The global 'farmland grab' in Ethiopia and the rest of Africa has become competitive, with companies from Asia, including India and China, joining it.
AN extraordinary new process has been at work in the past few years: the aggressive entry of Indian corporations into the markets for agricultural land in Africa. At one level, this process is simply following the hoary old tradition in global capitalism of firms (often supported by the governments of the originating countries) entering new areas in search of access to natural resources on preferential terms.
Several centuries ago, the growth of plantation agriculture in large parts of the western hemisphere was essentially the product of such a process. This was further facilitated by cross-border movements of labour (in the extreme case of African labour through slavery, then through indentured labour contracts largely from South Asia, then through supposedly more free movements driven by lack of adequate income opportunities in the home countries). Together these flows generated production and trade patterns that were critical in shaping the international division of labour by the mid-20th century.
In more recent cases, multinational agribusiness companies from Europe and the United States have been active for more than a decade now in acquiring prime agricultural land in developing countries to grow cash crops and biofuels that benefited from substantial subsidies provided by developed country governments. But recently, this global land rush has become even more competitive, with companies from developing Asia, and particularly China and India, joining the scramble to acquire land.
A new research study by Rick Rowden (India's role in the new global farmland grab, GRAIN and ERF, at https://www.macroscan.org/anl/aug11/pdf/Rick_Rowden.pdf) provides some startling insights into this process, particularly with respect to Indian companies and the explicit and implicit encouragement provided by the Government of India. Most of the Indian companies involved in such land purchase and lease arrangements have thus far been focussed on Africa, but South America is also seen as a promising new destination. And integrated Indian oilseeds firms have already invested in South-East Asia, in operations ranging from plantation cultivation to the processing of edible oils for export.
Looking at the East African region alone, on the basis of data provided by governments in the region, Rowden finds that more than 80 Indian companies have already invested about $2.4 billion in buying or leasing huge plantations in countries such as Ethiopia, Kenya, Madagascar, Senegal and Mozambique. The land will be used to grow foodgrains and other cash crops for the global market and in some cases specifically for the Indian market.
It is not just the allure for Indian foreign investors of much cheaper land and the promise of more abundant water sources in these locations that have driven these investments. It is interesting to note that many governments in the African region have actively courted Indian and other agricultural investors. They have typically offered incentives, ranging from the permission to lease massive tracts of arable land at very generous terms and providing access to water, to promising the firms that they will be allowed to export all output and have the ability to repatriate all profits.
The Indian government, for its part, has both facilitated and encouraged such investment, seeing it as a way out of land availability issues and increasing problems of water shortage facing Indian agriculture. In addition to leading trade missions and supporting various initiatives to facilitate Indian agricultural companies in their overseas investments in Africa and elsewhere, it has progressively liberalised the rules on outward foreign direct investment by Indian companies. The Exim Bank has provided lines of credit and soft loans not only to African governments but also to Indian companies engaged in such transactions.
Ironically, many of these Indian companies operating in Africa are engaging in activities that involve huge displacement of farmers and changing patterns of production and consumption that would either be difficult or impossible for them to do in India. They would either be illegal or get embroiled in very significant political controversies because of the negative impact on local people.
Take, for instance, one of the most high profile of recent deals, the acquisition of around 300,000 hectares of land on long lease in the Gambela region of Ethiopia by the Indian firm Karuturi Global Ltd. The claim is that this was all surplus or unutilised land that will now be used for more efficient and productive cultivation. But this is fiercely contested by several local analysts, who point out that there is no such thing as idle land in Ethiopia, or indeed anywhere else in Africa.
It is well known that competition for grazing land and access to waterbodies are the two most important sources of conflict between different pastoral communities in Ethiopia, and in all such cases of land lease involving foreign enterprises, there have been complaints by locals of loss of access to grazing land and water. There have been many cases of loss of cultivated land as well as homestead land in the process, leading to simmering discontent that has not yet been able to find political voice.
Further, since the new cultivation practices will be highly mechanised, there will necessarily be quite substantial displacement of labour from the traditional smaller-sized farms that will have lost land. And cultivation of the traditional staple food crop teff has already been affected, leading to significant increases in its local prices. It forms part of the subsistence diet of most Ethiopians. Meanwhile, there are also growing environmental concerns about the pattern of cultivation that has been promoted through these new arrangements. The large-scale and heavily mechanised monocropping farms that are being created typically depend upon high levels of water usage and involve heavy doses of pesticides and herbicides that can pollute nearby groundwater, all of which can rapidly deplete soil quality.
What is even worse is that the contracts signed provide a high degree of protection to the companies with low responsibility for any adverse effects, and scant respect for the rights of those affected by the contracts. Rowden's study provides detailed analysis of several contracts, including that of Karuturi Global Ltd with the government of Ethiopia.
According to Karuturi's signed lease agreement for the first 100,000 hectares, it has been given the land for 50 years at a total cost of only 100,000,000 birr (equivalent to $59.28 a hectare) for full use of prime agricultural land, with a yearly rent of only $1.18 a hectare. The five contracts analysed all mention that the companies have the right to build dams, water boreholes and irrigation systems as they see fit. But there is no mention of paying for this water, how much water would be used or over what period of time, how the usage would be monitored, or what the environmental impacts would be on surrounding areas regarding the water that would be diverted for use by the companies. With fixed-term leases, the implications for over-exploitation of this critical resource are obvious.
As a sign of how the Ethiopian government is seeking to make such investments attractive, the contracts all provide for special investment privileges such as exemptions from taxation and import duties on capital goods and repatriation of capital and profits granted under the investment laws of Ethiopia. None of these five contracts for the Indian companies mentions labour laws or specifies any wages or working conditions for their local employees. There is no obligation to dedicate any portion of the produced crops to the domestic market for local consumption.
In all the contracts analysed, the Indian companies have the right to provide power, health clinics, schools, and so on , but these are not listed under obligations of the investors. Nor do the contracts specify for whom these services might be provided the local population or for those of company workers. Since this is merely a non-enforceable right, the companies may choose not to act on it.
One of the most disturbing features of the contracts relates to displacement, the very aspect that is currently the cause of so many intense disputes in India. Rowden points out that the contract for Karuturi suggests the Government of Ethiopia will evict any local people who are in the way of the commercial project, by force if necessary. Although this land has been or still is home to thousands of Ethiopian citizens, Article 6.1 of the contract states: The lessor [Government of Ethiopia] shall be obliged to deliver and hand over the vacant possession of leased land free of impediments. Arguably, local people who are unwilling to leave their land could be construed as impediments, and the lessor is now contractually obligated to ensure they are not a problem for the company.
Article 6.6 seems to suggest the government will provide police or military action against any resistance: The lessor [government] shall ensure during the period of lease, the lessee [Karuturi] shall enjoy peaceful and trouble free possession of the premises and it shall be provided adequate security, free of cost, for carrying out its entire activities in the said premises, against any riot, disturbance or any other turbulent time other than force majeure, as and when requested by the lessee.
All these features point to a frightening new tendency with respect to land acquisition by Indian companies. As democratic processes in India force both Indian corporations and the government to take into account the rights of local citizens, issues of compensation and rehabilitation of those displaced, environmental concerns, the conditions of workers, and other related aspects, there is an attempt to export the problem by encouraging these companies to undertake land grabs elsewhere in the developing world.
Surely all those who would fight such irresponsible and exploitative corporate behaviour in India must raise their voices against this tendency as well.
At the very least, we have to express solidarity with those like Obang Metho, director of the Solidarity Movement for a New Ethiopia (SMNE), who in an Open Letter to the People of India asked for the citizens of India to take steps to stop the harmful land-grabbing by Indian companies in Ethiopia:
I come to you first and foremost as a fellow human as I call you to join our effort to stop the plundering of Ethiopia and Africa by African dictators, their cronies and their foreign partners some of whom are Indian who are hungry for our resources but care little for our people. Will you help work within India to bring greater transparency and compliance with whatever protective laws and safeguards are in place in India? This is important for Indian democracy, not only because of the broader humanist considerations outlined by Metho but also because without this solidarity, the struggle for greater economic justice within India will also be undermined.