Ethiopian program to lease farmland for food production to private investors encounters setbacks- report

November 25
12:28 AM 2013

A report from Bloomberg said the plan of the government of Ethiopia to lease farmland to private investors has suffered various setbacks.  The government set the program in place starting in 2008 in a bid to triple its food exports by 2015. One of the first to take advantage of the program is Bangalore, India-based agricultural firm Karuturi Global Ltd. Managing Director Ramakrishna Karuturi told Bloomberg that 80% of the land leased, which was located in the country's Gambella region, is located in a flood plain. For up to seven months of the year, their 100,000-hectare concession gets flooded by the Baro River.

Philipp Baumgartner told Bloomberg through email, "Karuturi, like many other large-scale investors, underestimated the complexity of opening land for large-scale commercial agriculture. The land leased out wasn't properly assessed by either of the contracting parties." Baumgartner is a researcher at the Center for Development Research based in Bonn, Germany. He did a doctoral thesis on agriculture in the said region.

International Institute for Environment and Development Consultant James Keeley told Bloomberg that transportation and electricity problems, shortage of funds, lack of farming expertise and inadequate security are also reasons why the program had started poorly. He added that in some regions, the leases were given without doing a review by investors, performing environmental impact assessments or requiring performance monitoring plans. Keeley said, "Land investment in Ethiopia proceeded initially in a chaotic fashion."

In 2008, the Ethiopian government started to lease land for as low as USD 1 a hectare each year. When the program was introduced by former Prime Minister Meles Zenawi, Zenawi said that by growing food on land that is unutilized, the country would be able to address food shortages. The government projected that commercial farmers would produce food on 900,000 hectares of land in five years. However, Prime Minister Hailemariam Desalegn said last month that only 10,000 hectares of land were developed on the 400,000 hectares given to the private sector.

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