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December 17, 2008

Can foreign-owned farms solve food crisis?

by Michael Chebsi

Tola Melka was planning to throw a traditional party at his shanty home in rural central Ethiopia, anticipating a bumper harvest. He was grief-stricken in late October when unexpected rains totally destroyed his almost ripened teff, a native staple crop used to make spongy bread.

"I expected the harvest this year would be different," said the Melka, frustration evident on his face. "I wonder what I'll be feeding my children in the months to come."

Last year, Melka and his wife, Shashe Dima -- then pregnant with their sixth child -- endured overwhelming hunger due to lack of rain. This year too much rain -- three consecutive weeks fell at precisely the wrong time -- could make it even worse.

"Nature seems to be at odds with us," says Dima, seated on a hide, breast-feeding her last-born. Melka is just one of the many farmers whose tiny plots of will fail to sustain them through the year.

Some farmers will move to other parts of the country to hire themselves out as workers until the next planting season. But most stay home, hoping for assistance from the government and donors.

Melka and his family will join the 6.4 million people officially identified as food insecure in the country. This has become a major headache for authorities in Ethiopia, where self-sufficiency in food is a distant prospect despite government prioritising agriculture an engine of growth.

The long term Agricultural Development Led Industrialization (ADLI) strategy adopted in 1992 largely aims at transforming the economy by investing in strengthening nine million small-scale farmers.

But the government's ambitious target of harvesting 28 million tonnes of cereals in the first three quarters of the 2007/2008 budget year has failed. The nation produced only 16.4 million metric tones, according to a performance report presented to the Ethiopian Parliament on Jun. 3 by the agriculture ministry.

Authorities seem determined to change this situation by leasing huge chunks of land to other countries for mechanised farming.

The Ethiopian Prime Minister Meles Zenawi has promised Saudi Arabia that his country will provide hundreds of thousands of hectares of unutilised agricultural land for growing cereals in the east African country. This is a follow up to an earlier pledge by Ethiopia to grant 5,000 hectares of land to the Djibouti government for large-scale commercial farming.

The Ethiopian agriculture ministry is identifying available land for such foreign investors; so far close to two million hectares of land have been identified in the regions of Oromia and Amhara, where almost all cereals in the country are produced.

Pundits however are wary of the risk; not just the food but the profits from this farming would be siphoned off to consumers and investors in other countries.

While the government argues that the food produced would be available to domestic markets as well as for export, analysts fear that almost all of it would leave the country because Ethiopians cannot possibly compete with the prices foreign consumers would pay for it.

Saudi Arabia is already one of the top three trading partners of Ethiopia; speaking to the Arab News newspaper in August, Prime Minister Meles Zenawi, said trade volume between the two countries stood at one billion dollars. Ethiopia imports half a billion dollars more in the form of Saudi oil and petroleum than its exports of coffee, meat and other agricultural products. Zenawi said about 240 Saudi companies have been given investment licenses, and they are expected to invest $2.5 billion.

"When local prices go up, these investors sell their outputs locally at the price that customers would pay if they were to import the same agricultural outputs from another country, said Hashim A. Ahmed, macro-economic policy advisor to the government. "They don't necessarily sell their outputs overseas."

There are reports that Saudi Arabia and China are out buying farmland all over the world, from Somalia to Kazakhstan. But other countries short of fertile agricultural land to feed hungry populations are also involved. A closer look reveals an impressive list of countries seeking fertile land: Egypt, Djibouti and Libya in Africa; China, India, Japan, Malaysia and South Korea in Asia; and Bahrain, Jordan, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates in the Middle East.

Ethiopia is just one of over a hundred countries targeted. "This is not something that is happening only in Ethiopia. It's everywhere," says Dr. Wolday Amaha, head of the Ethiopian Economic Association, an independent think tank. "But the net welfare gain for the Ethiopian society has to exceed the loss, if there is any."

Government officials argue that these investors would bring technology. Local farmers, it is said, would copy scientific farming techniques from these investors and be encouraged to produce cash crops.

"The spread of technology in Ethiopian agriculture has been slow thus far," says Ken Ohashi, World Bank's Country Director for Ethiopia. Almost all the ploughing is done with oxen, and tilling, planting and harvesting are done by hand in the horn of Africa country.

But what has grabbed the immediate attention of farmers like Melka is the potential employment opportunity that these investments would bring. "From my experience, depending only on one's own farm for a living is risky," he said. "There has to be an additional source of income. I would have at least depended on my employment income at this grim period."

Agriculture, which still generates close to 45 per cent of GDP is undergoing some changes, and there now seems to be the basis to bring significant increases in productivity. The investments by foreign states are expected to help meet the five years strategic plan of the Ethiopian government where it plans to increase cultivated land by close to five million hectares by 2010.


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