Sai Ramakrishna Karuturi, Managing Director of Karuturi Global Limited Company confidently talks about having the largest commercial farm. He proudly says 98 percent of their produce enters the local markets while only two percent is exported. They even say this number will decrease to one percent soon. Karuturi has leased 100,000hct in Gambella and another 2,000hct in Bako, Oromia regional state. It plants palm oil, sugar cane, sesame, rice and corn employing in total more than 4,500 employees. It also has two flower farms in Woliso and Holeta.
The company has plans to produce a million tons of produce annually helping to make food imports a thing of the past using innovative, highly mechanized agricultural methods like “Precision Farming” and “zero till farming”.
He also said the company’s management positions have been given to Ethiopians. This includes two of three senior managers.
Karuturi’s management reiterated that they are using the latest hybrid seed technology as well as appropriate pesticides and weed control methods and new irrigation technology to allow them to develop two cycles of crops every year since they are not dependent on the rain.
To accomplish this the company invited a specialist on Natural Farming Techniques and growing high yield crops through natural methods such as manure, compost and mixing teff and wheat grass waste to create bio fertilizers which are cost effective.
Sai Ramakrishna also said the company has started to sell bonds and shares to shed its image of being labeled an Indian only company and to create a sense of partnership and co-ownership with Ethiopians.
However he’s categorical in his denial of reports from some groups like Human Rights Watch that local people are being displaced because of commercial farming especially in the Gambella region. He questions their methodology and evidence and the veracity of the information they provide.
He also said some are confusing commercial farming with ‘villagization’ in which people are altogether relocated from their environment due to the harsh climatic conditions at their original location.
Karuturi has also reportedly settled its farm at an approximately two kilometers from indigenous people’s habitats so as to ensure it doesn’t encroach on existing community areas.
However it admits there are safety issues in the area where they are farming as it borders the newly independent but chronically insecure Southern Sudan, from where there are sometimes armed intrusions into Ethiopia, although Karuturi so far hasn’t reported any direct attacks on their farms.
Recently about 20 people were killed in an ambush in Gambella according to Bloomberg news agency citing the Ethiopian News Agency’s report of the Federal Affairs Minister Shiferaw Tekle-Mariam by people opposed to the relocation and commercial farming programs in the region.
Another Indian company that has started investing in Ethiopia on large tracts of land is CLC Spintex which has taken about 25,000hct of land for cotton in the Benishangul Gumuz regional state.
P.S. Reddy, Project Manager at CLC Spintex company says the company has cultivated last year about 1,400hct but lost much of the cotton yield because of climatic conditions which made it plan a modest 500hct for 2012.
He was disappointed by what he says the lack of the Ethiopian government’s prior notification about the heavy rains in the area, which makes the plot unsuitable for farming although he says cotton disease problems are marginal in the area.
He also said the company hasn’t been provided with proper infrastructure within and outside the farm as well as the provision of raw materials that are hampering its work.
As a solution Reddy suggested that the Ethiopian government consult with professionals before giving out land with this type of terrain because it is difficult to farm cotton on.
The company has not had any problem finding cheap, plentiful labor and they say they are teaching people how to grow and develop cotton.
However a local employee of CLC Spintex who works at a foreman level said part of the company’s problems are overambitious plans for their projects, unpreparedness and the different work ethic and culture of the two peoples.
“Indians tend to value patience and commitment as their work ethic while the Ethiopians, which make up the bulk of the workforce, tend to value motivation and rewards as job guiding principles,” he told Capital.
He also said so far the company hasn’t put in enough machinery for the project, failed to show new technological innovations and transfers as well as shown a lack of expertise and indecisiveness by the management on immediate decisions to be made for the cotton farm.
Another point of concern he raised was the relative absence of collateral the company has which in case of dispute or insolvency could be a problem, and habits of shortcuts to get a quick profit from the farm. However he commended the company for their treatment of Ethiopian laborers through such things like travel and payment incentives as well as its delicate use of chemicals for the farm.
He also rose to the defense of the company with regards to the high amount of rain in the area, which has rendered cotton farming difficult.
CLC Spintex has started small scale production of cotton to the Amibara Cotton Processing industrial farm and grinding industry. It has also planned a textile industry in Kombolcha town, where they will supply their own cotton.
Bizualem Bekele Land Administration team coordinator at the Ministry of Agriculture (MoA) says there are a total of 17 agricultural plants the Ethiopian government has prioritized as overall agricultural investment areas to be grown either on rain fed or a commercial farming basis.
Other criteria such as size of operational costs and the benefits accrued from the agricultural products, investment recovery rates, international commodity prices and its saturation level and transportation cost have also been factored into the calculation.
Bizualem further said every investor is required to construct 30Km of access roads as well as irrigation and camp infrastructure which will be factored in as an investment cost for the investor.
The assessment has been made by the Ethiopian Institute of Agricultural research, the Ethiopian Research Development Institute headed by Neway Gebreab chief advisor to Prime Minister Meles Zenawi together with the Ministry of Agriculture.
“Cotton prices last year increased because of textile demands and pest concerns which made our strategy of attracting textile industries contingent on having a domestic cotton industry,” Bizualem told Capital.
He also said cotton production together with sugar and edible oil are part of the government’s aims of import substitution.
However, he said to alleviate concerns about environmental problems every company that takes over large tracts of lands has to make a three month environmental impact assessment plus an environmental code of practice to prevent hazardous materials from seeping to the ground.
A regulatory framework has also been made for those chemicals that aren’t registered.
While the MoA insists that no forced displacement is taking place and environmental concerns are being taken into account a local NGO, Forum for Social Studies, in its June 2011 publication on large scale land transfers in Ethiopia said, especially dealing with the western region of Gambella, that the delicate eco-system of the region should be handled very sensitively.
It also reports an independent villagization program was subverted to be linked to commercial farming especially Saudi star farming which offered resettlement sites without consulting the population in addition to the inhospitality and difficulty for cultivation. It also found little technology transfer from the projects.
The report had recommended, especially for regions like Gambella with extensive wildlife resources, to engage in ecotourism, game ranching, controlled hunting, fishing and improved livestock programs.
A recent report by the British Broadcasting Corporation (BBC) citing the Food and Agricultural Organization (FAO) had put Ethiopia fifth on the list of countries who’ve given their plots proportional to their agricultural lands for land deals behind less publicized countries like Democratic Republic of Congo (DRC), Mozambique, Uganda and Zambia.
Ethiopia’s land deals proportional to its arable land was about 8.2 percent while DRC’s the largest country in sub-Saharan Africa was a whopping 48.8 percent, followed by Mozambique at 21.1 percent, Uganda at 14.6 percent and Zambia at 8.8 percent.
According to research conducted by Access Capital, 347.1 thousand hectares of land in Ethiopia are in use for commercial farming by 23 local and international firms and individuals. The largest single nationalities were Indian investors, followed closely by six local ones, five Diaspora investments and a single Chinese investment.