Agri economic zone: Ethiopia to tweak farmland renting policy

28 Nov

By Keffyalew Gebremedhin

Minister of Agriculture Tefera Deribew on November 27, 2012 indicated that preparations are underway to establish “agricultural economic zones”, according to FBC. This news report appears under the title ሰፋፊ የእርሻ መሬቶችን ከመስጠት ጋር በተያያዘ አዲስ አሰራር ተግባራዊ ሊደረግ ነው – the literal translation of which is: Government to introduce new measures in large-scale farmlands renting.

In unusual directness of tone for an Ethiopian official, the minister was upfront in acknowledging that the over 400 hundred thousand ha of farmlands rented in the past three to four years to foreign and domestic investors have barely delivered the expected results.

Minister Tefera has not elaborated how the new policy would ensure desired results under the new policy. Nor has he touched upon what investors would be expected to do differently or what the government’s role would be in that. What he stated would result in a new policy aimed at developing specialized agricultural economic zones.

It is not clear clear what the new policy’s implications, especially its emphasis on cash crops, would be on food production and the national goal of food security by the end of the growth and transformation plan (GTP).

Consequently, while not sufficiently specific the minister has made reference to experimental undertakings by foreign investors on hundred thousand ha in Benishangul-Gumuz, Gambella and in Bench Maji. In what made him sound a genius of the obvious, he said that the lesson learned from this failure has convinced officials that putting land in the hunds of investors is no guarantee for attaining expected results.

In the light of this, it appears that once again Ethiopia is on the road to cluttering in another experiment – early on it was ADLI, then BPR, etc. Now it is the multifaceted Japanese Kaizen and industrial zones. In fact, the agricultural economic zone policy appears intended to speedily simulate a transfer of experience from the few industrial zones that are are popping up in the country.

One thing Ato Tefera chose to ignore or forget in his latest encounter with the media, however, is announcing failure of the government’s severely-castigated farmland grab policy, which for that matter has been below its renting target of three million hectares by 2012.

The minister could be reminded that this has been a major preoccupation of his government since the beginning of 2012. He went to India in February to convince Indian investors to invest in Ethiopian agriculture, where on 2 February he famously told The Economic Times, a respected Indian paper:

    “We are now proposing to transfer another 3.6 million hectares of land to investors from overseas. And I am confident that more than half of the 3.6 million hectares land will go to Indians … How much land will actually go to Indian investors depends entirely on the interest of investors. If they come and take all the land, then also we will be very happy. Indian investors are very welcome in Ethiopia.”

He cannot tell the world now that his mission was not important or his ministry sending a delegation to Dubai in Jan – Feb 2012 to participate in the Second Commercial Farm Africa Market to attract Arab attention to Ethiopian landgrab.

All said and done, even the preferred Indian investors have not come in the big numbers he anticipated to take perhaps not more than half a million hectares. For the first time, Ato Hailemariam Dessalegn, then deputy prime minister, publicly spoke on behalf of the government about this concern on this at a meeting he had with the Ethiopian diaspora on 24 April 2012. It did not take his boss more than a week to contradict him publicly giving a four million hectare target and higher rental figure than the government had even planned.

At the time, hailemariam was so preoccupied with the fact that out of a target of three million by 2012, only a little over 300,000 ha of farmlands were rented. As foreign minister, this compelled him instead to focus on appealing to the patriotism and economic interests of the diaspora to invest in the various sectors of their country’s economy, especially the farmlands the government has set aside for investors.

Bravo! Ato Tefera now joins the prime minister and is able to speak up to a point. Unfortunately, it is not because transparency is a chosen principle in Ethiopian policy-making.

Today, it has suddenly dawned on the officials that the time has come to fiddle their arguments, why the much-vaunted GTP seems incapable of being panacea for all ailments of our society. With half GTP’s lifespan gone, the government’s pledge of food self-security by the end of the plan period is seen to be in tatters. Already, data from the Ethiopian Central Statistics Agency (CSA) in the past two years have indicated that vision is less likely to be realized, with significantly less than anticipated production levels reported.

It happens now that Ato Tefera is selectively underlining the failure to attain the desired result either in terms of agricultural production or modernization of agriculture – the meaning boiling down to low agricultural outputs. In concerete terms, he has now mentioned agricultural irrigation not picking up.

Understandably, it is a serious concern for him that firstly not even a million hectares of farmlands have been rented to local and foreign investors. Secondly, the much promised technology transfer has not occurred. Thirdly, the farms are not as productive, not to speak of the technology transfer Meles used to sell farmland grab.

In the circumstances, assuming that there is consistency in implementing the new strategy, the government’s new direction aims at courting small-scale investors.

The idea there is that because of scale they would be more willing and ready to feed the industry sector with raw materials, especially manufacturing for the production of exportable textiles and fabrics. Lately, after manufacturing received all the praises, officials have come to realize that it takes more than what they had anticipated to reach full capacity production. Worst of all, prospects do not seem to exist at this point about it being competitive.

The problem there is both the lack of adequate supply of raw materials and the quality issues, as Economist Belayneh Begajo, the managing director of Bizinfo Consultancy, discussed in his excellent analysis on the Commentary page of Addis Fortune of November 25, 2012.

Meanwhile, we have learned that this new policy measures would not affect the interests of Saudi Star Agriculture Development Plc.s As far as the Ethiopian government is concerned, Sheik Al Amoudi is priority investor in all sectors – wherever and whenever. In their views, his infractions are minor – not ever being able to pay the costs of acquiring state assets he has won in official tenders, which under the regulations, is not permissible for other ordinary mortals.

On November 10, The Reporter came out with a story that Saudi Star would receive an additional 130,000 ha. The paper quotes as its source none other than the CEO of Derba Midroc Haile Assegide. He confirmed to the journalist that the land transfer is a done deal – a person also so well-looped with the policy-makers as one of them in his earlier life.

Currently Saudi Star is producing rice in Gambella Regional State on 10,000 hectares plot of land. The sheik aims to develop the farmlands he has acquired for the next ten to fifteen years, with an estimated investment of three to five billion dollars, according to The Reporter.

TE – Transforming Ethiopia

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