The lesser known story of India's role in Ethiopian land deals

The global food price crises between 2008 and 2009 led countries that bore the brunt of the catastrophe to look elsewhere for agricultural land to mitigate the effects.

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.

A great deal of attention has been paid to the role of the US, the largest investor in land in the world, China and Middle Eastern countries. Much less attention has been given to the role of India. 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.

Indian land deals in Ethiopia are the result of the strong convergence in the two countries' domestic political-economic policies. Both advocate 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.

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.

What drives Indian firms to Ethiopia

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. This was driven by two factors: it was struggling to make more land available for investors and the spike in global food price crisis in 2008.

The lure of Ethiopia

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.

Need for caution

Foreign investors need to tread carefully when acquiring land in Africa. This is best illustrated in the Gambela region of Ethiopia which I visited earlier this year. The area has been the centre of large-scale land acquisitions by Indian as well as other foreign investors.

According to the Ethiopian constitution, land is administered by the regional government. However, the federal government’s move to govern land investments through a centralised agency called the Agricultural Investment Land Administration Agency has led to discontent among Gambela regional government officials.

The concern is that the behaviour of foreign companies is not being managed adequately. 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. During my visit I learnt that Karuturi Global Ltd, an Indian firm which has 100 000 hectares of land in Gambela, had only 1 000 hectares under production.

A lack of consultation with people living in the area is also a problem. Gambela is an ecological hotspot with Gambela National Park at its centre. It is home to Nuer and Anuak people whose livelihoods are threatened by investors illegally clearing trees in the park. These clearances happen mostly without consultation. This has led to conflict in the region.

Given the political nature of international land deals and the role states play in shaping policy and practice, there must be scrutiny on the role governments play in such deals because of their close alliance with private capital.

This is especially so for India. It can ill-afford to be tainted by accusations of complicity in land deals that disadvantage the people of Africa given the role it sees for itself in promoting co-operation among countries in the south to mitigate the effects of skewed power relations with the north.

Mohammad Amir Anwar does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.