Have Indian farm investors bitten off more than they can chew in Africa?

That's the question Aman Sethi asks in one of the surprisingly few articles that asks how the wave of farmland investors from India into countries like Ethiopia have fared.

Most of what usually comes to light are the public relations-type announcements of the millions of dollars one or another company is said to be investing into a country. There is usually little or no explanatory detail behind the numbers meant to impress. In the following years there is often even less information about the inevitable challlenges of establishing a project from scratch in a new environment.

As an example of what he calls the 'bitter harvest' being reaped by some Indian farmland investors, Sethi cites Emami Biotech, which withdrew from a 40,000-hectare biofuel plantation in Ethiopia just a year after it started in 2009.

The best known and biggest Indian investment in Ethiopia is Karuturi Global's rose and food crop operation. It is cited as both an example of Ethiopia's success at attracting large scale investment, as well as an example of a new type of 'land grabbing' colonialism. Seth says questions are being asked about the capacity of companies like Karuturi to manage a landholding as large as its reported 100,000 scattered hectares.

Although biofuel projects have been failing in many countries over an as yet unviable business model, Emami

cited as among its reasons for its pull-out lack of full cooperation from the Ethiopian government, insufficient water access and land disputes with resentful local communities who had not been consulted. An Ethiopian government official is reported to have laid the blame on Emani's failing to do its homework adequately.

An analyst quoted for Sethi's story speculates that when Emani found that jatropha biofuel wasn't going to be the next liquid gold just yet, it then sought land more suitable for food crops. Apparently the Ethiopian government was not impressed and was in no hurry to cooperate to save Emani's hide. In any case, that would have been a very different business plan than the one for which Emani originally raised investment funds, so at that point (the realization of the unviability of the jatropha project) the company was already in deep trouble.

Sethi's article (Indian firms reap bitter harvest in Africa) should be required reading for the many aspiring, inquiring would-be-investors who seem to think that normal due diligence, research and preparation do not apply to tapping into Africa's business opportunities.

Chido Makunike

African Agriculture

If Jain Irrigation is in trouble back home in India, can it raise $375 million to invest in Africa?

Why do foreign profit-seeking ventures in Africa have to so often be hidden as if they were free 'assistance?'

There is widespread new global interest in and excitement about the potential to make money in Africa, including in agriculture. The great potential itself is not new, but apparently there are more people across the world now willing to see it, partly by looking beyond the dominant ‘international media’ stereotypes about Africa.

But clearly, the paradigm switch from seeing Africa as a place of opportunity rather than as a perennial target of aid is proving very difficult for some. The CNN/BBC/’international media’ stereotypes are for many still much stronger on the imagination than the realization that along with its problems, ‘Africa’ is also a place on the move, with ‘normal’ people and great opportunities both because of and in spite of the many challenges.

Jain Irrigation, an India-based company is eager to exploit the opportunities that lie in providing irrigation equipment to the agriculture sector in African countries. The G8 Summit seemed to Jain like a good opportunity to express its Africa interest. Like many others, they can already smell money to be made from the newly announced G8 plan for the private sector to play a bigger role in agricultural ‘development’ in Africa.

Here are snippets from a May 21 Times of India article:

‘Jain Irrigation Systems said the company will invest $375 million over the next few years to improve income of small and marginal farmers in African countries, including Nigeria, Kenya and Rwanda…The company said that it is launching significant African expansion programme which aims to provide an integrated set of irrigation and infrastructure solutions for small-holder and commercial farmers. It would also invest in creation of storage, handling, supply chain and processing infrastructure in the African countries.’

It reads like yet another ‘project’ from a selfless, kind-hearted external ‘donor’ touched by the plight of Africa’s ‘small and marginal farmers.’ Yet behind the propaganda about investing to ‘improve the income’ of those farmers, what Jain obviously has in mind is to set up a presence in the countries mentioned in order to sell its products and services to these ‘small and marginal farmers.’

In other words, they want to do business in these countries. What is wrong with that? If they provide a good deal, indeed irrigation products accessible by small holder farmers should be a potentially very lucrative business opportunity for Jain. So why pretend to speak about it as if the planned/purported $375 million investment will be some kind of donation?

It turns out that the company may be in some trouble, and perhaps in not such a strong position for the currently fashionable ‘business philanthropy’ bandwagon that Africa is currently a target (victim?) of, and that Jain seems to want to join.

But according to ‘Jain Irrigation Systems: Can’t pay its huge debt and wants to conquer Africa,’ published in a different publication on the same day of the company’s Africa investment announcement, ‘from where will it get the money, still remains unanswered…because the company has huge debt on its balance sheet in India and has not been paying its dues to the banks. Even its receivables for FY11-12 were 343 days, which means the company has yet to receive cash for its sales done almost a year ago.’

Aha! So perhaps this is a company in trouble at home, hoping to make easy pickings in Africa?

Sure, it is a welcome development that the rest of the world is waking up to the fact that there are opportunities galore in Africa, and that perhaps much of the media they are exposed to gives them a very distorted, uni-dimensional picture. But boy, do those who naively think the ‘poor helpless Africa’ of their stereotypes is a place to just pick money off the streets have a steep learning curve waiting for them!

Here’s wishing Jain Irrigation good luck and good business, both back home in India and if and when it comes to Africa!

African Agriculture

Questions about India's 'major boost to Africa's cotton output'

A much circulated statement says 'India has set in motion a $4.66 million programme to develop the cotton industry across the African continent.'

Questions immediately rise from the first sentence. Africa is very big and varied so any claim about 'across the continent' seems very doubtful, especially given the stated amount of the initiative, the number of beneficiary countries (seven) and the project period (three years, from January 2012 to December 2014). No doubt the people the project will assist will be grateful, but less than $5 million spread so thinly cannot honestly be said to be capable of  'developing the cotton industry across the African continent.'

S.K.Makhijani, economic counsellor in the Indian High Commission in Nigeria, is quoted as saying the project involves training, transfer of technology and ICT-based interventions in production.

"This is an initiative under the aegis of the second India-Africa Forum Summit aimed at strengthening the competitiveness of the cotton sector," Makhijani said, including by, "training in extension technology, training in post-harvest management as well as pilot projects on crop residue-based industries" will be conducted.

It is also expected there would be the establishment of skill schools, exposure visits, advisory support for policy framework and investment promotion.

"It is hoped that these initiatives would change the face of an industry that has suffered a myriad of problems over the years," Makhijani said.

The cotton sector in many African countries is struggling, but it is for complicated local and economic reasons that cannot be addressed by a few projects, no matter how well-intended.

Indian and Chinese interventions are much more thriftily implemented than traditional Western ones that have dominated in recent decades in Africa, but still, the stated outcomes across such a large number of countries  from a distance seem out of proportion to the budget. The seven countries are Benin, Nigeria, Chad, Burkina Faso, Mali, Malawi and Uganda.

It may be oversold by its promoters, but it nevertheless sounds like a good initiative.

African Agriculture

Malawi receives US$ 55 million farm equipment loan from India

The government of India on December 19 2011 handed over 177 tractors and 144 maize shellers to Malawi on a loan facility under Line of Credit Corporation from Exim Bank of India.

Malawi will repay the loan within 40 years. The loan is said to be valued at 55 million US dollars and was duly approved by the Malawi Parliament.

Zodiak Online

The Indian land grab in Africa

by GOI Monitor

Joining the neo-colonial bandwagon, Indian companies are taking over agricultural land in African nations and exporting produced food at the cost of locals

Indian companies venturing abroad is always regarded as a healthy trend, an indicator of India's new-found economic status. But little is known about how these companies are flexing their imperalistic muscles in poorer countries, grabbing the land and giving little in return. A report ‘India’s Role in the New Global Farmland Grab’ by researcher Rick Rowden brings forth these atrocities which are shockingly similar to what India used to blame rich western countires for.

Joiing the race with China, Saudi Arabia, Kuwait, South Korea and the European Union, Indian and Indian-owned companies are acquiring land in Africa at throwaway prices, indulging in enviornmental damange and exporting the food while locals continue to starve. The origin of this unhealthy practice can be traced back to the food crisis of 2008 when rich countries were forced to confront the reality of how fragile the global food scenario can be, especially for those without sufficient cultivable land. To ensure more direct control over food, these countries started acquiring land in poorer African countries and shipping the produce back home. A recent World Bank report found that 45 million hectares of large scale farmland deals had been announced between 2008 and 2009.


The initial support to such forays was based on the belief that the world is facing scarce food supply because of long-term under-investment in the agricultural sectors of many developing countries. However, as stressed by the United Nations Special Rapporteur on the Right to Food, "the diagnosis and remedy are incorrect…Hunger and malnutrition are not primarily the result of insufficient food production; they are the result of poverty and inequality, particularly in rural areas, where 75 per cent of the world’s poor still reside.”

Outsourcing farming, the Indian way

There are various factors driving the “outsourcing” of domestic food production in India. Primary among these are stagnation or drop in crop yield due to "green revolution fatigue”, government’s concerns related to long term food security besides the allure of much cheaper land and more abundant water resources in African countries. The subsidies being offered by governments of African countries is another enticement. In many cases, the companies have been offered special incentives, including the offer to lease massive tracts of arable land at very generous terms with access to water and the ability to fully repatriate the profits generated.

According to figures provided by governments of various East African countries in 2010, more than 80 Indian companies have invested around $ 2.4 billion in buying or leasing huge plantations in Ethiopia, Kenya, Madagascar, Senegal and Mozambique to grow food grains and other cash crops for the Indian market. The high input cost of farming is also driving these companies to explore Africa. Talking to news agency IANS earlier this year, S.N. Pandey, an executive with Lucky Group, one of the companies which have invested in Africa, stressed on the price factor. “The cost of agricultural production in Africa is almost half that in India. There is less need for fertiliser and pesticides, labour is cheap and overall output is higher,” he was quoted as saying.

Indian agriculture companies also complain that India’s small and fragmented land holdings are unsuitable for large-scale commercial farming, and there are too many bureaucratic hurdles to investment. Recent offers by African governments allow Indian farmers to acquire much larger tracts of contiguous land on lease for 50 years, and in some cases even up to 99 years at throwaway prices. According to a news report in the Indian Express, “The land lease rate in Punjab’s Doaba region is a minimum of Rs 40,000 per acre. In contrast, in most African nations, the land lease rate in terms of Indian currency comes to Rs 700 per acre. This means that for every one acre in Punjab, Indian investors can own 60 acre in Africa. With a per capita land holding of 1.5 acre in Punjab, agriculture is ceasing to be a sustainable activity.”

A sample of Indian companies investing in agricultural land overseas:





Nobody bothers about locals

In some countries such as Ethiopia, where there is a lack of effective governance and democracy, local populations have reportedly suffered evictions with no recourse. Of all the land-grabbing deals in recent years, perhaps none has received as much attention as that of Karuturi Global's massive land leases in Ethiopia’s Gambela region. While the East African country claims the entry of foreign investors would help develop the large tracts of wastelands, experts say there is no such thing as “waste or idle land” in Ethiopia, or anywhere in Africa.

Several studies have shown that local competition for grazing land and access to water bodies are the two most important sources of inter-communal conflict in most parts of Ethiopia populated by pastoralists. Indeed, in almost every case of recent land leases involving foreign enterprises, locals have complained that they lost access to grazing land and water due to these projects. This has also been the case, for example, with foreign investments in both the Bako and Gambela regions of Ethiopia where many Indian firms operate. Proponents of the new land rush also often claim that the foreign investments in land will create jobs for locals, improve living conditions and increase national GDP. In Ethiopia, over 3 lakh families have been potentially displaced but only about 20,000 people are expected to get jobs on the new highly-mechanised farms.

According to a news report on BBC online, “there have allegedly been a number of arrests and killings of local people who oppose the recent land investments.” The indigenous Mazenger people of Gambela have been struggling to protect their ancient forest-covered lands along tributaries to the White Nile that have come into conflict with the lease given to the Indian company Verdanta Harvests Plc., which plans to clear their land and use it for a tea and spice plantation. According to the documents available with Solidarity Movement for a New Ethiopia (SMNE), the locals were made aware of the plan to lease out their ancient lands and “secret forests” only in early 2010. They approached the Ethiopian President Girma Wolde-Giorgis, who mostly has representative powers, and won his support. The Environmental Protection Authority of Ethiopia (EPAE) also recommended that the lease project be stopped since the short-term benefits of leasing would not outweigh the long-term costs to the country. However, the local Governor announced that the 3,000 hectare of forests had already been leased out for 50 years. Despite another intervention by the President, the project is moving forward and the forests are being cleared.

“If what is going on in Gambela was happening in New Delhi, India, or in Oxford, England, Bismarck, North Dakota, or in Saskatoon, Canada, this would be unthinkable. If it is not allowed in these places, why is it justified in Ethiopia," asks Obang Metho of SMNE.

Environmental concerns and contracts

One of the most significant concerns about the trend of overseas investors relates to environmental impacts of establishing increasing numbers of large-scale, mechanised mono-cropping farms that are dependent on high levels of water usage besides heavy doses of pesticides and herbicides which impact both the soil and the underground water. “The ecological sustainability of land and water resources is an important concern, especially considering the relatively short-term orientation of the foreign investors versus the long-term outlook needed in considering the environmental impacts of land uses,” says D Byerlee, who presented a paper on “Drivers of Investment in Large-Scale Farming: Evidence and Implications,” at a World Bank conference in 2009.

Amid growing controversy around investments in Ethiopia, the Ethiopian Minister of Agriculture and Rural Development recently made public the 12 Land Rent Contractual Agreements for land leases including five contracts with Indian companies. All these contracts specified that the companies were to ensure that environmental impact assessments were undertaken and submitted to the authorities shortly after assuming operations and that the investors would otherwise abide by current Ethiopian conservation laws. They did not specify who exactly would undertake the environmental impact assessments, the quality and scope of such assessments and transparency of the process by which they are to be undertaken.

Regarding water usage, each of the five contracts specified that the companies had the right to build dams, water boreholes and irrigation systems as they see fit. Only the smallest contract for Verdanta Harvests PLc.’s tea plantation did not mention water rights. Interestingly, only the biggest contract for Karuturi Agro Products Plc. included the additional clause that the company also had the right to “use irrigation water from rivers or ground water.” However, there was no mention of payment for this water usage, the quantity of water to be used and over what period of time.

All five contracts stated that the Indian companies have the “right”- not the obligation- to provide power, health clinics, schools, etc. It was not specified to whom these services might be provided –the local population or just the company workers. Yet, the provision of such facilities had been a high-profile claim made earlier by the government as to why the investors should be allowed to undertake these projects. None of the five contracts of the Indian companies mentioned labour laws or specified any wages or working conditions for their local employees. Nor did the contracts seem to justify the claim made by the companies and government regarding the increase in agricultural productivity and transfer of such new technologies to local farmers. If the omission suggests that the Indian companies alone shall retain the higher value technology, it is unclear how this will help local farmers in Ethiopia in the future.

Indian government's role

Following a 2009 visit by Namibian President Hifikepunye Pohamba, the then Minister for External Affairs Shashi Tharoor said: “We are now in talks with Namibia after their President's visit, to use land for our purposes.”

At the sixth Agriwatch Global Pulses Summit in New Delhi in 2010, India's Food and Agriculture Minister Sharad Pawar asked the delegates to ponder over the “viability of Indians leasing land abroad for growing pulses and exporting it back to India.”

Both these statements point towards India's objective to ensure food security by acquiring land in lesser developed countries. The Indian government acts as a facilitator to the whole process rather than the main player. It is supporting the conventional new greenfield foreign direct investments, merger and acquisition purchases of existing firms; public-private partnerships ; specific tariff reductions on agricultural goods imported to India through the negotiation of regional bilateral trade and investment treaties and double taxation (avoidance) agreements.

Another major way the Indian government has financially facilitated the process is by giving concessional lines of credit to various developing country governments, banks, and financial institutions, as well as to regional financial institutions, through the Indian Export- Import (Exim) Bank. Often such lines of credit are for the purpose of national development projects and where these projects involve agricultural development, Indian foreign investors stand ready to win concessions and contracts for agricultural development in the form of their foreign direct investment.

The largest single line of credit approved by the Exim Bank so far has gone to Ethiopia ($ 640 million) for its Tindaho Sugar Project and it is also widely expected to facilitate Indian investments. The soft loans, with an annual interest rate of 1.75 per cent, are to be repaid over 20 years.


In trade policy, a number of economic incentives such as duty-free tariff preference schemes have been put in place by the Indian government in order to encourage private companies to invest in land abroad. For example, Ethiopian farm produce entering Indian markets is now taxed less than produce from India, according to Anand Seth, the deputy director general of the Federation of Indian Export Organisations.

The defence put up by companies

Indian companies reject their characterisation as neo-colonials and insist they are just doing business. Many companies claim the land acquisitions are simply strategies for their expansion and vertical integration. Raju Poosapati, the vice president of India's Yes Bank, which advises Indian investors in Africa, said a government ban on non-Basmati rice exports had driven Indian companies to go abroad in order to be able to grow and sell it in global markets.


Karuturi Global Ltd. clarified that it pays its workers at least Ethiopia’s minimum wage of 8 birr, and abides by Ethiopia’s labour and environmental laws. Speaking to Bloomberg, Sai Ramakrishna Karuturi, founder and head of Karuturi Global Ltd., said, “We have to be very, very cognisant of the fact that we are dealing with people who are easily exploitable,” adding that the company will create up to 20,000 jobs and has plans to build a hospital, a cinema, a school and a day-care center in the settlement. “We’re going to have a very healthy township that we will build. We are creating jobs where there were none,” he said. However, Metho says so far there has been no sign or mention of any of this according to reports from the local people.

The situation seems quite similar to what foreign corporates are doing in tribal areas of Orissa and Chattisgarh in India. Metho believes a close coordination between Indian and African activists can help serve the cause of marginalised communities in both the worlds.

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Comments

RajMadhavCthakur

Just one word. DRIVE THOSE GREEDY COMPANIES OUT. The Indian MNC's have already riobbed it's own people and now they are on the drive to steal the poor african population.

rosemerry ·

"In many cases, the companies have been offered special incentives, including the offer to lease massive tracts of arable land at very generous terms with access to water and the ability to fully repatriate the profits generated."

What benefit is there to the Africans? India has done enough terrible damage to its own native peoples( eg Dalits, "Maoists", forest people) as well described by Arundhati Roy, with its big dams and removal of poor people to allow the big agricultural firms to make big profits. As always, the rights of corporations, and the needs of obese or even ordinary élites in any country take the place of any care for the land and the incumbent nuisance of victims of poverty.


Dr Fazzur Rahman

Really it was an eye opener and i would like to argue here that if UP or nay other government is grabbing land for some other purpose, it can not be justification for nay firm to go and compensate it by grabbing land of some other countries what seems to be the argument of Professor Joan P. Mencher

Dr Fazzur



Prof. Joan P Mencher


Thanks for publishing this report. One related point needs to be mentioned. When Indian State governments decide that they will evict large numbers of small farmers who are producing excellent crops because they want to build 4-8 lkane highways, fancy upper middle-class housing, malls, etc. Then of course they are limiting the amount of land in India to grow food. In UP, it has been said that 1/3 of the good farm land will be taken away under laws of eminent domain, in order to do then. SO, of course they must look elsewhere. I have seen enormolus amount of fgarm land taken to build highways to very very large airports in places like Bangalore or Hyderabad, with hardly any compensation for the farmer.

One other point, SRI rice or SCI System of Crop intensification, a method which entered India from Madagascar, has led to significant increases in food production on small and medium size farms. In states that [promote it, it has done exceptionally well. Yet, these multinationals are doing everything to claim that India cannot feed its people even if it grows to 2 billion. It uses between 1/3 and 1/2 less water, and no artificial pesticides or fertilizers. IT requires using the weeds as additional fertilizer. It is important to look at these alternatives when we allow investors be they from India, the US, or China or anywhere else, to take over African lands.

Counter Currents

Indian floriculture investor answers questions on his African interest

Sixteen years ago, Sai Ramakrishna Karuturi started a floriculture business in Bangalore, and became one of India's biggest floriculturists in quick time. A few years ago, he stepped into Africa; today, he operates 7.5 lakh acres in Ethiopia and 1,500 acres in Kenya. In land that is about 8 times the size of Mumbai, Karuturi grows flowers and a range of other agricultural products. He is probably today the world's biggest supplier of roses. Karuturi talks to STOI about his African safari.

What are the challenges in Indian agriculture?

Land is an emotive and contentious issue. If the interlinking of rivers project is revived, it may connect the flood zone in the East with the drought zone in the South, and unleash some arable land. Otherwise, of the 300 million hectares of land we have, only one-third is arable. It is impossible to have a sizeable 5,000 acres of land in the country. Rain-fed agriculture is suicidal.

Why has Africa become so critical for your business?

Africa is better in terms of productivity, costs, taxes, duty-free access to European markets because of their least developed country status, and lower transportation costs owing to the geographical proximity to our main markets in Europe.

How much lower is the price of a rose grown in Africa compared to that in India?

A rose from India, when it lands in Europe, will cost about 14 euro cents and it will be about 30% less from East Africa.

What about the political risks in Africa?

We invest only in countries that have a bilateral investment treaty with India. Also the country must be a signatory to World Bank's Multilateral Investment Guarantee Agency (MIGA). We buy MIGA insurance which protects us from political risks. We are also working closely with the government to build a healthy relationship with India. I am currently the honorary consul-general for Ethiopia in Bangalore.

We read about civil strife and mafias in some of these African countries. Isn't the environment difficult to operate in?

Riots happen everywhere, including in India. You have to find a way around them. Three months after our biggest acquisition in December 2007, Ethiopia was on fire. But we were working round the clock, harvesting and shipping flowers. Police and guards protected our farms. We stocked up food and water, essentials and blankets. Maybe the Cauvery and Rajkumar riots taught us how to survive such things. I remember then having gone to the Bangalore police commissioner, representing a small flower organization. He told me between 12 midnight and 3am, most people sleep. Since then, I have been shipping flowers in that window, when temperature and traffic are low. As for the mafia, they prefer to hijack trucks carrying copper. Copper is $10,000 a tonne, while food is only $200 a tonne.

Times of India

Indian research institute offers short courses for African food processing professionals

About: Two Short Term Training Programmes on "Upgradation of Food Testing Skills of Food Processing Professionals" under "India Africa Forum Summit (IAFS)-II; announcement asking for participants

Goal: Building Capability in the area of Food Safety in different countries of Africa.

Where: Shriram Institute for Industrial Research, Dehli, India

When: January 09-23, 2012 and during February 01-15, 2012

Cost: These programmes would be completely funded by the Government of India under the aegis of India Technical Economic Cooperation Programme (ITEC) as a part of India Africa Forum Summit (IAFS)-II. The funding includes economy airfare (most economical route), lodging, boarding (accommodation and food) and training fee. The participants will also be given some subsistence allowance for the period.

Shriram Institute for Industrial Research has been given the responsibility of organizing these training programmes at their center in Delhi, India so that it can transfer the know-how regarding different aspects of determining the level of toxic contaminants in different food products for ensuring the safety of food products.

The objective of these programmes is to upgrade the skills of scientists involved in assessment and certification of various food products for their quality and safety in different countries of Africa.

Institutes are invited to nominate their scientists for these programmes. The number of seats for each programme is limited to 25. There will be a selection criteria to fill the seats and therefore, there can be more than one nomination from one organization for the programme.

The nominees should be meeting following criteria:-

- Age:25-40 years

- Qualifications & Experiences: Graduate/Post Graduate in Sciences/ Food Technology/Microbiology/Chemistry, preferably with 1-2 years experience working in research/quality certification/inspection /regulatory affairs of food safety in the area of food, agriculture and water.

Further queries related to the subject matter may be forwarded to the following contact persons.

Mr. Virendra Seth + 91 9818360623 (Email: vseth@shriraminstitute.org / sridlhi@vsnl.com)

Dr. Manjeet Aggarwal +91 9811239472 (Email: manjeet@shriraminstitute.org

Dr. Sanjay Rajput +91 9868144455 (Email: rajput@shriraminstitute.org)

More Information: http://www.shriraminstitute.org/

India’s Tata group plans to grow tea in Ethiopia

 India's Tata group plans to grow tea in Ethiopia and is working towards setting  up an automobile assembly plant in Mozambique as it seeks to expand business interests in Africa.

The group, owner of the Tetley tea brand, has approached Ethiopian authorities with a proposal to venture into tea farming in the landlocked country, said Esayas Kebede, director  of Ethiopia’s agriculture and rural development ministry.

“We are in communication. We have regions in Ethiopia that are suitable for tea

 cultivation, as you have regions such as Assam,” Kebede said in an interview in Hyderabad, where he attended an India-Africa business conference. Around 70% of 40,000 hectares allocated for contract farming has gone to Indian companies, he said.

Cheap land and labor costs in Africa are attracting Indian companies with business interests in agriculture, particularly pulses and edible oils. India imports around 8 million tonnes (mt) of edible oil every year and 3.5 mt of pulses.

Mint reported on 19 October that state-owned trading firm MMTC Ltd,  Indian Farmers Fertiliser Cooperative Ltd (Iffco) and plan to join the list of Indian

companies engaged in commercial farming in Africa.

Tade between India and Africa rose from $25 billion in 2006-07 to $53.3 billion in 2010-11 as both exports to and imports from the continent swelled, according to a report prepared by the Export-Import Bank of India for the lobby group Federation of Indian Chambers of Commerce and Industry.

Tata Africa Holdings (SA) Pty Ltd has a presence in 10 countries of the continent in sectors as varied as information technology, communications, automobiles, steel, hospitality, consumer products and chemicals.

Livemint

A self-correcting feature of some foreign agro-investments: plain old business failure

by Chido Makunike

Is Africa getting a good deal from the rush of foreign investors to invest in the continent’s farmland? Are the terms of the deals fair? Will the promised and hoped for benefits actually materialize? Will the benefits outweigh the negatives?

It is questions like these that currently predominate in the huge discussion. For better or for worse, the answers will only become clear with time. There is unprecedented worldwide scrutiny of these deals, and a seeming preponderance of doubt that they will be good for Africa. This may be useful in letting investors know that the world is watching, and may serve as an incentive for some to conduct themselves better than the previous major scramble for African land, and better than they might have done unwatched.

Can the deals be structured to avoid abuses of host countries and local communities, or are the most welcoming countries so eager for agricultural ‘development’ that they sidestep this question? How to do this is another question that increasingly informs the debate.

While this discussion is raging, enough time has elapsed since the current wave of agro investments/land grabs (insert your ideological orientation here and choose your favored term accordingly) for a little discussed self-correction of some of the deals to become apparent. That is that many of these deals, as loudly touted and as impressive sounding as the figures involved are, actually are many times not very well conceived from a strictly business sense, let alone all the other aspects that are currently the main focus of controversy and discussion.

By both proponents and opponents alike, it seemed to have been assumed that once an agro-investment was given the go ahead, it would be an easy, virtually automatic and guaranteed license to print money for the entrepreneurs and their financiers. The underlying reasons for this assumption are familiar to anyone who has been following the controversy.  

Among them (spoken and unspoken): ‘’Land in Africa is dirt cheap compared to anywhere else, you would have to be a fool not to become a billionaire there in about two seconds. The main reason for the continent’s agricultural difficulties is that Africans are sitting on their brains; the hot sun might have fried part of their brains. Just bring in some non-Africans to run your project and voila, all problems solved, money in the bank. There is no need to secure markets before investing; the Africans don’t have a clue how to farm so they will all flock to buy whatever the investor decides to grow (‘no problem, we’ll work out the details when we get there.’) The problems of climate change on the continent that we keep hearing about (floods, drought, etc) only affect African farmers; they will bypass the foreign investor, easy money in the bank.’’       

  

And so on and so on. Dear reader, this is really not far removed from what has been said or implied by many excited investors. You might say that it is in the nature of being an entrepreneur to have a positive, sunny disposition to a business they have invested a lot in. But what is surprising is the number of what would normally be expected to be hard-headed financiers to buy a lot of these incredible assumptions.

Business is risky every where, any where. The many risks of tilling the soil are well to even the back yard garderner, le alone one of the world’s foremost business risk takers: the small scale African farmer. S/he’s livelihood depend on whether it rains enough or not, whether the timing of those rains is right, having enough money or labor to adequately tend and harvest the crop, etc, etc.

Because a key premise of today’s agro-deals is that they involve an entirely different model of farming to that practiced by most African smallholders, it has been assumed that the foreign investor would be largely be immune to the business risks that plague the African farmer.

So the thinking of many investors seems to be, ‘just get the chief/minister.prime minister/president to sign the lease, give him his ‘commission’ (wink, wink, heh heh heh) and then walk over to your new field and start harvesting the money. What could be simpler?

Alas (shock, horror), many investors are finding out it may actually not be that simple after all! Farming in Africa is as risky an enterprise as any other business anywhere else, with some unique twist thrown in as well. Up until recently all that would be released to the public by the hopeful agro-investors and their backers were the tens/hundreds (take your pick) of millions of dollars claimed to be involved, and the manifold returns soon expected.

Without any of the fanfare of the announcement of the biggest deals, reports are beginning to trickle in of some of them quietly folding.

One of several recent examples is UK-domiciled Sun Biofuels’ apparent abandonment of its much-hyped jatropha project in Tanzania. The reported reason is ‘the long, severe East African drought.’ Of course, it is entirely possible that severe drought is the main reason for the apparent failure of the project. But it must also be pointed out that other high-profile jatropha (and other crops) projects have collapsed before the current East African drought/famine really hit. Others elsewhere have quietly gone under where there is no ’drought.’

The failure of any business is sad because of all the preparation, investment and hope that goes into it. And yes of course, any plant, including ‘hardy, drought-resistant, marginal soil-growing’ jatropha needs a certain minimum of water to thrive. The investor can’t be blamed when that doesn’t happen, although there are still some tough questions that could be reasonably asked even in that scenario.

Examples: After sinking in tens of millions of dollars years of effort, why give up completely after a two or three year dry spell that scattered reports suggest is beginning to break? Why not now try to salvage the project by investing a little more now, rather than losing everything by abandoning it? If the financiers are not willing to do that, is it perhaps because other inherent, non-drought aspects of the business model are becoming apparent in a way they might not have been at the beginning?

If it is the latter case, this is a plain old business failure somewhere in the chain that led up to the investment, with ‘drought’ perhaps only worsening and quickening those weaknesses. And yet somehow, few people seemed to have contemplated that the failure/attrition rate of these projects may be no different from that of business anywhere else. In other words, even when based on what look like exploitative, give-away terms of lease, it is far from assured that the new agro-deals are virtually cash machines spewing out dollars and euros. Who would have guessed this? Apparently not the investors and their backers!

India-listed flower grower Karuturi seems on a role in Ethiopia. Everything seemsto be coming roses for the company, helped by the host government reportedly almost shoving huge parcels of land into the company’s lap for nothing. If things are good in Ethiopia for Karuturi, it is far from clear yet if the deal is a good one for Ethiopia. Proponents and opponents of these deals are so tightly in their ideological boxes that their comments about what is going on in Ethiopia, net good or net bad, must be taken with a large grain of salt.

But if the Ethiopian operation is or will soon/eventually be a net good for the country, Karuturi seems to now be dangerously cocky and super-confident in a way that may come back to haunt them. They seem hell bent on snatching business failure from the jaws of their current success.

How so? With the huge amounts of land the Ethiopian government put at their disposal, Karuturi now proposes to bring in tens of thousands of Indians as outgrowers!!! You can figure out for yourself how many Ethiopians are going to take this news, cockily delivered by Karuturi’s CEO, not even the Ethiopian government. Read up on the colonial histories and aftermaths of (to name a few) Algeria, Kenya, Namibia, Zimbabwe and South Africa as a reference to why sooner or later, this idea of Karuturi’s will likely blow up in its face.

Ethiopians are likely to welcome this news with about the same level of enthusiasm as would Indians if they were told that 20,000 Ethiopians would be landing on their shores, for whatever purpose. Karuturi’s project will all of a sudden  by seen by many Ethiopians as a scheme to settle Indians, rather than an ‘investment’ that will bring jobs, skills and other benefits for them.

In Zambia, in recent years Chinese investment has outpaced Western investment in the country’s mining (mainly copper) sector. The country welcomed that as much as many others are falling all over themselves to lure agro-investors. By all accounts, it is widely agreed that Zambia has benefited from this, at a time when for various reasons Western investors were no longer interested in the country.

But there has also been simmering, sometimes exploding resentment by many  Zambians about the influx of Chinese people. Somehow, foreigners running chicken  

farms, small scale retail shops and so on were not quite what they had in mind when they though of the ‘investors’ who would come from China. Many such ‘investors’ in many African capital cities is a controversial, explosive issue. Many attribute the September upset of new Zambia president Michael Sata over the extremely China-friendly incumbent Rupiah Banda to Sata’s promise to get tough with the Chines about this issue.

Perhaps Karuturi in Ethiopia didn’t get the report of what happened/is happening in Zambia, and how there might be parallels with its stunning plan to import tens of thousands of Indian ‘experts.’ If so, epic business fail! They should keep on top of these hot issues across Africa, and dissect them appropriately in regards to their own operations.   

So even if all the figures of Karuturi’s business plan seem to add up, this non-numerical miscalculation may very quickly wilt what now seem like the companys’

rosy prospects in Ethiopia. If that happens, it can not be said to be a non-predictable  factor like ‘drought.’ It would, quite simply, be a huge business mistake to do this, even with the endorsement of an allegedly, astonishingly compliant host government. Knowing the likely result of such a politically, socially charged (even reckless) announcement as Karuturi has made, that brings their overall business skills into question as much as any other more traditional reason for business failure.

There are many other similar as well as different train wrecks waiting to happen in the great African land rush. Some will succeed, many will fail for a multiplicity of reasons, some of which are only beginning to be apparent now, about three years after the rush began.      

Amidst the many challenges of doing business in Africa, there are indeed great opportunities for Africans as well as non-Africans to make good money and carve out new business empires. But it might not be quite as easy as picking roses or jatropha berries.      

      

If so far we have mainly heard the public relations hype of excited new foreign miners of African ‘green gold,’ watch this space as the harsh business reality begins to set in for many operators.

Unfortunately, and beyond the scope of this already too long post, the sudden departure of large foreign agro-investors who get burned (or who burn themselves) may leave behind an even bigger mess than if those projects had been nurtured to eventual win-win success. 

African Agriculture

Indian company Karuturi’s rosy Ethiopian investment increasingly resembling a colonial-style settler land grab

by Alemayehu G. Mariam

“Karuturi's First Corn Crop in Ethiopia Destroyed,” announced the headline.

Karuturi Global Ltd., is the Indian multinational agro company that has been gobbling up large chunks of Ethiopia over the past few years. This time, Mother Nature gobbled up Karuturi. The company reported last week that its 30,000 acre corn crop in Gambella in western Ethopia was wiped out when the Baro and Alwero rivers overflowed their

banks and overwhelmed Karuturi’s 80km long system of protective dikes.

Head honcho Sai Ramakrishna Karuturi said his company took a $15 million ‘hit’ from the floods. He was manifestly puzzled by the intensity of the calamity: “This kind of flooding we haven?t seen before. This is a crazy amount of water.”

Karuturi is today the proud owner of ?2,500 sq km of virgin, fertile land ? an area the size of Dorset, England-? in Ethiopia. Truth be told, Karuturi did not ask for this bountiful giveaway, nor did it lay eyes on it when it was presented with a 50-year ‘lease’ on a golden platter by the ruling regime in Ethiopia. Karuturi was offered the land together

with generous tax breaks and other perks for £150 a week (US$245).

Karuturi Project Manager in Ethiopia, Karmjeet Sekhon, giggled euphorically as he told Guardian reporter John Vidal the amazing story of how his company became the beneficiary of one of the largest free land giveaways in post-colonial African history:

“We never saw the land. They gave it to us and we took it. Seriously, we did. We did not even see the land. (Triumphantly cackling laughter.) They offered it. That’s all. It’s very good land. It’s quite cheap. In fact it is very cheap. We have no land like this in India. There [India] you are lucky to get 1% of organic matter in the soil. Here it is more

than 5%. We don?t need fertiliser or herbicides. There is absolutely nothing that will not grow on it.

To start with there will be 20,000 hectares of oil palm, 15,000 hectares of sugar cane and 40,000 hectares of rice, edible oils and maize and cotton. We are building reservoirs,

dykes, roads, towns of 15,000 people. This is phase one. In three years time we will have 300,000 hectares cultivated and maybe 60,000 workers. We could feed a nation here.

The ruling regime in Ethiopia claims that it “leased’ uninhabited wilderness to Karuturi. It denies forcing the local people out of their land. But the evidence is incontrovertible. The leased land is not only the ancestral home of the people of Gambella but also the basis of their entire livelihood and survival as a tiny minority in the Ethiopian family. For Gambellans who live as pastoralist and subsistence farmers, massive dispossession and auctioning off their land for pennies will inevitably destroy the very fabric of their society and way of life and threaten them with extinction.

It is said that in Ethiopia ‘land is owned by the government.’ If the government is the largest land owner, Karuturi must be the largest plantation owner and second largest land owner in that impoverished country. Indeed, it would be most appropriate to rename Gambella ‘Karuturistan’ in the interest of full disclosure and accurate description of what is happening on the ground.

Karuturi says it has all kinds of plans for its vast land holdings. It will ‘build taller dikes’

to enclose the plantations ‘with no connection with outside water except through manually operated devices.’ Karuturi is ‘aggressively rolling out an agriculture business venture in Ethiopia’ and plans to ‘outsource 20,000 hectares of farm land in the African nation to Indian farmers on a revenue-sharing basis,’a senior Karuturi official told India’s leading business newspaper, the Business Standard.

“We have got a decent response. We intend to give land and the necessary infrastructure to farmers who have the expertise in specific crop cultivation and get into a revenue share (65%:35%) with them. We hope to have agreements reached for around 20,000 hectares in the near future as part of the first phase.” Karuturi is actively negotiating with farmers from Punjab, India to launch its outsourcing venture.

Karuturi’s business model is simple: “Ask not what Karuturi can do for Ethiopia, but what Ethiopians can do for Karuturi.”

Karuturi is in Ethiopia for only one thing: Profit and more profits. Just as it has built dykes to enclose its plantations from flood water, it also maintains a social, psychological and security enclosure to insulate itself from the local Gambella community. Karuturi maintains a virtual agricultural treasure island in Gambella. While foreign farmers are

brought in as modern sharecroppers and given partnership interest, Gambella’s farmers are offered or given nothing. Why not offer Gambella farmers (the real owners of the land) a 35 percent share just like the Punjabi farmers?

Karuturi says it intends to give part of its vast landholdings to Indian farmers with "expertise." The people of Gambella have their own time-tested agricultural expertise, but Karuturi does not want it and will not even make a symbolic gesture to help them acquire expertise by giving them training and education in new agricultural methods and

techniques.

Karuturi says it will export its corn and other commodities to “South Sudan and other East African markets” using “two tug boats with the capacity to carry 600 tonnes each?”

Yet millions of Ethiopians are starving and dependent on foreign food aid for their daily bread. Some 7.5 million Ethiopians are kept alive daily by international food handouts.

Last week USAID chief Raj Shah announced in Ethiopia that the US will provide $110m for famine relief. Karuturi says its commodities exports will “bring foreign exchange to the National Bank of Ethiopia.”

What will Karuturi bring to the people of Ethiopia? The people of Gambella? More poverty, exploitation, environmental degradation?

Karuturi Ltd., is the world’s largest producer of roses. Its slogan is said to be “Let millions of roses bloom.” Roses are beautiful, but looking through rose-colored lenses one gets a rosy outlook on reality.

Karuturi could easily mistake the vast tract of free land that was dropped on its lap, all of the tax breaks it receives, the duty free imports of machines and equipment it enjoys and all of the other preferential treatment it gets as proof of its arrival in Nirvana, not

Ethiopia.

Take the rosy lenses off and Karuturi shall behold an Ethiopia that ranks at the bottom of every international economic and political index: It is among the countries in the world with the lowest per capita incomes and highest inflation and unemployment rates. The ruling regime has been classified as one of the worst violators of human rights in the

world. Karuturi looking through its rosy lenses may be unable to see the grinding poverty of the people of Gambella and the destruction of their way of life when they were forced to give up so much of their ancestral lands.

The most troubling aspect of Karuturi’s “investment” in Ethiopia is not only that it has created an island of wealth and prosperity in a sea of poverty in Gambella, but that its large-scale commercial farming operations and practices are manifestly unsustainable and likely to have a severely negative impact on the land and the way of life of the people.

Numerous experts continue to warn that large-scale commercial farming operations and practices by land-grabbing multinational companies that use forest burning to clear the land, channel rivers and introduce exotic crop species cause permanent and irreversible

environmental damage and ecological imbalance. The capital-intensive technologies of the multinationals displace local farmers and render them irrelevant necessitating outsourcing and importation of foreign farmers with “expertise.”

In Gambella, the people complain that despite millions of dollars in investments by Karuturi, they have seen few jobs, schools, clinics or clean water facilities for their use. At the end of the day, the people of Gambella will be the ones suffering the long-term effects of deforestation (land clearance by burning), reduction of ecological

diversity, loss of local species, and environmental contamination caused by herbicides and pesticides used in large-scale commercial farming. When fertile Gambella becomes a virtual desert, the multinationals will move to another oasis in Africa.

Karuturi needs to take off its rosy lenses and ask itself a few questions: How could it create jobs and business opportunities for local Ethiopians when it is outsourcing its landholdings to Indian farmers? How could it improve the agricultural expertise of those Ethiopians in the local area when it is bringing in foreign “experts?”

How could Ethiopia ever achieve food security and feed its explosively growing and

food aid-dependent population when it is shipping out agricultural commodities on 600-ton tugboats under cover of darkness to feed the people of other nations? What will Karuturi do in the face of Ethiopia’s spreading hunger, famine and uncontrolled population growth?

Will it build larger dikes, walls, fences and levees to keep the people out of its corn filelds? Will the regime send its soldiers to protect Karuturi from the hungry and starving hordes of Ethiopians begging for a few ears of corn at Karuturi’s gates?

Karuturi has the option of doing the right thing: Dump the current land acquisition and ownership deal and replace it with contract farming and deal directly with the farmers of Gambella, not Punjabi farmers.

Karuturi (and other foreign investors) could provide the technology and capital, and the Ethiopians will be obligated to provide the land and labor. Karuturi could provide training to farmers in Gambella and enhance their “expertise” to make them more productive.

Karuturi could supply grains and other agricultural commodities for the Ethiopian

market profitably and over the long term maintain a sustainable and ecologically balanced agricultural venture. Is this too radical an idea or is it too old fashioned?

It has been argued that regimes that seek out or fall prey to the big multinational land grabbers are dictatorships that exist on international charity and handouts and are thoroughly mired in corruption and debt. There is much talk these days about a ‘second

generation colonialism’ spearheaded by profit-hungry land grabbing multinationals.

Some even talk about a ‘green gold rush’ for fertile African land sold at fire sale prices by African dictators eager to line their pockets. These shameless money grabbing dictators will even agree to a deal that will export grain out of their countries as their

population starves and they are panhandling the world for food handouts.

Truth be told, no one except a few of the top leaders of the ruling regime know the real deal in the land giveaway to Karuturi. Very little useful information is evident in the ”agreement” made public with Karuturi.

That “agreement” offers nothing more than the usual boilerplate full of meaningless legal mumbo jumbo routinely used for such ‘leases’ by multinational land grabbers verywhere. For instance, the agreement alludes to environmental safety but provides no specific

environmental standards to be followed. It talks about jobs, infrastructures and the rest but provides no specifics or details on the timetable for implementation or the scope of Karuturi's obligations.

Over a century and a half ago, far, far away from Karuturistan, a prophesy was told in the lyrics of a song of African slaves toiling on vast cotton and tobacco plantations in America.

"God gave Noah the rainbow sign: No more water. The fire next time!"

God has given the people of Ethiopia the rainbow sign: Unite and come together as one

rainbow nation. For those who divide and misrule and sell and buy pieces of Ethiopia, the sign says: No more water!

Nazret 

Indian agro investor in Ethiopia to outsource leased land to Indian farmers

by Raghuvir Badrinath

Karuturi Global, the Indian company that is one of the world’s largest exporter of roses which is aggressively rolling out an agriculture business venture in Ethiopia, is looking at outsourcing 20,000 hectares of farm land in the African nation to Indian farmers on a revenue-sharing basis.

The company has leased 300,000 hectares in Gambela, in the western corner of Ethiopia. It has been looking to develop a bouquet of crops such as paddy, maize, cereals, palm oil, and sugarcane, among others, to cater to the huge demand in Africa and also look at the export market. According to senior officials of Karuturi, they have taken possession of 100,000 hectares, and after the completion of this, they will be able to take possession of another 200,000 hectares.

“We have got a decent response. We intend to give land and the necessary infrastructure to farmers who have the expertise in specific crop cultivation and get into a revenue share (65:35) with them. We hope to have agreements reached for around 20,000 hectares in the near future as part of the first phase,” a senior company official said.The first phase will be over by the end of this financial year. As part of its expansion plans in this sector, Karuturi had earlier this year held discussions with farmers from Punjab interested in this venture.

For the second phase, Karuturi is understood to have initiated discussions with some farmers in South India and a few agri-commodity majors. It hopes to outsource as much as 50,000 hectares over a period of time.
Karuturi Global derives as much as 90 per cent of its revenues from the floriculture business. The company hopes to get 35 per cent of its revenues from the agriculture business in the next couple of years.

The company had recently taken a hit of around $15 million after flash floods in Ethiopia destroyed maize crop sown over 12,000 hectares. To prevent such setback, Karuturi has hired WAPCOS limited, a public sector enterprise, to provide consultancy services for undertaking flood control measures besides designing irrigation and drainage systems.

WaterWatch, a Dutch advisory firm, has also been in engaged in authenticating the irrigation, drainage and flood control work of Karuturi.

Business Standard

India sues Monsanto for biopiracy over GM eggplant

The National Biodiversity Authority of India is suing Monsanto corporation for what is claims was the unapproved use of local varieties of eggplant/aubergine/brinjal to develop the company's gene-modified variety of the crop.

The introduction of the Bt brinjal, as it is known in India, was stopped in 2010 by Indian authorities on the grounds that more product safety tests were needed.

India is particularly sensitive to biopiracy because of previous attempts by biotechnology companies to patent plants that it was said were merely repackaged versions of pre-existing local varieties.

More...

Indian investments in Ethiopia farming face criticism from activists

by Anupama Chandrasekaran & Vidya Padmanabhan

When R.S. Mohamed Saleem, a 37-year-old high school dropout from Coimbatore, India,  went in two decades 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  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​ 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. “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.

Livemint

Have we seen the end of jatropha as a potential biofuel?

by Brian Westenhaus

According to Promode Kant from the Institute of Green Economy in India and Shuirong Wu of the Chinese Academy of Forestry, some 12.8 million ha (49,421 square miles) are expected to be planted with jatropha by 2015. Most anyone would be thrilled that such a large area is going to support jatropha oil for fuel production and offer incomes to subsistent farmers.

But it’s not looking good. One wonders how that can be.

The report is authored by Wu and Kant in an article published in the ACS journal Environmental Science & Technology, ‘The Extraordinary Collapse of Jatropha as a Global Biofuel.’

For India the story starts in 2003 with the decision by the Planning Commission of India to introduce mandatory biofuel blending over increasingly larger parts of the country with a target of 30% by 2020. The Planning Commission pushed for jatropha as it was considered to be high, early yielding, nonbrowsable and requiring little irrigation and even less management.

That followed with encouraging millions of marginal farmers and landless people to plant Jatropha across India. In 2006, China decided to meet 15% of its transportation energy needs by 2020 and, following India’s example, focused on jatropha, with plans to raise it on more than 1 million ha of marginal lands. Other developing countries took similar measures, in the hope that the crop would provide enhanced income for farmers as well as renewable energy. By 2008, Jatropha had been planted on more than an estimated 900,000 ha, of which 85% was in Asia, 13% in Africa and the rest in Latin America.

What happened in India was the provisions of mandatory blending could not be enforced because seed production fell far short of the expectation. Very little oil, very little blending obviously. A recent study has reported jatropha cultivation has been discontinued by 85% of the jatropha farmers in India.

Things look little better in China where very little production of biodiesel from jatropha seed oil can be found.

To make the potential matters worse some real research has come in from Tanzania where jatropha research found the net present value of a five-year investment in jatropha plantation was negative, with a loss of US$ 65 per ha on lands with yields of 2 tons/ha of seeds and only slightly beneficial at US$9 per ha with yields of 3 tons. Its even more discouraging when the average expected jatropha seed yield on poor barren soils is only 1.7 to 2.2 tons/ha.

There is basic reason for this – the plant has not been domesticated, hybridized and developed across growing conditions. In comparison, U.S. corn has been in development since before the U.S. Civil War, from the simplest farming practice of saving the best of a crop for the next year’s seed to billions of dollars of investment in genetic study and engineering.

... jatropha is busy self propagating – not busily producing seed oil.

It seems obvious now that a few select areas where jatropha grows and excelled was a basis for a conclusion – by a bureaucracy. The authors offer a story form of indictment saying, “These observations are, however, nothing out of ordinary and should have been anticipated by the Planning Commission of India, the powerful apex body that decides national priorities and allocates funds for them, before taking up such a continent sized program involving millions of low income farmers. But the Commission may have relied too heavily on the opinion of one of its top functionaries, who expected an internal rate of return ranging from 19 to 28% across India. National planners’ enthusiasm for the species rubbed off easily on research organizations and universities that rely heavily on the Planning Commission for funding and some of these institutions themselves became partners in raising jatropha plantations.”

The authors also reach into the motivations, and that is where they depart from your humble writers opinion.

“It appears to be an extreme case of a well intentioned top down climate mitigation approach, undertaken without adequate preparation and ignoring conflict of interest, and adopted in good faith by other countries, gone awry bringing misery to millions of poorest people across the world. And it happened because the principle of “due diligence” before taking up large ventures was ignored everywhere. As climate mitigation and adaptation activities intensify attracting large investments there is danger of such lapses becoming more frequent unless “due diligence” is institutionalized and appropriate protocols developed to avoid conflict of interest of research organizations.”

Maybe the authors are right, but they miss the point. Jatropha very well could develop into a major cash crop offering a bonanza of alternative fuel. But it “ain’t gonna happen” without a common sense approach with research, development, investment in hybridization, genetic engineering and dedication by the supplies of the seed and other inputs, the farmers and oil processors – and finally consumers.

The jatropha catastrophe isn’t about jatropha; it’s about central planning, big government, and the concentration of power. It can backfire with astonishing results:

The whole of the U.S. corn crop, some 40% of the world’s production, takes less than 20,000 square miles. Jatropha is set to be planted across 2 ½ times that area. An average U.S. corn acre makes about 420 gallons of ethanol. The best jatropha makes nearly 75 gallons. That’s something to consider very carefully when biofuels are discussed.

Oil Price

India's Jayshree Tea & Industries to acquire African plantations

by Pradipta Mukherjee

Jayshree Tea & Industries Ltd. (JTI), the world’s third-largest tea producer, plans to acquire plantations in Africa as it seeks to double output in five years.

Jayshree wants to increase tea production to 50 million kilograms, Managing Director D. P. Maheshwari said. The Indian tea producer made three acquisitions in Africa last year to boost output as demand for the beverage exceeds supply.

“Organic growth has a limit,” Maheshwari said. “Unfortunately things in Africa move very slowly but I expect something concrete within the next three to four months.”

Jayshree joins McLeod Russel India Ltd. (MCLR), the world’s largest producer, in expanding overseas after output in India last year fell to the lowest level since 2005 because of pest attacks in the nation’s biggest growing region. Prices at auctions have almost doubled on average in the past five years, data from the state-owned Tea Board of India show.

“African region is the best place right now because labor cost is cheap and a company will get really good realization if exporting to Europe,” said Sanjay Manyal, a Mumbai-based analyst with ICICI Securities Ltd. “But tea prices are very high so the assets are going to be very expensive.”


Jayshree, which owns about 10,000 hectares (24,710 acres) of tea gardens and spent a total of 320 million rupees ($7.2 million) to buy tea estates in Uganda and Rwanda in the year ended March 31, expects another purchase to “improve production and profitability” as costs are lower in Africa, Maheshwari said. Acquisitions will be funded mainly with company’s profit, he said.

Tea production in India may total as much as 990 million kilogram this year as favorable weather conditions boosts yield, Maheshwari said. Output was 981 million kilograms in the financial year ended March, 2010, he said.

Jayshree’s tea productions from gardens in India may total 27 million kilograms this year and another 5.5 million kilograms may be supplied by plantations overseas, he said. The company produced 24.1 million kilograms of tea last year, he said.

Bloomberg

The great land grab: India's war on farmers

by Vandana Shiva

Land is life. It is the basis of livelihoods for peasants and indigenous people across the Third World and is also becoming the most vital asset in the global economy. As the resource demands of globalisation increase, land has emerged as a key source of conflict. In India, 65 per cent of people are dependent on land. At the same time a global economy, driven by speculative finance and limitless consumerism, wants the land for mining and for industry, for towns, highways, and biofuel plantations. The speculative economy of global finance is hundreds of times larger than the value of real goods and services produced in the world.

Financial capital is hungry for investments and returns on investments. It must commodify everything on the planet - land and water, plants and genes, microbes and mammals. The commodification of land is fuelling the corporate land grab in India, both through the creation of Special Economic Zones and through foreign direct investment in real estate.

Land, for most people in the world, is Terra Madre, Mother Earth, Bhoomi, Dharti Ma. The land is people's identity; it is the ground of culture and economy.

Colonisation was based on the violent takeover of land. And now, globalisation as recolonisation is leading to a massive land grab in India, in Africa, in Latin America. Land is being grabbed for speculative investment, for speculative urban sprawl, for mines and factories, for highways and expressways. Land is being grabbed from farmers after trapping them in debt and pushing them to suicide.

In India, the land grab is facilitated by the toxic mixture of the colonial Land Acquisition Act of 1894, the deregulation of investments and commerce through neo-liberal policies - and with it the emergence of the rule of uncontrolled greed and exploitation. It is facilitated by the creation of a police state and the use of colonial sedition laws which define defence of the public interest and national interest as anti-national.

The World Bank has worked for many years to commodify land. The 1991 World Bank structural adjustment programme reversed land reform, deregulated mining, roads and ports. While the laws of independent India to keep land in the hands of the tiller were reversed, the 1894 Land Acquisition Act was untouched.

Thus the state could forcibly acquire the land from the peasants and tribal peoples and hand it over to private speculators, real estate corporations, mining companies and industry.

Across the length and breadth of India...the government has declared war on our farmers in order to grab their fertile farmland.

Their instrument is the colonial Land Acquisition Act - used by foreign rulers against Indian citizens. The government is behaving as the foreign rulers did when the Act was first enforced in 1894, appropriating land through violence for the profit of corporations... This is rampant in the country today.

These land wars have serious consequences for our nation's democracy, our peace and our ecology, our food security and rural livelihoods. The land wars must stop if India is to survive ecologically and democratically.

In Bhatta Parsual, Greater Noida, about 6000 acres of land is being acquired by infrastructure company Jaiprakash Associates to build luxury townships and sports facilities - including a Formula 1 racetrack..

The farmers have been protesting this unjust land acquisition, and last week, four people died - while many were injured during a clash between protesters and the police on May 7, 2011. If the government continues its land wars in the heart of India's bread basket, there will be no chance for peace.

In any case, money cannot compensate for the alienation of land. As 80-year-old Parshuram, who lost his land to the Yamuna Expressway, said: "You will never understand how it feels to become landless."

While land has been taken from farmers at Rs 300 ($6) per square metre by the government - using the Land Acquistion Act - it is sold by developers at Rs 600,000 ($13,450) per square metre - a 200,000 per cent increase in price - and hence profits. This land grab and the profits contribute to poverty, dispossession and conflict.

... in Jagatsinghpur, Orissa, 20 battalions have been deployed to assist in the anti-constitutional land acquisition to protect the stake of India's largest foreign direct investment - the POSCO Steel project. The government has set the target of destroying 40 betel farms a day to facilitate the land grab. The betel brings the farmers an annual earning of Rs 400,000 ($9,000) an acre.

The largest democracy of the world is destroying its democratic fabric through its land wars. While the constitution recognises the rights of the people and the panchayats [village councils] to democratically decide the issues of land and development, the government is disregarding these democratic decisions - as is evident from the POSCO project where three panchayats have refused to give up their land.

The use of violence and destruction of livelihoods that the current trend is reflecting is not only dangerous for the future of Indian democracy, but for the survival of the Indian nation state itself. Considering that today India may claim to be a growing or booming economy - but yet is unable feed more than 40 per cent of its children is a matter of national shame.

Land is not about building concrete jungles as proof of growth and development; it is the progenitor of food and water, a basic for human survival. It is thus clear: what India needs today is not a land grab policy through an amended colonial land acquisition act but a land conservation policy, which conserves our vital eco-systems, such as the fertile Gangetic plain and coastal regions, for their ecological functions and contribution to food security.

Handing over fertile land to private corporations, who are becoming the new zamindars [heriditary aristocrats], cannot be defined as having a public purpose. Creating multiple privatised super highways and expressways does not qualify as necessary infrastructure. The real infrastructure India needs is the ecological infrastructure for food security and water security. Burying our fertile food-producing soils under concrete and factories is burying the country's future.

*Dr Vandana Shiva is a physicist, ecofeminist, philosopher, activist, and author of more than 20 books and 500 papers. She is the founder of the Research Foundation for Science, Technology and Ecology, and has campaigned for biodiversity, conservation and farmers' rights, winning the Right Livelihood Award [Alternative Nobel Prize] in 1993.

full article...Al Jazeera

Organic farming gains popularity in India

by Amy Yee

On Thakur Das’s farm in northern India, rice fields stretch into the distance, creating a chartreuse sea of waist-high stalks. Mr. Das, 59, gazed out at the crops on his small farm, about 16 kilometers from the city of Dehra Dun, where he grows rice, wheat and corn in rotation, as well as turmeric and beans. It looked to be another plentiful harvest. “Too much growth,” he joked.

The bounty was all the more fruitful because Mr. Das’s farm, 10 miles from the city, is organic. He has not used chemical pesticides or fertilizers since 2002, when he joined Navdanya, a nonprofit biodiversity center and organic farm, a few kilometers away, to learn how to farm organically. Since he went organic, Mr. Das said, his crop yields, and his profit, have doubled.

Before Mr. Das switched to organic, one acre, or about 0.4 hectare, of land yielded 600 kilograms, or 1,300 pounds, of rice; now it yields 1,200 kilograms. He practices crop rotation and intercropping, or growing different crops together in the same field, and uses natural pesticides and fertilizer, like compost produced by worms.

“Organic is best benefit. Taste is different. Size of grain is bigger,” said Mr. Das. “Most farmers use chemicals. Soil is totally dead.”

In India, certified organic farming accounts for only about 1 percent of overall agriculture production, according to the Indian Agricultural Products Export Development Agency. Organic farming is still small worldwide, as well; it accounts for less than 2 percent of global retail production, according to the U.N. Food and Agriculture Organization.

But as food prices rise around the world, agriculture has moved to the top of the global agenda after decades of neglect from policy makers and investors. India’s Green Revolution of the 1960s and 1970s used high-yield seeds, chemical fertilizers and irrigation to significantly increase agricultural production.

Yet over the years, chemical “inputs” — namely, fertilizer and pesticides — have depleted soil, and inefficient irrigation has caused water tables to plunge in many parts of India. For many farmers, crop yields have fallen even as India’s food demand has increased. Now farmers and experts are looking for improved farming methods. In some cases, this means a back-to-basics approach.

A paper submitted to the U.N. General Assembly last December highlighted the benefits of “agroecology” — otherwise known as organic farming. “Agroecology delivers advantages that are complementary to better known conventional approaches such as breeding high-yielding varieties. And it strongly contributes to the broader economic development,” the U.N.’s Special Rapporteur on the Right to Food wrote.

In India, agriculture has always been an important topic, even if methods remain largely outdated and manual. More than half of the country’s population of 1.2 billion relies on agriculture for a living.

Hunger and food security are also pressing, perennial issues for hundreds of millions of poor Indians. Malnutrition rates of children under age 5 is higher in India than in sub-Saharan Africa. Suicides of struggling, indebted farmers claim newspaper headlines each year. In India, rising food prices are particularly politically sensitive; the affordability of onions, a staple food here, is an unofficial but critical barometer of public sentiment in election years.

The vast majority of farms in India are small — three acres — and farmers can be burdened by the cost of fertilizer and pesticides, even though the government heavily subsidizes them. For some small farmers like Mr. Das, organic farming makes sense if farmers are given training, support and linked to markets with affluent customers.

Navdanya, which is leading the charge for organic farming and biodiversity in India, has trained 500,000 farmers in sustainable agriculture in 16 states across India since it was founded in 1987. It also set up the largest direct-marketing, fair-trade organic network in the country and has established seed banks to preserve indigenous seeds. Navdanya sells its products in stores in Delhi, Dehra Dun and Mumbai.

The organization says that “ecological agriculture is highly productive and the only lasting solution to hunger and poverty.”

A new report from Navdanya, called “Health Per Acre,” was released in New Delhi in March by Syeda Hameed, a member of the Indian Planning Commission, whose chairman is Prime Minister Manmohan Singh.

According to the report, “a shift to biodiverse organic farming and ecological intensification increases output of nutrition while reducing input costs.” Agricultural output should be measured in terms of “‘Health per Acre’ and ‘Nutrition per Acre’ instead of ‘Yield per Acre,”’ the report says. The paper said that “this should be the strategy for protecting the livelihoods of farmers as well the right to food and right to health of all our people.”

Vandana Shiva, the Indian environmentalist and advocate who founded Navdanya, claims that organic farming produces more food and nutrition than conventional methods. Through intercropping, one organic farm could produce 900 kilograms of food per acre, including 400 kilograms of corn and 500 kilograms of beans and other crops, according to Navdanya’s studies of the farms of its members. A comparable conventional farm growing one crop would yield 500 kilograms of corn but would lose the other products.

Organic farming produces “twice the amount of nutritional needs by intensifying biodiversity rather than monoculture and chemicals,” Ms. Shiva said.

The report from the U.N. Special Rapporteur on the Right to Food pointed out that the Green Revolution had focused primarily on increasing cereal crops that contain relatively little protein and other essential nutrients. “Nutritionists now increasingly insist on the need for more diverse agro-ecosystems in order to ensure a more diversified nutrient output,” it said.

But some agriculture experts say that while organic farming has benefits, it cannot make a significant dent in total agricultural demand. Organic farming is an important niche market with big potential near major cities. But it is “not a general solution to malnutrition at all,” said Mark W. Rosegrant of the International Food Policy Research Institute in Washington. “You have to put inputs in to get yields. To move fully to organic, you are going to lose productivity.”

A chapter in the 2006 book “Global Development of Organic Agriculture,” co-written by Mr. Rosegrant, said that compared with “high-yielding crops cultivated with the use of fertilizer and pesticides, most organic crops yield less per hectare due to a combination of lower nutrient supply and yield reductions from weeds, fungi, and insects.” The paper cited a study from 28 countries that found “that on average organic yields are 80 percent of those under conventional agriculture.”

There are other barriers to the growth of organic farming in India. Organic certification from international agencies is expensive and bureaucratic. A shift to organic farming requires extensive training and support for farmers who are largely uneducated. Farmers must be connected to markets and shops that sell their goods, usually in cities with wealthy consumers — no small feat in India where roads and infrastructure are poor.

Organic food is at least 30 percent more expensive than foods produced by conventional methods. In India, there is no financial support from the government for organic farming, while the majority of fertilizer and pesticide companies are subsidized.

But if organic farming reached a greater scale, prices would fall, said Vinod Bhatt, a director of Navdanya. As he led a tour of Navdanya’s tranquil 45-acre farm near Dehra Dun, Mr. Bhatt walked past lush rice fields and explained how ginger and turmeric were grown between rows of corn to retain soil fertility and maximize yield per acre.

A botanist by training, Mr. Bhatt said rice should not be grown in successive seasons but should be alternated with peas, wheat, corn and mustard over two years to keep the soil fertile. Marigolds planted on the edge of the field help keep pests away, as do lantana plants and neem trees, and mixtures made of cow urine and worm secretions, he said.

Mr. Bhatt joined Navdanya in 1997, and he recalled that interest in organic farming was limited back then. Now, “farmers are coming to us because they can see the results,” he said. He pointed out some okra growing on tall stalks.

Mr. Bhatt bent a stem so a visitor could peer at the large green “lady fingers,” as okra is called in India. “I don’t know why people don’t believe organic is more productive,” he said.

New York Times