Not Much Fruit for the Picking?

"Some observers have likened developments in Africa to a modern-day gold rush; others argue that the United States, China, India, and Russia are reenacting the nineteenth-century 'scramble for Africa,' when European nations laid claim to territories in the region during a four-decade-long span prior to World War I."
--from When Giants Fall: An Economic Roadmap for the End of the American Era

For many of those who invest in emerging markets, Africa is the next great land of opportunity. However, based on the following Telegraph report, "India Joins 'Neocolonial' Rush for Africa's Land and Labour," and others like it, Iwonder just how much fruit -- low-hanging or otherwise -- will be left for the picking once governments and corporate interests are done staking their claims?

India, once the colonial jewel of Britain's empire, has been accused of 'neo-colonialism' in Africa where its business people have joined a race with China, Saudi Arabia and elsewhere to buy up agricultural estates and take advantage of cheap labour.

Indian farming companies have bought hundreds of thousands of hectares in Ethiopia, Kenya, Madagascar, Senegal and Mozambique, where they are growing rice, sugar cane, maize and lentils for their own domestic market back in India.

Its government has given soft loans as aid to support the overseas ventures in what has been described as a challenge to China and Saudi Arabia in the new scramble for Africa. China, South Korea, and a several Arab countries have led the way in creating new African mega-farms to outsource domestic food production and use cheaper labour.

South Korea has bought just under 700,000 hectares in Sudan, while Saudi Arabia has signed a deal for 500,000 hectares in Tanzania.

India is now catching up fast with its government offering financial incentives for companies to produce food in Ethiopia and other African countries. Pulses, cooking oils and maize are in short supply in India.

More than 80 Indian companies have invested an estimated £1.5 billion in buying huge plantations in Ethiopia. The largest among them is Karuturi Global, one of the world's largest producers of cut roses. It has signed deals for just under 350,000 hectares to create what it claims is the world's largest agricultural land-bank. The Bangalore-based company, which has also bought farm land in Kenya, is growing sugar cane, palm oil, rice and vegetables.

Indian farming is dominated by small, family-run holdings, bullock cart transport, and legions of middlemen. The slow, cumbersome system is cited as the main reason why a large proportion of Indian produce rots before it ever reaches the market – the annual loss is valued at up to £6 billion.

So Indian companies see in Africa the possibility to build more efficient and far larger agricultural operations. This is an separate motivation from that of many Arab countries that buy African land to produce food that their homelands cannot.

Raju Poosapati, Vice President of India's Yes Bank, which advises investors in Africa, said a government ban on non-Basmati rice exports had driven Indian companies to grow it in Africa to sell overseas. Indians are now eating more meat and that has led many companies to grow maize animal feed in Africa as there are no government incentives for Indian farmers to grow it at home.

Sharad Pawar, India's agriculture minister, rejected claims that the government supported a new colonisation of African farmland. "Some companies are interested in buying agricultural land for sugar cane and then selling it on the international markets. It's business, nothing more," he told The Daily Telegraph.

Government documents meanwhile show the details of official support, and just of under £500 million in soft loans to encourage African countries to export food to India. New Delhi has also cut import duties for food produced in Ethiopia.

A report by the UN Food and Agriculture Organisation said more than 2.5 hectares of African land had been bought by foreign companies since 2004 and voiced concerns that poor villagers might be ousted to make way for investments. It also said it feared some of the deals may be open to corruption.

Devinder Sharma of India's Forum for Biotechnology and Food Security said the companies buying up land to export food from Africa were "food pirates" and compared them with the English companies that shipped food from Ireland during the 19th century potato famine.

"There are 80 Indian companies trying to get land in Ethiopia, and it's all to be imported back to India. The government of India has been encouraging them," he said, and warned of danger if famine returned to Africa.

"If food is being shipped out and poor people are dying, what will happen? There would be riots," he said.

Comments

[roger]

There are some extremely dark clouds in this trend
of buying up land.The scary part is the size and
power of the buyers and the extreme vulnerability
of the African farmer