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December 09, 2008

Daewoo unsure of Madagascar land deal

by Christian Oliver

Daewoo Logistics of South Korea has not received approval from Madagascar for a plan to farm maize and palm oil in an area half the size of Belgium, contrary to statements by company officials, it has emerged.

Daewoo managers told the media last month the company would develop 1.3m hectares on the island to secure stable food supplies for South Korea under a 99-year lease, joining a flurry of Asian and Middle Eastern companies seeking to tap Africa’s agricultural export potential.

A Daewoo official said that the company understood it would not have to pay to lease the land, given the investment involved and the jobs to be created. But in a statement attributed to the company and posted on the website of the Malagasy president, Daewoo said: “There is not yet a contract on the land between Daewoo Logistics and [the] Madagascar government.”

Echoing that, the Malagasy land reform ministry said: “There has been no contract at regional or central government level. They [Daewoo] have prospected for land and now the central government is waiting for the prospecting reports.”

The ministry said an environmental investigation would be required as well. Marius Ratolojanahary, the land reform minister, confirmed to a Malagasy newspaper that Daewoo still had several hurdles to clear. “Every request must be examined by a commission before being supported by the cabinet,” he said. “So Daewoo was free to file an application in line with the procedure but that does not mean it will get the land.”

Daewoo declined to confirm or comment on the statement on the government website.

Responding to initial reports of the deal, critics said the welfare of Malagasy people and global food security would be better served by islanders being helped to manage their own farms.

They stressed the trickle-down effect of Daewoo’s plan would be marginal and noted the company’s focus on exporting food from a country in which about 600,000 people rely on relief from the United Nations World Food Programme.

South Korea is the world’s fourth biggest maize importer and wants to wean itself off US shipments.

Financial Times

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