Of commercial farming: beneath 'land grab' politics

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The Reporter | 7 September 2013
Suri boys at the entrance of the Koka Malaysian plantation, Omo valley, which is run by Lim Siow Jin estate. (Photo: Alamy)

By Asrat Seyoum and Yohannes Anberbir

Hands down, the political discourse over the leasing of large tracts of land to multinational agribusiness giants in some Africa nations, Ethiopia included, resonates better across the international media than most issues of a more pressing nature.

Nowadays, almost exclusively, African agriculture is being associated with the 'land grab' agenda. Ethiopia is at the forefront in the so-called 'land grab' debate; but not so much when it comes to mechanized agriculture or large-scale farming activities.

For all intents and purposes, the 'land grab' debate has replaced large-scale commercial issues, one might say. But, the fact of the matter is that the two are quite different in form and substance. 'Land grab', as it is amply reiterated, is the way whereby large tracts of land are seized by investors, mostly foreign. Large-scale farming activities are the very purpose why these extensive land acquisitions are being made in the first place. Thus, it is quite puzzling to note the raging debate over the way land acquisition was being made while paying no attention as to why, and what is happing to the acquired plots after the transfers were made. Most of the time, the issue would end up being a human and democratic right of citizen, although these issues are critical by themselves, neglecting the whole purpose of the land transfer.

Hence, under the colorful covers of the 'land grab' politics lies large-scale commercial farming, a complement to the small-holder agricultural sub-sector, a mainstay of the majority of Ethiopians. The architecture of the overall agriculture sector in Ethiopia reveals that the majority of the crop production and employment creation heavily relies on the small holder sub-sector. This has been the case all through Ethiopia's modern history, one can say. Obviously, the current government and the two that went before it were not content with meager, seasonally fluctuating output from the sub-sector. For it meant nothing more than the subsistence farming households, and remained highly venerable to slight shocks like drought. But, the role of small holder farming is not one that can be neglected either; the country depended on its output. Yet gain, to wait for the small holder agriculture to transform to medium- and large-scale farming practices in their own time could take a while. Hence, it was in the 1960s and 1970s that the need for complementary subs-sector that is large-scale commercial sector began to emerge.
The proliferation of commercial farms continued during the military era as well, albeit under state ownership.

After the toppling of the military regime, initial focus was on the small holder farming sub-sector. Mostly after the early 2000s, the strategy of complementing the dominant small-holder farming with large- and medium-scale production started emerging. When it comes to the commercial farming subs-sector, the ruling party, EPRDF, follows inherently a two-pronged approach. The first one is commercial farms that require relatively smaller plots of land and is disposed to using labor-intensive technologies. Thus far, the horticultural and vegetable production, largely destined for export markets, are the ones that fall under this classification. The  second one is the large-scale scale food or energy plants production sector that is proving to be quite controversial these days. Such investments are largely designated to be operational in drier, sparsely populated part of the country. This kind is expected to employ less labor force, but rather adapt capital-intensive forms of production relaying largely on irrigation and heavy machineries. Because technology transfer is among the primary aim of such projects, the government has been zeroing in on foreign firms to take part in this sub-sector. The plan to attract Foreign direct investment here seems to have gained some traction on account fact that the majority of the firms which have acquired large pieces of land were foreign firms, in other words  the ones 'grabbing land'. The political pressure regarding the land contracts apart, the commercial farming sector seems to face serious difficulties to achieve its targets.

The most critical factor of production in commercial farming or any form of agricultural activity for that matter is land itself. The FDRE Constitution affords legal rights to federal units of the country to administer and mobilize resources with respect to the land and  the natural resources that fall within their geographical boundary. Each region has the right to issue its own legal framework, including the lease price that it charges. Hence regional land authorities would be directly responsible to provide land for investors, negotiate the terms of the lease contract and to follow up on the investment activities. The bulk of land that is designated for large-scale commercial agriculture in Ethiopia is located in sparsely populated regions among which the Gambella, Benishangul Gumuz and Afar Regional States are found. As per the assessment of the federal Ministry of Agriculture a little while back, the rate at which commercial farming has progressed was found to be really disappointing. And the main reason behind it was the inherent weaknesses exhibited in making adequate land available for investment. The ministry found out that the technical capacity of the regions to facilitate land for investors leaves a lot to be desired. And hence it proposed to assume the responsibility of handling the technical aspect, while the right of the regions to fully benefit from the revenue generated from land remained firmly intact. The technical help was more focused on large-scale acquisitions of 5000 hectares and above.

Bizualem Bekele, coordinator of Agricultural Investment Support Directorate (AISD), however, says that establishment of technical support teams at the regional levels was not enough to change the way land was transferred to investors. “Although for a while, this had encouraged investment,' Bizualem recalls. However, the technical support team was not enough to change the overall land provision system in the country; then it was decided for the team to be organized at a directorate level for better performance.    “Now we are thinking of making it an agency.”

Nevertheless, he appears to be quite frank about the shortfalls of the land administration system in Ethiopia. This is  even more serious when it comes to the commercial farming sector, he argues. In an exclusive interview with The Reporter, he admits that the land authorities do not have the exact inventory of the stock of total arable land that is ready for investment. “We go by mere estimates. We primarily rely on satellite images, and such images would highly depend on the professionals’ ability to interpreter them,”he explains. He further notes that some of these images are quite old, taken as far back as 2007. Some of the locations might have under gone major change in that time, undermining the ability to represent the actual setting in the ground. The discrepancy that exited between what the records show and what is actually true on the round could be bigger than what is anticipated, Bizualem noted. It is quite common to come across a plot of land thought to be available for investment on the records were in fact already transferred to someone. “Most of the time, the measurements are done by riding a motorcycle or a vehicle, and this leaves so much room for error and overlapping,” he explains.

Surprisingly, he admits that there might not be a right answer as to how much land has already been transferred to investors in Ethiopia so far; how much of these were actually suitable for crop production in large-scale is also another matter. “There seems to be a serious data gap with regard to our critical agricultural resources, apart from land,” he continues to explain. More importantly, the lack of knowledge about the actual status of soil, climatic conditions and other resources is also quite severe for the sub-sector.
The supply side issues, however, are not limited to the capacity of the land administration  authorities, but the contract documentations that is tabled before investors also is telling as to lack of carefully-thought-out approach in handling commercial investment. According to legal experts who reviewed the 24 contracts which were made available at MoA website, the clearly visible similarity in all the 24 contracts is an indication as to what the ministry does when dealing with investors. It seems that all MoA has to do is change the name of the investors, the area, lease price and date on the same contract to accommodate a new land request. This shows lack of a case-by case approach to each investment projects, according to pundits. Bizualem never refutes this fact, but says that the case-by-case follow-up is the next thing in his directorate’s agenda.

Furthermore, the contractual agreements issued by Ethiopian authorities is also lacking in putting legal obligations in some of the requirements from these large-scale projects. Here, for instance, the clause about the infrastructural investments such as dams, roads, bridges, residential building and educational facilities is left for the lessee's mere discretion; there is no part of the contract that can be used if these facilities which are part of the whole land deal were put in place. On the other hand, some of the terms in the contracts were also criticized for being too vague and open to interpretation. The case in point here is the right of the lessee to administer his farm either personally or through 'delegation' or an 'agency'. Following Karuturi's announcement to settle farmers from Indian, it seems that the clause mentioned above have been invoked because of its openness to interpretation.

Last but not least, Bizualems basic concern is also about the structural weakness exhibited by the investors themselves. According to him, the majority of investors who wishs to get into the business would not even bother to do primarily assessment as to what kind of land they are asking and what would be the real challenges of harvesting one hectares of land. “Some of them do not even look to have any idea as to what the stretches of one hectares of land would be like,” he exclaims. This seems to be the defining characteristic of local investors in the agricultural sector. Thus far, some 43 firms have gotten a hold of the agricultural land. However, Bizualem indicates that scores of these have already left the sector, while 16 of them are currently under probation. An investor is given six months in the contract to start the development process, he explains. But if not, the contract allows the authorities to repossess the land. “Recently, such measures have multiplied,” he reveals, because of the rise of properties which are kept ideal.

Nevertheless, the basic problem is not only the inaction of the investors only, he explains, sometimes those willing to develop the land are constrained because of unforeseen difficulties that they have not accounted for while entering into the venture. “Most investors do not do a feasibility study before requesting a particular piece of land, hence upon development they will be in for many surprises,” he elucidates. Still, authorities should also be accountable here, according to the coordinator. This is because, he continues, part of the homework to identify what piece of land is suitable for what also falls in the jurisdiction of the authorities, he argues.    
Original source: The Reporter
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