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January 07, 2012

Foreign farm investors flock to Ethiopia, but food self-sufficiency not in sight

by Keffyalew Gebremedhin

As if it were a rehearsal for year-end message, in early November the ministry of agriculture announced, “Ethiopia is working towards commercializing agriculture and [realizing] its full potential to provide each household surplus and income for its growing population.” As an idea that looks to the future, there is nothing wrong with that — except that the officials preferred to be opaque when it came to linking the anticipated outcome with the means they would employ.

This took place at an important regional conference, whose theme was Productivity and Enhancing food Security in Africa: New Challenges and Opportunities, held in Addis Abeba from 1-3 November. The official who represented the government and launched the conference chose to reiterate the usual set position, especially at a time when Ethiopia has continued to be hit harder by inadequate domestic food production and distribution, against the backdrop of double-digit-inflation. Data released by the government on 13 December indicated that in the last one year, inflation has pushed food prices by a whopping 50.3 percent.

Unfortunately, the agriculture ministry even seemed coy to show a vision behind the plan; as the government’s representative limited himself to iterating, “The government has taken strong policy measures to recognize agriculture as an engine of the economy and a means to fight poverty.” This took many people by surprise, since it sounded as if State Minister for Agriculture Wondirad Mandefro was announcing to the conference a new government strategy two decades after the Meles regime seized power and massive resources have been thrown at agriculture, without any sign of the country becoming self-sufficient in food production now or the likelihood of it at in the foreseeable future.

Instead, the state minister stated that the government has been spending on agriculture more than 14 percent of GDP, in his words, “exceeding the target set by Maputo Declaration to meet the Comprehensive African Agriculture Development Program targets.” He then recalled how it was foreseen in the government plan to double agricultural GDP to achieve food self-sufficiency at the household and national level through the growth and transformation plan (GTP 2011 – 2014/15). Not only the GTP is treated these days as an all cure; but also he made it the basis of his prediction of agricultural production.

If the news report is accurate, the official chose to rely on economic growth patterns of the past few years. He then boldly asserted that the economy would “continue to grow with a double-digit for subsequent eight years.” If that is the basis on which the future of the country’s goal of food self-sufficiency is being predicated, I lost him there. What else can one say in the face of such a known trouble ahead, save fearing for the state of the nation and future generations!

One person who was not entirely sanguine with everything he heard at the conference was Monty Jones, the Executive Director of the Forum for Agricultural Research in Africa. He politely took the floor to give a sense of what African countries needed to do. He urged them “to go beyond just research to increase productivity that enables to reduce hunger and poverty.”

As to this year’s harvest, ten days after the conference and in connection with the 2011 harvest season, Ms.Samiya Zekeria, Director-General of Ethiopia’s Central Statistics Agency (CSA), announced that she expected over 218.3 million quintals of output to be harvested from small-scale private farms on over 12.1 million hectares of land this year, according to the Ethiopian News Agency. She reported this represented an increase of 15 million quintals, compared with that of same period last year.

Tentative as this data is, it is difficult to establish whether the increases reflects productivity gains or mere expansion of land under crops. Last year’s CSA data indicated that crop land increased by about 200,000 hectares. Already on the face of this forecast, one is inclined to think that a great deal of work and appropriate policies are badly needed to guide Ethiopia’s agriculture to a better future.

Not long ago FAO’s Assistant Director General Hafez Ghanem alerted African journalists as to the what culprits are lurking behind the rise in food prices the world over. While he emphasized that agricultural investments alone are not sufficient conditions in and of their own, he urged each country to examine its particular conditions more seriously and adopt appropriate polices, instead of clinging to everything that is being presented as causes for the rising food prices.

The need for such an approach, he said, should be given sufficient consideration since “The available data show that the situation is different in each country. In some countries, price rises have meant higher prices for farmers, while in others this is not the case, which is generally the result of the fact that governments are hindering the transfer from the global market to the farmers.”

To the thinking of the assistant director-general, Ghana represented an example of a successful country regarding agricultural development. He observed in that regard:

Notwithstanding the fact that Africa still has a long way to go in the battle against hunger, even so, despite everything, [the region] has recorded some successes in this area. Take the case of Ghana in particular. This country has succeeded in achieving its Millennium Development Goal 
(MDG) aiming to cut the proportion of its population suffering hunger by half between 1990 and 2015. It did so by supporting its farmers in two important and priority sectors: public investment, particularly in research and development (RD), and ad-hoc policies, which specifically allowed farmers access to seed and the market. These were measures which had been adopted in other countries and explain their relative success.

This reminded me of a news item I read in late August from the association of coffee producers in southern Ethiopia, which wrote a letter to the prime minister and the National Bank of Ethiopia (NBE) urging them to take urgent measures to tide the growing shift by his members to the production of khat, a stimulant crop in young nation, for lack of bank loans and credits.

Looking at the problem from the economic, financial and land tenure angles, experienced by Ethiopian farmers, Atkilt Admasu and Issac Paul came with new evidence of misguided policies in their ASSESSMENT ON THE MECHANISMS AND CHALLENGES OF SMALL SCALE AGRICULTURAL CREDIT FROM COMMERCIAL BANKS IN ETHIOPIA: THE CASE OF ADA’A LIBEN WOREDA ETHIOPIA, published in the Journal of Sustainable Development in Africa (Vol 12, No.3 2010). Their study found out:

…Agricultural credit in the Woreda [Ada'a Libern] followed a two-tier delivery approach, where input loans were provided to farmers through cooperatives. The main variable to qualify farmers for such loans was their working land size. Nevertheless, due to the shortage of land in the Woreda, the amount of loans, availed in the form of fertilizers, improved seeds, and chemicals, were inadequate. As collateral for the loans, the Commercial Bank of Ethiopia secures federal government guarantee, which is considered as cash substitute collateral from Ministry of Finance and Economic Development( MoFED) on the Oromia Regional Government’s subsidy budget. The main reason for many of the default cases was found to be the lack of farmers’ awareness on repayment terms. In a nut shell, the government’s role in the small-scale farmers’ access to bank loans appeared crucial both during loan origination and collection.

At the same time, this shows that there is strong bias in government toward foreign investors. Thus, on the political side the problem is better summed up by the Bertelsmann Transformation Index (BTI), which in its 2010 report on Ethiopia wrote:

Indian and Chinese companies encouraged by the Ethiopian government have increased their investment in the agricultural, construction and communication sectors, but have not been able to compensate for deficiencies on the Ethiopian side. The further transformation towards a market economy has been slow due to ideological reservations in the political class and the fear that private investment could be used to bolster the political opposition.

Why should we be alarmed by Ethiopia’s present agricultural policy?

There is no doubt that the government has practically abandoned the 13.4 million small holders long ago, not to speak of nomadic pastoralists. The government is more obsessed with production of cash crops and earning more foreign exchange. Their explanation is that with the cash people could buy their food. It seems our leaders live on a different planet, since otherwise they could not have adopted this disastrous policy at a time when even the rich countries, oil producer included, are trying to run away from food imports, despite their healthier balance of payments.

With such a failed policy and dependence on commercial farms that produce cash crops or foods for export, Ethiopia should not expect to dig its way out of hunger. Nor can it develop as an economy, or make headway in this fiercely competitive world, safeguard the pride and dignity of its citizens and maintain the nation’s independence and sovereignty so long as the policies pursued force it into dependence on international food aid. If one of the state of mind that these agricultural investors would abandon their pursuit of profit and become the new food donors, there is a need for sanity tests.As it stands now, this policy is a road to slavery for a proud nation that cherishes its sense of independence for which huge and historic sacrifices have been paid!

Secondly, as I discussed a few days ago in another article in the context of realization of the Millennium Development Goals (MDGs), today in Ethiopia there is 15-20 million people facing hunger everyday. At the same time, according to United Nations reports, 46 percent of Ethiopians live on less than a dollar a day; 51 percent of children are stunted.

What this says is that these people are not a part of the new Ethiopia, whose economic growth is compared to a miracle by the investing world. What they do not realize is that these fast growths are servicing the interests of narrower group(s).

As it happens, for that matter even by official admission, today 12.2 million Ethiopians in 290 food insecure woredas (districts of the country) are categorized as incapable of supporting themselves and are dependent on international food aid. Under normal circumstances, i.e., when there is no drought or famine this number goes down to 7 – 8 million. While this is the reality, government leaders boast that no one has died of hunger in Ethiopia, although secret interviews of farmers filtering out of the country are showing that hunger is closer than a neighbor to many, especially in the southern and south-western parts of the country. Bear in mind that in the past, hunger, drought and famine was mainly a northern Ethiopian phenomenon.

The Productive Safety Net Project (PSNP), financed by the international community, has saved lives in the last five years. Unfortunately, its problem is that it has no successful mechanism for the graduation of the dependent people to become productive and self-supporting citizens, a fact which some in the World Bank have also come to realize.

Misguided commercial agriculture, mostly known by its misnomer (in Ethiopia’s case) ‘farmland grab’

While the dependency on international food aid, discussed above, remains a worrying as to the future of Ethiopia’s agriculture, one of the evolving dangers lies in the country’s fertile lands being doled out mostly to foreign investors. This has been criticized roundly. But nothing could convince Prime Minister Meles Zenawi about the errors of his policies. These are, as Stefano Manservisi put it in 2009, pushing local farmers in a wrong direction; he rightly pointed out that intensifying commercial agriculture at the expense of smallholders would only lead to the exploitation of developing countries. The end result is, he stressed, “The poorest countries are selling commodities, they are exporting migrants and now they are selling their land from which they will not take any kind of benefit in terms of food or whatever.”

Standing side by side (from left) are father Surya Rao Karaturi, and son Sai Ramakrishna Karuturi, founder and managing director of Karuturi Global Limited; with Anil Tumu, director of Karuturi Agro Products Plc, and Chombe Seyoum, managing director of Gedeb Engineering Plc. Left: a John Deere tractor.

What commercial agriculture could do to a nation, where local farmers are displaced and their lands are taken away by force or threats, is better articulated a few years ago by Devinder Sharma, analyst with the Forum for Biotechnology and Food Security in India. Firstly, he predicted discontent of pushed away citizens leading to civil unrest, the undercurrents of which are already being witnessed in Ethiopia.

Secondly and more importantly Sharma looks at the environmental consequences and observes:

Outsourcing food production will ensure food security for investing countries but would leave behind a trail of hunger, starvation and food scarcities for local populations…The environmental tab of highly intensive farming – devastated soils, dry aquifer, and ruined ecology from chemical infestation – will be left for the host country to pick up.

Moreover, there is also the problems of mistreatment and exploitation of the rural population by the investor farmers. The locals are embittered by the exploitation of their labor with payments in some instances of 25 ETB for tractor drivers, which is USD $1.45 a day and less in other areas. Ordinary daily laborers without skills get paid far less than that. Speaking of the exploitation, One Girma Umad, an employee of Saudi Star and who works as machine operator, told Addis Fortune that, although he appreciated the chance to work without having any prior skill sets, he was not happy about the pay. He observed in that regard, “I have managed to develop the skills needed through observation and personal practise…However, the 25 Br I get a day is not even enough for my daily meals.”

How could this be considered an income that should start these people something meaningful for themselves? Most of all, the opportunities for technology transfer are non-existent in most instances, especially in situations where Indian and Chinese investors have brought machine operators from their countries, as happened in Gambella and other leased lands.

Many of the issues surrounding such commercial agriculture remain unresolved. The problem is being felt like fresh wound by literate consumers around the world, because of the dangerous implications of this to food production by smallholder agriculture.

This week the PRI, Public Radio International has become the latest addition to raise a series of unanswered questions about the persistence of the government in Ethiopian in pushing farmers out of their holdings and handing over the most fertile lands to investors. Those who have experienced this misfortune continue to speak out.

On its part, government is denying it has pushed away anyone. It claims the lands were unoccupied as discussed some months back. At that time, Meles said:

What we are doing is putting all unutilized land in this country and we have a lot of unutilized land in the lowlands…What we have done is to build infrastructures in those areas and therefore open up the area for investments both by domestic and foreign private sector on the basis of a clearly set out lease arrangement. That is a win-win arrangement. It is not a land grab. And, therefore, we are very comfortable with the fact that we have put in place all the necessary guidelines, environmental and otherwise, to make sure that everyone benefits from this exercise.

Transforming Ethiopia

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