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January 06, 2012

Indian floriculture investor answers questions on his African interest

Sixteen years ago, Sai Ramakrishna Karuturi started a floriculture business in Bangalore, and became one of India's biggest floriculturists in quick time. A few years ago, he stepped into Africa; today, he operates 7.5 lakh acres in Ethiopia and 1,500 acres in Kenya. In land that is about 8 times the size of Mumbai, Karuturi grows flowers and a range of other agricultural products. He is probably today the world's biggest supplier of roses. Karuturi talks to STOI about his African safari.

What are the challenges in Indian agriculture?

Land is an emotive and contentious issue. If the interlinking of rivers project is revived, it may connect the flood zone in the East with the drought zone in the South, and unleash some arable land. Otherwise, of the 300 million hectares of land we have, only one-third is arable. It is impossible to have a sizeable 5,000 acres of land in the country. Rain-fed agriculture is suicidal.

Why has Africa become so critical for your business?

Africa is better in terms of productivity, costs, taxes, duty-free access to European markets because of their least developed country status, and lower transportation costs owing to the geographical proximity to our main markets in Europe.

How much lower is the price of a rose grown in Africa compared to that in India?

A rose from India, when it lands in Europe, will cost about 14 euro cents and it will be about 30% less from East Africa.

What about the political risks in Africa?

We invest only in countries that have a bilateral investment treaty with India. Also the country must be a signatory to World Bank's Multilateral Investment Guarantee Agency (MIGA). We buy MIGA insurance which protects us from political risks. We are also working closely with the government to build a healthy relationship with India. I am currently the honorary consul-general for Ethiopia in Bangalore.

We read about civil strife and mafias in some of these African countries. Isn't the environment difficult to operate in?

Riots happen everywhere, including in India. You have to find a way around them. Three months after our biggest acquisition in December 2007, Ethiopia was on fire. But we were working round the clock, harvesting and shipping flowers. Police and guards protected our farms. We stocked up food and water, essentials and blankets. Maybe the Cauvery and Rajkumar riots taught us how to survive such things. I remember then having gone to the Bangalore police commissioner, representing a small flower organization. He told me between 12 midnight and 3am, most people sleep. Since then, I have been shipping flowers in that window, when temperature and traffic are low. As for the mafia, they prefer to hijack trucks carrying copper. Copper is $10,000 a tonne, while food is only $200 a tonne.

Times of India

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