Spreading in Gambella: Investment, criticism, opportunity

Addis Fortune | 11 December 2011

One of the machineries used at the farm of Saudi Star used to process rice. The company has paid 80 million dollars for the procurement of machineries from caterpillar which will be delivered by Ries Engineering. There are two rice mills that are going to be erected at Gambella and Bishoftu (Debre Zeity) whose parts bought at a cost of 25 million dollar have arrived.
In a sparsely populated area of 3.4 million hectares of Gambella Regional State, foreigners have become a increasingly common sight over the past five years. A growing number of companies have shown interest in venturing into the agriculture sector there and the government has been letting them.

The number of companies who have been granted investment licences in the region has jumped into the hundreds since 2005/06. Yet only 34 licences had been granted in the five years before that. This interest by both local and international companies to lease land in the region has been met with criticism from pundits as nothing more than land grabbing.

There has been no environmental impact assessment done to date and people are being driven off their lands forcefully, allege these pundits, one of which is the Oakland Institute, a think-tank based out of California in the United States.

However, theirs is not an accusation the Ethiopian government seems to have given much attention to. It has been staunchly refuting the allegations and has been accusing these proponents of disseminating such claims to promote hidden agendas. The investment allows for job creation, technology transfer and helps in food insecurity on lands that have lain bare without any agricultural activities on them, it argues.

The government believes that the lands which are not used by small farmers should be used for huge commercial farms and thus require huge capital investment. Indeed some of the companies involved in the region’s plan for big projects require heavy machinery and investment in infrastructure.

One of the companies that have acquired land, perhaps the biggest in Africa, is India-based Karuturi Agro Products Plc, which received a 100,000ha plot. It plans to plant sugar cane, rice, cotton and maize.

A project by a subsidiary of Karuturi Global Ltd, through the Agro Products Plc, is the first venture for the company. Karuturi is known as the biggest rose producer in the world.

Having finished a one-year-long harvest of seedlings on 63ha for its sugar cane plantation, it is now planting 10,000ha with it. Also in the works is the erection of a sugar factory.

Karuturi believes that accusations of residents in the area not based on facts.

“The area used to be covered by forest which we had to clear,” Karmjeet Singh Sekhon, project director, told Fortune. “Our projects benefit not only the company but also the local people in terms of employment and transfer.”

On top of the sugar cane plantations and the factory construction projects, the company is also undertaking construction of residential buildings for the company’s employees. Currently, there are 362 permanent and another 650 to 1,600 contractual employees in the company.

However, not all employees are not happy with their pay.

Abera Lera, 28, is one of the employees of the company. Although he has been working for the past seven months for a salary of 1,800 Br, he says it is not commensurate with work in the area.

“We do not have hardship allowances and we have to cover our own food expenses,” Abera, who has worked at Wongi Sugar Factor for 10 years. “Although we have been told the situation will get better, I am thinking about leaving the job,” he told Fortune.

Sharing his concern is Deneke Tora, who also works at Wongi with Abera.

Similar discontent is echoed by employees of Saudi Star, another mega investment project in the region. Incorporated in 2009 with a capital of 500 million Br, Saudi Star aims to grow rice on a 10,000ht plot it acquired using water from the Alwero Dam, which was constructed during the Dergue Regime to supply water to grow cotton.

It plans to access this dam, which has been idle for two decades, using a canal, to irrigate the farm. To facilitate this, the company has signed a contract worth 85 million dollars with GRC, a Pakistani company, for the construction of more than 30km of  canal two weeks ago. The Pakistani company has agreed to complete the project within 11 months.

The company, established by Mohammed Al-Amoudi, has already put 80 million dollars into buying agricultural machinery and equipment from Caterpillar, which will be delivered by Ries Engineering SC.

Girma Umad, 28, is one of the employees currently working as a machine operator at Saudi Star. Before he came to work at the project, he used to live in the nearby town of Abobo with his parents.

Although he appreciates the chance to work without having any prior skill sets, he is not happy about the pay as well.

“I have managed to develop the skills needed through observation and personal practise, he told Fortune in appreciation for the overall working conditions. “However, the 25 Br I get a day is not even enough for my daily meals.”

A few weeks back some of the field workers had gone on strike demanding an increase in pay. This was triggered by an increase in wages for those involved in construction work.

However, the issue was resolved after discussions with the workers who received an increment of three Birr a day. The misunderstanding occurred as the increments were not given to all at the same time, according to Seifu wolde, the construction manager at the site.

Despite their complaints, many of the workers are still happy about the work opportunity they are getting.

“It is exactly this kind of technology transfer using machinery that we want to have shifted to our people,” Goaner Yer Zuor, vice president of the regional state, told Fortune.

It seems that the notion of employing local labour is taking root at Ruchi Agro Plc, another Indian company, which received 25,000ha in March 2009.  The labour composition at the site is 70pc local, with the remaining technicians coming from India, according to Manohar Lankella (Phd), project manager of the company.

“We employ Indians because we use modern technology,” he told Fortune. “But they are also here to teach locals about how to use them.”

Currently Ruchi employs more than 160 employees.

Manhohar has had the same response to the “land grab” accusations, which he too says are not true.

“The land was empty and we had to clear the land before we could start our work,” he told Fortune, responding to accusations that people were forced to relocate to give way for his company.

Obanga Amir Okoch, 25, a native to the area and an employee of Ruchi agree. Obanga grew up in a local area called “fugnido. The land had lain bare for many years, and people were forced to relocate there during the military regime, according to Obanga.

“However, people left right after the regime was overthrown because they were put  there against their will,” he explained to Fortune.

On the other hand, locals like Edosa Telila, 25, who has a diploma in law, seem to have no problem with the presence of foreigners on their land. In his view the locals are benefiting from ground water works and donations of maize at harvest time.

However, it is not just foreigners who have received land in the region, but local companies as well. One such company is Bazen Agricultural & Industrial Development which leased 10,000ha in 2005. It is currently preparing to undertake the clearing of 3,000ha to use as part of 7,200ha for its plantation.

Cotton, peas, maize and mango constitute the main cash and food crops currently cultivated on 2,300, 160, 80, and 53ha of land, respectively. A preliminary 10ha of vineyards also makes up part of the total cultivated land by the company so far. The company has plans to increase the actual cultivated land to 5,230 hectares by 2013.

The current potential harvest from its cotton farm, which takes up the lion’s share of the company’s cultivated land, is about 28 to 30ql per hectare, according to Desta Gebre, General Manager of Bazen, which employs, 48 permanent, 67 contractual and on average 913 seasonal workers.

“More than 60pc of the daily workers usually come from Wolaita in the Southern Regional State, while the balance is made up of local workers from around the farm site,” he told Fortune.

Workers at Bazen seem to have less to complain about than other sites. Daily workers get paid 22 Br along with a kilogramme of maize flour, 50 gram of shiro and 30 gram of salt daily. They sleep in dormitories and receive one Birr for every kilogramme of crop they collect on top of their salary during the harvest season.

It seems that while many outside the area debate the land grab issue, the real concerns on the ground for the most part are about wages. Hardly any of the workers of the people who live nearby seem to have any notion that they are being overrun.

There are 306,916 people living in the region, many of whom are not involved in agriculture at all.

Allegations of land grabbing are totally baseless, according Wondimu Filate, public relations expert at the Ministry of Agriculture (MoA).

“The current government policy in agriculture promotes both commercial and small agricultural farming,” he told Fortune, saying that anyone who wants to get involved is handled according to their request.

Commercial agricultural investors who want to lease less than 5,000ha of land can conclude their agreement with the regional states while agreements in excess of that are at the federal level.

The large scale commercial agricultural ventures for which specialized equipment and know-ow are required cannot be undertaken by local companies, according to Wondimu.

Indeed this has been the case for a few of the farms in Gambella. Karuturi reported a loss of 15 million dollars when the Alwero and Baro rivers flooded. The company lost 60,000tn of maize that would have been collected despite the presence of dikes on the sides that face the rivers.

However, the 1.8m tall dikes were not enough to withstand the onslaught of water. That prompted the company to place dikes all around the farm and increase the height of existing ones. Currently, it plans to build a polder, which is low-lying tract of land enclosed by dikes forming an artificial hydrological entity with no connection to outside water.

This is to be accomplished by building walls that are four meters tall and nine meters wide.

As this is an undertaking that cannot be done by a local company, Karuturi has hired Water and Power Consultancy Services (WAPCOS), an Indian public sector enterprise with autonomy to enter joint ventures and subsidiaries, to provide consulting services in flood control and the design of irrigation & drainage systems. Water Watch, a Dutch advisory firm, has also been retained to provide satellite information on hydrological processes and water management issues.

The undertaking will cost as much as the crop that was lost, officials of the company had told Fortune after the flooding.

The magnitude of the scale of projects is also comparable at the farm site of Saudi Star. Not being able to find local companies to construct the canal for its irrigation, it has had to look outside and settled on the Pakistani firm.

It is also constructing two 25-million dollar mills in Gambella and Bishoftu (Debrezeit), 47km from the capital, for the processing of the rice it grows before it is packaged.

Original source: Addis Fortune

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