Tuesday, October 4, 2011


Leasing of land from poor and impoverished countries, especially those in Africa has been severely criticized because of its colonial flavor! While these land transactions are purely based on business philosophy, there is another dimension viz, the sociological impact. As these countries are considered relatively less developed and do not have the wherewithal to utilize the potential, their vast stretches of land offers, leasing to resource-rich private players to cultivate them for a consideration is logically sound. Most criticisms about land deals center around the fact that the local population are unable to access to adequate foods due to shortages and the foods produced by the investors find their way to international market or to the countries of the investors. Though FAO is seized of the matter and model lease agreements are being discussed, fact still remains that the foreign investors are given land not hitherto utilized. May be there can be suitable provisions in the agreement to sell a part of the production from such land in the domestic market. It is also argued that the country offering land on lease can also import most appropriate foods relevant to the local population, with the investments received. As for Indian investors, GOI must ensure that country's image is not marred by the style of working of its entrepreneurs.

"About $2 billion, or 40%, of India's $4.78 billion investments in Ethiopia come from agriculture and floriculture companies, according to the ministry of external affairs. India is the East African country's second largest foreign investor behind the European Union, and ahead of China. Indian agriculturists doing business there try to offset criticism of being neocolonialists by taking on social initiatives and highlighting their contribution to the food security of the drought-prone and famine-hit country."Ethiopia has been a food-importing part of the world, and large-scale agriculture production by foreigners is only going to boost food supply," said Sai Ramakrishna Karuturi of Bangalore-based Karuturi Global Ltd, the world's No. 1 exporter of cut roses with 250,000 acres under rose cultivation in Ethiopia and which plans to triple cultivated area with crops such as maize. The 1994-incorporated Karuturi Global ventured seven years ago into Ethiopia to scale up its low-cost rose exports business. In 2010, it logged a 20% sales growth, touching $115 million, with expectations of reaching $1 billion in five-six years. But such large-scale commercial ventures are stoking doubts about bridging the gap between the demand and supply of food in Ethiopia. "Many of the transnational land deals being concluded in Africa are therefore not about cultivation of food at all, let alone cultivation of food for Africa," said an online report of Africa-focused agriculture policy group Future Agricultures. In recent years, manpower costs of India's largely marginal farmers have surged following greater availability of less strenuous factory jobs and welfare programmes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme. Yet, Indian corporations that can afford to hire mechanized harvesters to cope with labour shortages steer clear of large-scale farming owing to the difficulty of buying and operating on several small plots and government restrictions on agriculture ownership. Sara Cotton's Saleem had struggled with exactly these issues. So when he attended a 2006 road show by the Ethiopian government in Coimbatore and learned about labour costs in the African nation being one-tenth those in India, and the availability of thousands of acres of untouched arable land, he took the plunge".

India is facing acute shortage of oil seeds and legumes and there is every justification for GOI to encourage its citizens to go out side the country to invest on land and cultivation of these crops. The land leasing countries cannot expect that foreign investors are tempted to take up cultivation of low value staples where margins are very thin and when such lease deeds are finalized this factor needs to be kept in mind. It is wiser for the Indian investors to keep their ears close to the ground to understand the aspirations of local people and not to injure their feelings unnecessarily. In fact there should be a social content in such projects under which either a portion of the production is shared with them or part of the land is earmarked for production of native crops. Development of infrastructure like health centers, education facilities, power generation for local population etc can also be considered and investments on them should be factored into the project. Let this route be used for fostering better relationship between the people of India and that in the land leasing countries


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