Ethiopia today is liability than asset to any land grabber. This is due to a double sided principle reasons. Firstly the existing chronic famine could turn to unexpected human catastrophe due to different factures cumulating from crop failure, massif rainfall or unexceptional drought which had never left the country since 1973. Secondly unstable situation created by the dictatorial regime reigning in the country that has destroyed the existing over half a century old agricultural institutions by replacing them with Ethnical unstable rivalry regionally based agricultural failed policy since 1991.
The world is experiencing a grain rush from dry waterless Arab Gulf states and the rich countries of East in are investing in farmland overseas to meet their food security needs. These Asian Gulf private sector is pursuing farmland deals abroad, with many investors perceiving land as a safe investment in the world unstable financial environment. This run on agricultural land grab in Africa has been described as a new phase of the world food crisis in making. This is cumulated with the recent floods in Asia and Earth quake in Caribbean and Latin America.
“Investors who qualify have the opportunity to receive loans from local banks up to 70.0 percent of their capital investment as well as attractive incentives and tax holiday”
This Agricultural Investment Support out fit of the government of Ethiopia issued July 29, 2009 is a paradox that the government used to block the initiative of the nationals who wanted to invest in their on country.
Ethiopia has also been ravaged with undeclared famine which makes it very hard for the country close to 90 million to feed itself. It would be a challenge to letting eventually grown food on the grabbed land to be shipped out in the eyes of starving millions. There are actually over 20 million Ethiopians waiting to be feed, while the other 23 million are surviving with international aid. There will be a bread riot any time soon due to recently the massif monsoon pouring rain devastating the remaining crops in the cultivated highland plateau. The worst scenario is expected from over flooding of the newly unstable constructed dams on shifting tectonic river beds. If the rain continues at its present rhythm the country’s main roads will risk to be closed due to land sliding. The risk of the over flooding won’t be as much as Pakistan but will enough to trigger a new worst famine in addition to the one already ravaging. The government of Ethiopia has been forced to suspend flight to the different regions due to the massif smog and thick clouds covering the high central plateau.
The proportion of the people in need of food in Ethiopia today is more than 1984/85 famine,and the population has doubled since. In other words almost all the population of Ethiopia short of food in the country is as many as the total population of Ethiopia in 1985.
Today the best way out would be the dictatorial regime to denationalize the land and returns it to its original owner or redistributes the cultivable land rather than letting to be grabbed. The government lands which were confesticated during the Derge Regime must be collectively farmed to feed those right now in danger of dying but not by land grabber.
Corrupt Agricultural Policy
The Ethiopian government has nationalized all lands in Ethiopia promising to transform the land of famine to a bread basket. According to the agricultural experts that the Ethiopian government facing the failure of its agricultural policy is trying to cover up by leasing the nationalized land . In its double failure to to attract foreign investors with hefty incentives is clear evidence of that failure. Moreover, already its 2010 budget allocation places agriculture to a third place in terms of priority, sign of its discouragement, or sign of resigning responsibility and relegating food production to foreign companies. This is happening for the first time since the regime assumed power in 1991, thus further affirming the failures of its national agricultural policies . In equal measures, what its action dose is arouse serious doubts about the future of agriculture in the country.
Yet, in inviting international investors, the government’s intention on one hand is said to be to improve the country’s food production capacity and on the other to earn more foreign exchange. Ninety-eight percent of the agricultural projects recorded at the Ethiopian Investment Promotion Agency involve food production, compared to only two percent for bio-fuels according to the international report. In Ethiopia today the government is retreating from domestic agricultural investment by letting the land to grabbed by the international agents at the expense of local farmers.
While Chinese company aiming to take the sesame seeds from Ethiopian farmers by producing in the country , Indian companies are preparing to produce sugar cane, tea and cotton and bio-fuel. Saudis have contracted to work on palm oil , rice, wheat and barley production. The private companies rather than foreign state-owned entities own the major shares of the approved investments rather than the governments except in china.
Chinese Share
The Ethiopian does not need a 58 store high Babylon type mega hotel construction by the Chinese in Addis, rather the country needs an equitable and durable exchange of know how and support in an infra stricture construction. While the Chinese are making unnecessary skyscraper to loge their international delegates, Ethiopians are starving from hunger not far from this megalomaniac death tower. China is given an unknown size of farmland to produce oilseeds, sesame in Ethiopia. China already brought Chinese workers to do the job denying Ethiopians employment possibilities but also the transfer of experience and technology would be minimal. China has been Ethiopia’s important destination for sesame export. China uses sesame for chocolates, biscuits, and extraction of oil for both its international and local consumption.Thus China soon will satisfy its enormous needs for oilseeds and its export revenues through its own production in Ethiopia depriving Ethiopian farmers from international revenue. China has made the local price down any way by weakening Ethiopian export capacities due to unfair competition inside Ethiopia. This will weaken Ethiopian already fragile susubistance farmers. In the past the West was weakening the African cash crop producing farmers by subsidizing their own farmers unjustifiably, but China is doing even worst by grabbing the vital food land in Africa itself.
Grabbing in Ethiopia is a liability than an asset today even in the future. All the money spent to grab the famine farmers land is poured in sinking sand and the money is sent to the fiscal paradise in Europe and American by the ruling dictator and the farmers are starving and one day they will be forced to revolt to get their land back to over turn the rgime like in the past sologan of the 1974 revoluiton:-
Land to the Tiller!
And all the partners of Dictator Melee Zenawi are risking their fortune to spend it in the land grab rather than on a lasting infrastructure and a mutual project with the land owners in the country. The first thing to be done by the starving populations is to grab the food stored if any left in the grabbed lands.
Welcome back to 1974 revolution Melese Zenawie. One of the main cause of the famine in Ethiopia was Feudal lords, today they are are replaced by the new land Lord called grabbers. This will give the Ethiopians more incentive to fight those grabbing their land any way . The land grabbing in Ethiopia is the announce of the end of the regime and a coming of the second revolution after 36 years…
Political risks to Saudi farm investment abroad
Saudi Arabia needs to consider political risks in its massive drive to invest in the agricultural sector abroad to meet its soaring food needs and cut a huge farm import bill, according to a key bank in the kingdom.
The world’s oil superpower should also try and finalise strategic alliances with major global food suppliers to ensure its farm needs in the long term and offset risks of shortages or disruptions, Banque Saudi Fransi (BSF) said.
In a study sent to Emirates 24|7, BSF said the surge in food prices in 2008 served as an alarm for the world’s richest country in oil and poorest in water to embark on massive farmland investment in fertile countries, including Turkey, Sudan, Ethiopia, Vietnam, Ukraine and Kazakhstan.
“Investing in agriculture abroad is easier said than done because the investments are often politically charged and local players could regard Gulf investors as potential ‘land grabbers’. Certain sub-Saharan African countries are themselves often net food importers, adding to the investment risk, particularly given severe climate changes occurring globally, the first half of 2010 was the warmest on record,” John Sfakiankis, BSF Chief Economist, said in the report.
“Private sector firms, meanwhile, would need support of local governments to develop infrastructure. The Food and Agriculture Organisation (FAO) estimates that, in addition to public investments, $209 billion in gross annual investments are needed in primary agriculture and downstream services in developing countries to meet global food requirements by 2050.”
BSF said for the Saudi initiative to succeed, private investors from the kingdom should have access to crucial investment information about target countries so they can base their decisions on geography, political risk, rule of law and domestic economic and infrastructure conditions.
It noted that the Saudi government has acted as a facilitator between investors and some of the countries under consideration.
“Even with these elements in place, the system would need to be tested during a food supply crisis at domestic and/or global levels,” it said.
“Private investors looking for higher profits could seek to export their crop to global markets instead of Saudi Arabia. Offtake agreements – signed between producers and buyers of resources – will need to be tested for how legally binding they are and whether the purchaser will be required to incur upfront infrastructure investments. Still, offtake agreements offer little investment risk, especially in mature and developed economies.”
The study said the desert kingdom, the largest Arab economy, could also look to strike “strategic alliances”, not necessarily based on equity acquisitions, with global food giants with decades of experience and local field knowledge.
It said these multinational companies offer “enormous” economies of scale, vertical integration, financing, research capabilities and global strategic alliances.
“Forging such agreements could facilitate access to either land in sub-Saharan Africa and elsewhere or to final products,” it added.
BSF said the vulnerability of Saudi Arabia, which relies on imports for about 70 per cent of food supplies, was heightened by its plan to phase out the production of wheat and some other water-intensive crops following decades of rapid depletion of non-renewable water resources.
It said the country needs about 2.7 million tonnes per year of wheat, around 800,000 million tonnes of rice and over 6.3 million tonnes of barley, nearly 45 per cent of total global exports. In total, it demands about 14 million tonnes of animal feed each year for livestock, it said.
Citing figures by the US-Saudi Business Council, it said up to 2008, Saudi Arabia was paradoxically a net exporter of wheat despite having one of the world’s lowest renewable water resources.
In order to face challenges of shrinking water resources and global food shortages, a government initiative was unveiled two years ago to reduce wheat production by 12.5 per cent per year until halting it completely by 2016.
BSF referred to King Abdullah’s agricultural Initiative, which took effect in early 2009. Backed by a SR3bn government-sponsored fund, the initiative aims to improve long-term food security by enabling private Saudi businesses to invest in agricultural projects in countries better suited for crop cultivation.
Saudi Arabia hopes to secure supplies of essential commodities such as sugar, rice, wheat, barley, soybeans and maize, livestock and animal feed.
“Given the scale of investments required, the fund would need to be enhanced if it is to achieve a stated goal of building a strategic reserve of basic commodities to avoid any future food crisis,” the study said.
It noted that Kazakhstan’s largest crop is wheat, ranking as the sixth largest in the world. However, agricultural lands were depleted of their nutrients during the Soviet era, which continues to impact production today, it said.
Ukraine provides opportunities for agricultural production (barley and wheat) but like Kazakhstan governance, infrastructure, and transparency issues pose challenges for potential investors, the study added.
“Similarly, Sudan’s agricultural potential could be significant but infrastructure, the hydropolitics of the Nile and stability challenges cannot be ignored. Turkey’s dynamic macroeconomic profile, stable politics and elevated rule of law has attracted foreign investors,” the study said.
“Wheat, first domesticated in southeastern Turkey, is widely produced although traditionally it imports Black Sea wheat from Russia. However, weak harvests are not uncommon due to drought and there is no legal settlement of the usage of the Tigris and Euphrates rivers by the riparian states, Turkey, Syria and Iraq.”
Turning to Vietnam, BSF said its attraction is due to its rice production capacity, being the world’s second largest rice exporter after Thailand. Vietnam is one of Asia’s most open economies and among the world’s fastest growing, it added.
As for Egypt, its agricultural potential is constraint by limited arable land, a growing population and water inefficiencies, BSF said.
“Finally, Ethiopia’s agriculture potential is vast but would require considerable infrastructure investments as well as better reorganisation. Ethiopia is often ironically referred to as the ‘water tower’ of Eastern Africa because of the many (14 major) rivers that pour off the high tableland. It also has the greatest water reserves in Africa, but few irrigation systems in place to use it.”
In 2008, the United Nations World Food Program helped feed 11 million people in Ethiopia, which suffers from crop failures and food distribution problems.
“However, there are other countries that need to be carefully examined, notwithstanding their own specific challenges, including Brazil, Argentina, Canada, New Zealand and Australia that offer predictability, rule of law and macroeconomic stability and an extensive farming experience,” the study said.
What’s the new global source for fresh, shiny produce? Famine-ridden Ethiopia
Maclean’s | 19 August 2010
Photo: Nancy MacDonald
Visit a supermarket in Abu Dhabi and you’ll be greeted by row after row of picture-perfect produce, most of it imported. The Indian subcontinent has long supplied food to the wealthy desert capital. These days, though, it’s likely those rows of shiny vegetables and fruit came from an improbable source: Ethiopia, a country practically synonymous with famine. Yes, Africa, where one in three people is malnourished, is now growing tomatoes and butter lettuce for export.
Ethiopia’s biggest greenhouse farming operation is kept hidden from curious, or hungry, eyes; even in Awassa, the southern city where it’s housed, few know it exists. Two kilometres down a dusty private road, past a checkpoint guarded with AK47s, hundreds of pristine, white greenhouses suddenly appear, alien to the setting. Farming in Ethiopia is still done by sickle and ox-driven plough. But inside Awassa’s cool, humidity-controlled greenhouses, vines are fed by a computerized irrigation system, the latest Dutch agricultural technology.
Every day, a workforce of 1,000 locals pick, pack and load hundreds of tons of fresh produce onto waiting trucks, including 30 tons of tomatoes alone. After reaching the capital, Addis Ababa, the produce is flown to a handful of Middle Eastern cities, entirely bypassing Ethiopia, one of the hungriest places on the planet. The trip from vine to store shelf takes less than 24 hours. It’s the latest project by Saudi oil and mining billionaire, Sheikh Mohammed Al Amoudi. And it may be the future of farming.
Over the past 18 months, plantations like this one have been sprouting across Africa. Middle Eastern countries like Saudi Arabia—rich in oil, but water-poor—as well as those dependent on imports like South Korea and Japan, and rising powers like China and India, have begun leasing vast tracts of land in Africa, outsourcing food production to the continent. Agribusiness and Western hedge funds are funnelling billions into the new projects, banking on future scarcity.
The controversial trend has been dubbed “outsourcing’s third wave”—following manufacturing and information technology (IT) in the ’80s and ’90s. The high cost of installing irrigation systems, and importing fertilizers, combines and tractors is no deterrent. Defenders of the new projects say they’re bringing desperately needed new technologies, seeds and investment to Africa. But opponents see the trend as a “land grab” that is forcing poor farmers off their land, and benefiting only the governments inking the deals.
Already, commercial farms dot the northbound highway to Addis Ababa. In the evenings, a steady stream of trucks loaded with fat, sumptuous berries and cherry-red tomatoes rumble past, rushing to Bole International Airport and Gulf state grocery stores beyond. The highway’s dusty shoulders, meanwhile, are littered with the carcasses of animals dead from starvation and disease, the bones bleached white from the sun. The contrast is grim, even by local standards.
The new scramble for Africa was triggered by a convergence of events: surging demand for biofuels, rising consumption patterns in China and India and the 2008 global food crisis, when the price of corn and wheat tripled, almost overnight. Responding to sudden hyperinflation, rioting and panic buying, at least 30 countries, including Argentina, Vietnam, Brazil, Cambodia and India, banned or sharply reduced food exports. In short order, Japan and South Korea, who import 70 per cent of their grains, joined a parade of countries turning to Africa to lock in means of production beyond their borders.
The scale of the effort is astonishing. More than 125 million acres—an area roughly equal in size to Sweden—has been or is being negotiated for lease or sale in poorer countries, mostly in Africa, according to a recent estimate. In Sudan alone, the U.A.E. and South Korea have leased one and two million acres respectively, for crops including corn, alfalfa, potatoes and beans; Egypt has enough land there to grow two million tons of wheat annually, and Saudi Arabia and Jordan have leased 25,000 and 60,000 acres each, mainly to grow wheat and corn. In February, the U.S. investment firm BlackRock launched a world agriculture fund, earmarking US$30 million for farmland acquisitions; Goldman Sachs and Morgan Stanley already offer investors access to similar funds. Calgary’s Agcapita, a three-year-old firm focused exclusively on farmland investment, says private equity firms have lined up some US$3 billion for farmland in developing countries.
Mostly, the deals fly under the radar. Sometimes, their size or sheer audacity triggers attention—like former AIG trader Philippe Heilberg’s deal to lease one million acres in Darfur. When it emerged that Daewoo, the South Korean giant, had signed a 99-year lease granting it close to half of Madagascar’s arable land, protests broke out in Antananarivo, the country’s capital, eventually sinking both the deal, and the president.
Why Africa? Not only is land roughly one-tenth the price of land in Asia, it’s likely the “final frontier,” says Paul Christie, marketing director at Emergent Asset, a London investment firm investing several hundred million dollars in commercial farms in Africa. Some 90 per cent of the world’s arable land is thought to be in use. Also, as Heilberg told the German magazine Der Spiegel after closing the deal in Darfur, “When food becomes scarce, the investor needs a weak state that does not force him to abide by any rules.” Sudan, a dictatorship ranked among the five most corrupt countries on the planet, certainly qualifies. Heilberg’s deal was approved by the deputy commander of Sudan’s People’s Liberation Army (SPLA), the official army of semi-autonomous southern Sudan. “This is Africa,” he recently told Rolling Stone. “The whole place is like one big mafia. I’m like a mafia head. That’s the way it works.”
He’s now looking to double his Sudanese holdings. In so doing, he’ll also gain access to hundreds of million of gallons of scarce water resources—the hidden impulse behind this new play on Africa, says Michael Taylor, with the Rome-based International Land Coalition. “Saudi Arabia has no shortage of land.
Its interest in Africa,” he says, “is water.” What we tend to think of as a dry continent actually has more water resources per capita than Europe, and drought-ridden countries from the Persian Gulf to Asia want in. In places, Taylor warns, investors are walking away with two-page contracts covering 99-year leases. No matter what the harm—over-consumption of water, over-fertilization, deforestation—“governments will be powerless to make changes.” South Korea’s Sudanese plantation will draw from the Nile, threatening Egypt’s food security downstream. Already experts warn of a brewing conflict between the nine Nile states—including favourite destinations for foreign farms: Sudan, Ethiopia, Tanzania and Kenya. Can the region shoulder the added water strain?
But the land deals also offer a chance to reverse decades of under-investment in Africa—which was bypassed by the Green Revolution that, in the ’60s and ’70s, transformed India and China. In much of the poor world, “land is not primal forest,” says Oxford economist Paul Collier; “it is just badly farmed.”
Collier, among the best-known voices on global poverty, argues that the West’s “love affair with peasant agriculture” is clouding the development debate on Africa. “Our peasantry vanished for a simple reason—it was inefficient,” says the author of The Bottom Billion, pointing to emerging market successes like Brazil, where large-scale industrial farms have replaced small holdings. “Commercial farms innovate,” he writes, “because scale helps to overcome the impediments faced by the small.” Some African intellectuals bridle at Western criticism of the play on Africa. “They’re here because we want them here,” says Teshome Gabre-Mariam, one of Ethiopia’s top lawyers. “We can’t ignore the development potential of this venture. We have everything to gain, nothing to lose.”
These days the severity of the food crisis has eased, but not forever. By 2050, when the global population tips nine billion, demand for food will have risen by as much as 70 per cent, according to the UN Food and Agriculture Organization. Food commodity prices continue to climb alongside rising energy prices and desertification is accelerating from Australia to China to Spain; the rising temperatures are predicted to slash yields. In places, that’s already begun. Like it or not, hungry eyes will increasingly zero in on Africa. The world, it seems, may come to depend on it.
Photo: Nancy MacDonald
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