Reuters | Thu Nov 5, 2009
By Barry Malone
ADDIS ABABA, Nov 5 (Reuters) - Ethiopia plans to offer 3 million hectares of land over the next two years for investors to develop large-scale commercial farms, a government official said on Thursday.
Countries in Asia and the Gulf -- such as China, India and Saudi Arabia -- have rushed to buy farmland abroad to grow crops for their own people after food price inflation last year highlighted the need for greater food security.
Africa has become a prime target, despite concerns about the impact on the world's poorest people, and locals nicknaming the practise 'land-grabbing'.
"We will make 3 million hectares available for investment in the next two years," Esayas Kebede, director of the government's Agricultural Investment Agency told Reuters.
"This is land around the country that is not currently used and could be used to produce coffee, cotton, sesame, sugar cane, tea, palm oil and flowers."
The agency has already parcelled off two million hectares and is negotiating a further one million hectares from regional authorities in the huge country.
"More than 9,200 investors have received licenses for commercial farms in Ethiopia since 1996, of which about 1,300 are foreign," Esayas said.
Analysts point to massive potential profits in farmland investments as global population grows and climate change chokes off supplies of arable land.
Esayas said Ethiopia could offer investors a wide range of climatic conditions, unlimited water resources and quickly developing infrastructure.
The government offers incentives to both foreign and Ethiopian investors, including tax holidays depending on export levels, duty-free import of capital goods and grace periods of up to five years on land rents.
The majority of investor enquiries are from India but there are also Chinese, European and Middle Eastern firms operating in Ethiopia, Esayas said.
India has invested nearly $4 billion in Ethiopia, including in agriculture, flower growing and sugar estates.
Development organisations have expressed concerns about the erosion of local farmers' rights by foreign investments in developing countries.
Ethiopia is still desperately poor and this year appealed for food aid for 6.2 million people. But Esayas said investment could be used to fight hunger and poverty.
"We have 74.5 million hectares of cultivable land of which only about 15 million is cultivated by small scale farmers," he said. "When we give land to investors they create jobs, they develop our technology and they bring foreign currency."
The three million hectares selected were sparsely populated, he said.
Ethiopia is overwhelmingly reliant on its agricultural exports. It is Africa's biggest coffee producer and the world's fourth largest exporter of sesame seeds.The U.N. Food and Agriculture Organisation says private investment to develop agriculture in poorer countries is urgently needed if the world is to double food output by 2050 and stamp out hunger that still afflicts about 1 billion people.