Monday, January 04, 2010

The Last Frontier

We have reported previously on the land grab taking place in Africa and once again we read of more developments

Until last year, people in the Ethiopian settlement of Elliah earned a living by farming their land and fishing. Now, they are employees. They work for Bangalore- based Karuturi Global Ltd., which is leasing 300,000 hectares (741,000 acres) of local land, an area larger than Luxembourg. The jobs pay less than the World Bank’s $1.25-per-day poverty threshold, even as the project has the potential to enrich international investors with annual earnings that the company expects to exceed $100 million by 2013.
“My business is the third wave of outsourcing,” Sai Ramakrishna Karuturi, themanaging director of Karuturi Global said “Everyone is investing in China for manufacturing; everyone is investing in India for services. Everybody needs to invest in Africa for food.”

“African agricultural land is cheap relative to similar land elsewhere; it is probably the last frontier,” said Paul Christie, marketing director at Emergent Asset Management in London. The hedge fund manager has farm holdings in South Africa, Mozambique and Zimbabwe.

Under the agreement with Ethiopia’s government, Karuturi pays no rent for the land for the first six years. After that, it will pay U.S. $1.18 per hectare per year for the next 84 years. ( Land of similar quality in Malaysia and Indonesia would cost about $350 per hectare per year ).

“This strategy will build up capitalism,” president of Ethiopia’s Gambella region said . “The message I want to convey is there is room for any investor. We have very fertile land, there is good labor here ...”

The government plans to allot 3 million hectares, or about 4 percent of its arable land, to foreign investors over the next three years.

Workers in Elliah say they weren’t consulted on the deal to lease land around the village, and that not much of the money is trickling down.
“These Indians do not have any humanity,” Omeud Obank who guards the site 24 hours a day, six days a week said, speaking of his employers. “Just because we are poor it doesn’t make us less human.”

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