webmaster
© Copyright DEHAI-Eritrea OnLine, 1993-2011
All rights reserved
From: Biniam Tekle (biniamt@dehai.org)
Date: Thu Sep 08 2011 - 13:49:45 EDT
"Indian companies are making a beeline to grow agricultural commodities and
sell seeds, fertilizers and agriculture equipment in the Horn of Africa
thanks to the availability of cheap labour and a dole-out of vast fertile
land chunks by Prime Minister Meles Zenawi through the last decade"
http://www.livemint.com/2011/09/04215254/Investments-in-Ethiopia-farmin.html?atype=tp
Posted: Mon, Sep 5 2011. 1:00 AM
IST
Published on page 7
Investments in Ethiopia farming face criticism from activists
As Indian businessmen bet on cash crops, it’s unclear whether food security
issues are being tackled
When R.S. Mohamed Saleem, a 37-year-old high school dropout from Coimbatore,
sought to untangle his knotted cotton trade—a two-decade-long struggle
during which he shrank from being a first-generation cotton farmer to a
broker—he ventured out 3,000km west to Ethiopia.
Saleem, who has never owned more than 50 acres of land in India, is poised
to plough in $6.4 million (nearly Rs.30 crore) to grow cotton on 25,000
acres of land in a fertile valley in southern Ethiopia close to the
perennial Omo river.
“Ethiopia offers an investor-friendly climate for companies, with incentives
such as a three-year tax holiday,” Saleem, founder and chief executive of
Sara Cotton Fibers Pvt. Ltd, said in an email response from Ethiopia. “The
Ethiopian government has also announced cotton as a priority sector for the
country.”
Indian companies are making a beeline to grow agricultural commodities and
sell seeds, fertilizers and agriculture equipment in the Horn of Africa
thanks to the availability of cheap labour and a dole-out of vast fertile
land chunks by Prime Minister Meles Zenawi through the last decade.
But allegations of forcible possession of plots by the Ethiopian government
to create land banks, and environmental damage from projects such as a
proposed dam on the Omo river continue to cast a shadow on such ventures.
“If the government dams the Omo
Valley<http://www.livemint.com/2011/09/04215254/Investments-in-Ethiopia-farmin.html?atype=tp#>
tribes’ water and parcels off their land to outsiders, these peoples may
not survive,” said Stephen Corry, director of London-based Survival
International—a global advocacy for tribal rights—via email. “The government
is pushing industrialization at the ultimate expense of the country’s most
vulnerable people.”
The Ethiopian government denies that the policy is putting its people at a
disadvantage. “Most Ethiopians live on highlands; what we are giving on
lease is low, barren land,” said Metasebia Tadesse, minister counsellor at
the Ethiopian embassy in New Delhi. “Foreign farmers have to dig metres into
the ground to get water. Local farmers don’t have the technology to do that.
This is completely uninhabited land. There is no evacuation or dislocation
of people.”
With Zenawi—Ethiopia’s prime minister of nearly 20 years accused by human
rights watchers of curbing press and civilian freedom—and Indian businessmen
betting on cash crops such as sugarcane, tea and cotton, it’s unclear
whether one of the world’s poorest countries’ food security issue is being
tackled.
The Ethiopian government insists that it is in fact addressing food security
by prioritizing cotton, sugarcane, palm and rubber cultivation by foreign
investors. “These are high-capital, strategic products that are our way to
industrialization,” Tadesse said. “When we develop, we can feed more of our
people.” He added that though the focus was on the four cash crops, there
were many investors who were producing food crops in Ethiopia “purely for
the local market”.
About $2 billion, or 40%, of India’s $4.78 billion investments in Ethiopia
come from agriculture and floriculture companies, according to the ministry
of external affairs. India is the East African country’s second largest
foreign investor behind the European Union, and ahead of China.
Indian agriculturists doing business there try to offset criticism of being
neocolonialists by taking on social initiatives and highlighting their
contribution to the food security of the drought-prone and famine-hit
country.
“Ethiopia has been a food-importing part of the world, and large-scale
agriculture production by foreigners is only going to boost food supply,”
said Sai Ramakrishna Karuturi of Bangalore-based Karuturi Global Ltd, the
world’s No. 1 exporter of cut roses with 250,000 acres under rose
cultivation in Ethiopia and which plans to triple cultivated area with crops
such as maize.
The 1994-incorporated Karuturi Global ventured seven years ago into Ethiopia
to scale up its low-cost rose exports business. In 2010, it logged a 20%
sales growth, touching $115 million, with expectations of reaching $1
billion in five-six years.
But such large-scale commercial ventures are stoking doubts about bridging
the gap between the demand and supply of food in Ethiopia.
“Many of the transnational land deals being concluded in Africa are
therefore not about cultivation of food at all, let alone cultivation of
food for Africa,” said an online report of Africa-focused agriculture policy
group Future Agricultures.
In recent years, manpower costs of India’s largely marginal farmers have
surged following greater availability of less strenuous factory jobs and
welfare programmes such as the Mahatma Gandhi National Rural Employment
Guarantee Scheme. Yet, Indian corporations that can afford to hire
mechanized harvesters to cope with labour shortages steer clear of
large-scale farming owing to the difficulty of buying and operating on
several small plots and government restrictions on agriculture ownership.
Sara Cotton’s Saleem had struggled with exactly these issues. So when he
attended a 2006 road show by the Ethiopian government in Coimbatore and
learned about labour costs in the African nation being one-tenth those in
India, and the availability of thousands of acres of untouched arable land,
he took the plunge.
While cotton prices have halved in recent months following a slump in demand
from China, the world’s largest cotton importer and garment supplier, demand
is expected to rise.
“Our belief is that cotton has significant growth potential in terms of
clothing,” said Suresh Kalpathi, a seed-stage investor in Sara Cotton,
holding a 58% stake. “Ethiopia is one of the most stable countries in
Africa, with vast tracts of suitable land, water and cheap labour.”
With a $4.48 million loan and remaining in equity capital, Saleem is hoping
to harvest 30 million kg of organic cotton from 3,000 acres by July. That
would bring in roughly a Rs.80 crore profit on Rs.200 crore revenue this
year. The Ethiopian government doesn’t allow Bt cotton—the genetically
modified version of the plant that is widely used in India—because of
allegations of high seed costs and a decline in soil fertility, Sara
Cotton’s chief financial officer Sundhar Rajan said.
The company is currently flying in Indian agriculture graduates to offer
farm training to Ethiopian cattle-breeders and plans to distribute
cottonseed oil to surrounding villages at a subsidized rate. Meanwhile,
Karuturi supports drinking water supply initiatives and food donations to
needy Ethiopians.
Still, few Indian companies flocking to Ethiopia question the means of land
acquisition or the ecological consequences of the government’s strategy.
During a trip to that country in August organized by the Federation of
Indian Chambers of Commerce and Industry, delegates from 33 agro-companies
scouted for contract farming, and seed and farm equipment sales.
“None of the businesses had questions on human rights issues or ecological
impact of farming,” said Sheila Sudhakaran of the Delhi-based business
group.
----[This List to be used for Eritrea Related News Only]----