Star Agricultural Development wants to cultivate
half a million hectares of Ethiopian land within the next ten years,
beginning with 10,000 hectares of paddy fields in the Gambella region, along
the Sudanese border. He obtained a 60 year lease at a peppercorn rent for
this land coupled with authorisation to pump water from the River Alwero in
return for selling a portion of the rice production on the local market.
Another Al Amoudi company, Horizon Ethiopia, is vying for 100,000 hectares
of land, again in the Gambella region, where it wants to cultivate oil
palms. For his part, the Djibouti President Ismail Omar Guelleh has been
attributed 3,000 hectares over a year ago to grow cereals near Serofta in
the Oromia Regional State.
Indians and Asians in the race.
The largest Indian company operating in Ethiopia, Karuturi Global Ltd, is
negotiating an allocation of 300,000 hectares in the Gambella region for an
extremely ambitious agricultural project (corn, palm oil, sugar cane, etc)
costing over $1 billion. This company expected to start its operations by
working around a hundred hectares by mid 2011. The Indian magnate with
Seychellois nationality, Chinnakannan Sivasankaran, known by the nickname
Siva, is one of the investors who acquired agricultural land in Ethiopia.
Meanwhile, an association of farmers from the Punjab is currently
negotiating 50,000 hectares of Ethiopian land for a ridiculously low price:
25 to 40 year leases, rent free for the first five years then a rent of $9
per hectare per annum, tax exemption of imports and equipment, and tax
exemption on exports. Under a similar process, the Singapore company Olam
International Ltd, is planning to invest in coffee plantations in Ethiopia,
while Chinese companies are looking to grow sesame seeds. However, not all
of these projects will see the light of day and certain companies appear to
be trying to speculate on land prices.
The State has the high hand on land. In spite of Prime Minister Meles
Zenawi's free market pretentions, the Ethiopian State is keeping control of
the land. This gives it the freedom to attribute long term leases however it
likes to foreign agricultural companies of its choice. The leases already
attributed concern over 600,000 hectares, which according to the FAO
corresponds to 1.4% of the country's arable land. But the EPRDF's aim is to
rent over three million hectares of land by 2013. Officially, all this land
was listed as wasteland, but that does not mean that it was not useful to
the local populations, such as the Anuaks in the Gambella region who were
neither informed nor consulted about these major agricultural projects.
Furthermore, the issue of control and attribution of revenue from renting
this land has still not found an answer. The Addis Abaaba federal government
has admitted that had resulted in corruption. It has therefore decided to
withdraw from the regional governments the right of attributing leases of
over 1,000 hectares. However, the 2010 federal budget lists no income
whatsoever, and no information on this subject appears in the quarterly
reports of the National Bank of Ethiopia (NBE).
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