Thursday, June 04, 2015

India buys Ethiopia

In 2008 prices of some foods, including wheat, soared by 130% in a single year and the United Nation's Food and Agriculture Organisation's food price index shot up 40%. The result was a frenzied scramble that saw countries acquire an estimated 40 million hectares of land in foreign countries, most of it in Africa.

India's ability to feed its 1.22 billion people is under increasing strain. This is due to a rapidly growing population, low agricultural productivity, reductions in farm sizes, declining water tables, increasing control of the seed sector by multi-nationals and a gradual withdrawal since the 1990s of the farm support system. India introduced special economic zones in 2005 hoping it would lead to agricultural development through the consolidation of land holdings. The intention was that this would lead to industrialisation. But the policy exposed the oldest contradiction of capitalism -- primitive accumulation which includes privatisation of land, the forced expulsion of peasant populations and the conversion of common, collective and state property rights to exclusive property rights. Widespread resistance movements began in many states, stalling some of the biggest zones, most notably in Nandigram. The protests led to the fall of the Left Front state government of West Bengal in 2011 after 34 years in power.

To meet consumption needs the Indian government started encouraging firms to seek land abroad for growing crops. A global land monitoring initiative, Land Matrix, ranks India as one of the top 10 investors in land abroad. It is the biggest investor in land in Ethiopia, with Indian companies accounting for almost 70% the land acquired by foreigners after 2008. Rough estimates suggest Indian firms have acquired roughly 600 000 hectares of land in Ethiopia. This is more than ten times the size of land acquired by firms in India under the country's special economic zones policy. India is followed closely by Saudi Arabian firms, with 500 000 hectares of land, in Ethiopia.

Indian land deals in Ethiopia are the result of the privatisation of public assets and increasing reliance on free trade and open markets. India's investment in land has been driven by the need to obviate the effects of spiralling food prices by outsourcing food supply. Ethiopia's decisions are driven by its development policy based on commercialisation of agriculture and reliance on foreign investments. 

The Ethiopian agricultural sector lies at the heart of the government's development strategy. It has set out to attract more foreign investment in large-scale commercial agriculture as outlined in its 1993 policy which was later reformulated in 2005. The policy marked a move towards a more trade-orientated approach, and a desire to attract foreign investors. Over 3.5 million hectares of land has been earmarked for investment by foreign firms. There is a strong sense that land deals in Ethiopia have benefited both the foreign investors and domestic private capitalists with close ties to the ruling party. A recent study found that foreign investors are farming less than 8% of the land they have acquired.

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