One such arrangement, launched in 2009 under Saudi Arabia’s King Abdullah initiative and forming part of a $100-million investment scheme in Ethiopian agriculture, had farmers grow teff (a North African cereal grass), white wheat, maize and white sorghum, among other crops, before these were exported back to the Gulf region. The Economist referred to it as an instance of a “powerful but contentious trend sweeping the poor world”, further saying that countries which export capital but import food are outsourcing farm production to countries that need capital but which have land to spare.
According to Human Rights Watch, in less than five years Ethiopia has approved more than 800 foreign-financed agricultural projects. The watchdog group further said that from 2008 to 2011, the Ethiopian government leased out no less than 3.8 million hectares to foreign investors, displacing local inhabitants and resulting in tens of thousands of internally displaced persons who are often forced to migrate to urban areas.
The majority of land acquisitions occur in government-to-government deals. In the past, Saudi officials and closely tied sovereign wealth funds negotiated with former Prime Minister Meles Zenawi, while presently, such discussions take place with the ruling coalition of his successor, Hailemariam Desalegn Boshe. Supporters argue that such deals increase production efficiency and improve economic outlooks but only if investors are willing to pay a fair price.
In 2011, Oxfam reported that Middle Eastern and Far Eastern investors were purchasing plots in developing countries, including Ethiopia, for as little as $1 per hectare. That same year, Saudi Star Agricultural Development Plc leased 10,000 hectares for a bargain price of $9.42 per hectare annually for the next 60 years. (Saudi Star, a food company owned by Ethiopian and Saudi Arabian billionaire Mohammed Al Amoudi, and which forms part of the Derba group, produces sugar, rice and edible oil. The company is based in Addis Ababa, Ethiopia.) Advocacy groups from Spain and the US commented that the government sponsored deal had caused human rights violations as well as the forceful relocation of hundreds of thousands of residents, including the Nuek and Anuak indigenous groups. The government retorted by saying that the resettlement plan was acted out voluntarily on behalf of residents. Saudi Star claims that it acted in good faith and that the benefits of the land deal – including improvements to regional infrastructure – outweighed the consequences, despite scepticism. Fikru Desalegn, former State Minister of Capacity Building in the Ethiopian federal government and current CEO of Saudi Star, played down the negative connotations associated with the controversial foreign investment. He said there was “nobody in the 10,000 hectares” and that the company had “not paid any compensation” but that the possibility of employment opening up would “teach the public it is very useful for them”.
In July 2012, the Derba Group announced plans for an additional 300,000-hectare development project in the fertile region of Gambela. While no figures have been released, industry experts suspect that the lease was contracted below cost, generating approximately $923 million per annum for the consortium. The company intends to export the majority of the crops harvested, with 45 percent destined for Jeddah.
Ethiopia’s sales of land for agricultural use can generate much needed capital for financing the federal government’s ambitious growth plans. The land is lucrative, and if crop production is profitable, the market share of Ethiopia’s soft commodities inevitably increases. Liberalising food markets and boosting trade while discouraging protectionism for agricultural commodities is essential for the advancement of Ethiopia’s economy. However, it is unclear whether or not Ethiopians will actually benefit from the sale of their lands. In the words of an unidentified farmer interviewed for a 2013 IDS working paper on agriculture in Ethiopia, in response to a question on the difference between those who live on the land compared to those who reap what the farmer sows: “Show me a person who became rich because they depended on farming. There is no one here. Those who are well-off are those involved in trading.” His response cuts to the major issue facing Ethiopia’s push to attract foreign investors to its fertile farmlands: the locals providing the land for farming see very little of the profits, while the foreign investors selling the commodities grown on farmland purchased at cut-throat prices are literally reaping the benefits