Ethiopia: The billionaire’s farm

By: Tom Burgis
Date: March 1st 2016
Source: Financial Times

Across the globe, investors are betting billions on land. Tom Burgis reports from Ethiopia, where a tycoon has planted a vast rice farm in soils tainted by years of conflict.

1, THE HARVEST

November’s harvest, covering only a portion of the allocated land, was long overdue. It was initially forecast to yield 10,000 tonnes of rice but Saudi Star halved the outlook after poor rains. The company plans to spend another $100m by 2018 completing 21km of irrigation canals, levelling the ground using lasers and bringing in more machinery. That would double the farm’s yield, allowing annual production of 140,000 tonnes, more than enough to supply the entire Ethiopian market.

Mr Bedlu, who studied plant science at university in Egypt, blamed the farm’s initial troubles on mistakes by inexperienced managers and consultants. He was part of a team that Mr al-Amoudi installed in 2014. It has brought expertise of large-scale commercial farming and is trying to improve community relations. The 4,000-strong staff includes 1,300 locals: 300 on permanent contracts and 1,000 seasonal labourers.

Temesgen Desigew, a rangy 23-year-old from a nearby town, has already risen to the position of agricultural supervisor. He joked that he wanted Mr Bedlu’s job one day. Asked whether his father, who grows maize on the family plot, used a combine harvester, Mr Temesgen’s eyes widened. “No, no,” he said. “An ox.”

Education in Gambella is rudimentary for most, so local hires are trained from scratch. In the rice-processing plant housed in a vast hangar rising from the scrub, a Pakistani technician took pride in the skills he was imparting to his local charges. “It’s difficult,” he admitted, his grin unwavering. “There are 86 languages in this country.”

Mr Bedlu was learning the language of the Anuak, the main ethnic group in the area, one of the two biggest in Gambella. Their livelihoods are rooted in farming and some have found work at Saudi Star. But armed guards on the perimeter were a reminder of what happened on April 28 2012, when decades of lowlander grievances were unleashed on the sheikh’s farm.

A group of gunmen, widely held to have been Anuak militants, opened fire at the company’s compound. They killed at least five employees before fleeing. Reprisals followed. According to Human Rights Watch, the military rounded up villagers, beating the men and raping the women.

The attack was a lesson for the new lords of the land, whether in Gambella or Brazil, Madagascar or Scotland. They can come with the promise of jobs, technology and progress. But land is like the lion that prowls near Saudi Star’s farm: hard to tame.

2. A NATION OF FARMERS

From the air, most of Ethiopia looks like a vast patchwork of tiny plots, each a slightly different shade of ochre or green.

This is a nation of smallholders: 85 per cent of employment is in agriculture and 95 per cent of all agricultural produce comes from small farms, typically the size of a couple of football pitches.

Of that, 80 per cent is consumed by the households that produce it; only 20 per cent is sold. These farmers rely on their hands, some rudimentary tools and the fickle rains.

A mere 5 per cent of agricultural output comes from big commercial farms. Yet they form an important plank in the government’s strategy to complete a journey from famine to prosperity by the middle of the century

Hundreds of thousands of Ethiopians have starved to death in periodic famines. Another 8m were declared at risk by the UN in November. Nonetheless, a country once synonymous with deprivation has found its swagger. Official figures in this country of 97m people show more than a decade of double-digit growth, with strong exports of coffee, livestock and cut flowers.

Some analysts question the numbers, especially when they are accompanied by famine warnings. But there is physical evidence of advancement too: the smooth new roads, the telecoms infrastructure, the dams — and Barack Obama, who in July last year became the first sitting US president to visit Ethiopia. The country is a self-styled “developmental state”: a nation, like China, Singapore or Rwanda, where an authoritarian government sets a strict economic path.

The ruling Ethiopian People’s Revolutionary Democratic Front took power when it toppled the communist regime in 1991. Dominated by highlanders, as those from central and northern Ethiopia are known, it established a record for economic competence and intolerance of dissent. A surge of opposition support ahead of 2005’s elections prompted a crackdown: government forces violently dispersed protests against alleged rigging. In last year’s polls the party and its allies won every seat in parliament. Resistance to government high-handedness has boiled over in recent weeks into protests that have drawn a deadly response from the authorities. Ethiopia sits in the bottom 25 of Freedom House’s press freedom rankings, close to Russia and Saudi Arabia. Under a counter-terrorism law that human rights activists and lawyers say is used to stifle criticism, dozens of politicians, protesters, journalists and bloggers have been jailed, along with critics of the land deals.

For years, the EPRDF was opposed to the idea of starting big commercial farms. That changed about a decade ago as donors encouraged foreign investment in agriculture. Since then, Ethiopia has been at the forefront of a global phenomenon.

Lorenzo Cotula, a senior researcher at the UK’s International Institute for Environment and Development, has tracked the evolution of transnational land deals. “Land might be seen as an asset class by a fund manager,” he says, “but for many rural people it is a foundation for social identity and food security.” Most “wild west” deals failed after the food price shock of 2007, Mr Cotula says. Still, in a report published last year, he noted that momentum is again building. “Demographic growth, climate change, urbanisation and changing consumption patterns are widely expected to continue . . . compounding pressures on valuable lands.”

Ethiopia has tried to make itself the most attractive destination for land investment. More than 50 foreign investors, from India, Turkey, Pakistan, China and Sudan as well as Saudi Arabia, have leased Ethiopian land. The rents are often very cheap. Saudi Star’s contract stipulates an annual rate of less than $3 a hectare. Investors enjoy tax holidays and access to guaranteed credit.

Yet only 35 per cent of the leased land has been developed, according to official figures. That is partly because of the sheer difficulty of getting agricultural machinery and skilled manpower to the most remote corners of a landlocked country. The government has cancelled seven leases after investors failed to deliver on their promises. Some of the domestic investors, who cumulatively have taken much more land than the foreign ones, have simply stripped their plots for charcoal and left them idle.

The biggest lease, taken by Karuturi Global of Bangalore, has not fared well. The Indian group had sought to diversify into food from its multinational roses business but struggled with flooding and debt. Initially 300,000 hectares, the government cut the lease area to 100,000 hectares. Abera Mulat, head of Ethiopia’s land investment agency, wrote to Karuturi in December, saying its lease had been terminated because it had failed to bring its plot in Gambella into cultivation. Karuturi declined to comment but its boss was quoted saying the company would challenge the cancellation.

In an interview in his office in Addis Ababa in November, Mr Abera insisted that, despite allegations from activists, no one with a rightful claim had been forcibly moved to make way for investors. “There have been cases where people have come and said: ‘This is my land.’ If we are mistaken, then we will leave that land.”

There have, however, been forced relocations under the government’s separate “villagisation” programme. This, the government says, is designed to group scattered communities into larger settlements to make it easier to deliver basic services. Some Anuak, including victims who spoke to human rights activists, have reported beatings and rapes by the soldiers who enforced their resettlement. One Anuak activist notes a bitter irony: that some of those who were self-sufficient before they were moved now depend on food aid.

Mr Abera stressed that “the point of resettlement is not to clear land for investment”. He added, however: “After the land is vacant and we have done surveys, then why not?”

3. RESISTANCE

Okello Akway Ochalla had been in exile for a decade when he checked in to a hotel in Juba, the capital of South Sudan, in March 2014. An Anuak, his homeland lay across the Ethiopian border in Gambella, where Saudi Star and other flagship ventures of the Ethiopian government’s land drive have their farms. But Mr Okello could not go home.

He had been the governor of Gambella in 2003, when mobs of highlanders set about slaughtering the Anuak, after Anuak assailants allegedly staged a deadly ambush on a government vehicle carrying highlanders. According to testimony gathered by human rights groups, the Ethiopian military joined in the massacres. More than 400 people died.

The government claimed the deaths arose from inter-ethnic clashes between indigenous groups in Gambella. But Mr Okello refused to peddle the official line. Threatened with arrest or worse, he fled. He was granted asylum in Norway but maintained contact with Anuak scattered across east Africa, some of whom, according to his associates, were involved in the small resistance groups that have taken up arms against the authorities.

In exile, Mr Okello developed twin agendas, says Gora Ojulu, an Anuak refugee in Kenya who worked as a finance official in his regional government. “One, to have a strong political organisation that can oppose the government. Two, advocate around land: be against the narrative from the government that ‘we must move you to a place where we give you infrastructures, then we give this land for investors’.”

For Mr Okello as for many other Anuak, the dispute over the land deals has fused with their people’s century-long struggle to claim their rights from British colonialists, Haile Selassie’s Ethiopian empire, a communist dictatorship and, most recently, a federal government dominated by highlanders.

Ethiopia receives more food aid than any other country. But starvation’s domain is the highlands, where the soils are thin and the droughts unforgiving. The lowland arc that has Gambella at its centre is bountiful, watered by the Nile and its tributaries. The Anuak would typically clear a patch of forest, cultivate it for 5–10 years growing maize, sorghum and groundnut, then move on to a fresh patch. If the crop in one area failed, those with a fuller harvest would come to the rescue.

It is in the lowlands, perennially resistant to highlanders’ diktats, that the vast majority of the land deals have been struck. Federal officials stress that many of the deals were agreed by local authorities. Opponents counter that local leaders who signed off on them were often stooges of the powers in Addis Ababa.

Whatever the motives of the land policy — and its proponents argue passionately that they have locals’ interests at heart — the sorry history of the lowlands was always going to colour the programme.

In March 2014, Mr Okello embarked on a tour to organise Anuak resistance. He went to Eritrea, Ethiopia’s sworn enemy, then on to South Sudan, home to many thousands of Anuak. On March 22, two South Sudanese security agents entered the hotel where Mr Okello was staying.

According to a relative who was with him, Mr Okello was led away with four other Anuak men who had been visiting him. They were taken to a military prison near the airport. All were flown to Addis Ababa. Mr Okello has been in prison since. He faces charges under the counter-terrorism law. The maximum penalty is death.

4. ‘A BLESSING FOR ETHIOPIA’

Jemal Ahmed quivered with anger. “Some of the figures are mind-blowing,” the chief executive of Saudi Star said one morning in November. Sitting in his office on the 15th floor of the Midroc skyscraper in Addis Ababa, he rattled off some of the wilder claims of profiteering that critics of the Gambella rice farm have cited. “It makes my blood boil.”

Mr Ahmed was a leading Ethiopian cooking-oil trader when he formed an agro-business partnership with Mr al-Amoudi in 2008. In 2014, the sheikh asked him to turn round the troubled Saudi Star project.

“I’m an African,” Mr Ahmed began. “And whenever I read my history, when I see how our forefathers suffered . . .” He broke off to tell the story of his grandfather. The 23-year-old man who looked out proudly from a black and white picture on Mr Ahmed’s phone was killed days after it was taken, fighting off Benito Mussolini’s Italian colonisers.

“After colonisation and slavery, Africans are still not able to use their resources,” Mr Ahmed went on. “Take Gambella. That land is infested with mosquitoes. The indigenous survive by eating roots from the forest. They don’t have food shortages but their mortality rate is so high. They don’t go to school. The only thing you see when you fly is not factories or businesspeople: you see NGOs.”

He was resentful that, when a company such as Saudi Star tried to invest, it would come under attack from foreign activists. “I get happy when I see an Anuak boy operating a Caterpillar machine the way an American boy would do on the Mississippi delta.”

Saudi Star has tangled for years with activists from the Oakland Institute and Human Rights Watch, who have compiled detailed reports on Ethiopia’s land investment programme and the heavy-handed ways in which, they allege, the government shifts locals out of the way. Mr Ahmed flatly denied such claims. “No one was living in this area,” he said of Saudi Star's plot.

On the wall of Mr Ahmed’s office hung a framed picture of him and Mr al-Amoudi, whose closeness to the ruling party has exacerbated resentment among Gambellans. Mr Ahmed objected to attempts to portray the sheikh as “a man who came to take advantage of Ethiopia’s resources at the expense of the indigenous people, to take their ancestral land”.

Instead, he argued, the farm made economic sense. “Saudi Arabia is a rich country and imports food. We have rich lands but we need capital. If Saudi hunger for food lets us bring in capital, that is a blessing for Ethiopia.”

‘If I had invested $200m in Thailand, we could easily have produced more rice. Why do we do it in Gambella, with no roads, no electricity, no skilled workers? Because if we don’t, no one else will’

Contrary to press reports, Saudi Star had yet to export a single grain of rice, Mr Ahmed added. Higher prices at home meant that it was more profitable to sell domestically. Saudi Star’s rice production would cut Ethiopia’s import bill by up to $100m, Mr Ahmed forecast, and generate more foreign currency through exports. That hard currency is precious: Ethiopia’s trade deficit stood at $8bn in 2013 and, the International Monetary Fund forecasts, will be twice as big by the end of the decade.

Despite the early setbacks, Mr Ahmed was contemplating expansion. He had his eye on as much as 100,000 hectares in the area around Saudi Star’s farm that he expected to come free as the government cancelled failed leases.

“If I had invested $200m in Thailand, we could easily have produced more rice,” Mr Ahmed said. “Why do we do it in Gambella, with no roads, no electricity, no skilled workers? Because if we don’t, no one else will. The Indians came but they could not do it. We have a sentimental attachment to our people. Gambellans are Ethiopians too.”

By now, Mr Ahmed had calmed down. The view from his window is spectacular, taking in the national stadium and, beyond, the capital’s fast-rising skyline. For him, the land venture in Gambella is part of a plan to drive Ethiopia into the 21st century.

“All the indigenous groups have had a rough time,” he said. “They need more investment. And better governance. And civilisation.”

5. EXILE

In the cramped living room of a one-storey house on the mud-spattered outskirts of Nairobi, 14 of the men and women scattered by the long tussle for land and power in Gambella gathered one recent afternoon. A picture of an Anuak woman torn from a calendar adorned a wall.

One after another, the refugees recalled when they had fled Gambella. Some arrived recently, driven by evictions linked to the villagisation programme. Others, such as Omot Oluwoch, 37, came to Kenya after the pogroms of 2003.

“I was taking tea on a veranda and I heard a gunshot,” Mr Omot recalled. “I saw soldiers shooting Anuak. They saw that I was Anuak. I decided to run — but I can’t run.” Mr Omot’s leg was damaged when he was small and he walks with an awkward shuffle. “Because I am disabled they did not shoot because they thought they could catch me and kill me with their hands.”

He limped as far as a nearby empty house, went inside, locked the door and hid in the roof. He heard the soldiers taunting him that the land of Gambella was theirs. They called him “tyre”, a highlander term for darker-skinned lowlanders. Eventually they lost interest. Mr Omot crawled out of a window. He spent two days in the bush before he hitched a lift to South Sudan. From there, he came to Nairobi.

“The reason why we are being killed is because of the land,” Mr Omot said, to nods of agreement from other refugees. “Because the government look down on us, they don’t want us to live there. They don’t consider us, because we have dark skin. It is like what happened under apartheid.”

Anuak leaders who had opposed Addis Ababa were simply swept aside. “Some have fled, some have been taken to prison, some have been killed. So [the government] can come and sell the land,” Mr Omot said.

Some of the refugees had known Mr Okello in Gambella. Since his arrest, the former governor’s supporters have lobbied the government of Norway, his adopted home, to intercede on his behalf. Norway’s foreign ministry says the country did not interfere in the judicial process abroad but that the embassy in Addis Ababa was monitoring the case. Diplomats visited Mr Okello early in his detention but were prevented from doing so again last year, the ministry says. It added that the embassy planned to contact Ethiopian authorities about Mr Okello’s allegation that he had been subjected to violence during interrogations. A judge in the terrorism trial has concluded that the prosecution case is compelling. A verdict is due on March 7.

The refugees rattled off names of other Anuak intellectuals consigned to Addis Ababa’s jails. In some cases, the detentions appear directly linked to criticism of the land deals. One prisoner is a relative of Mr Omot’s. Pastor Omot Agwa worked as a translator for a World Bank inspection team that investigated allegations of forced evictions and other abuses in Gambella. The pastor was arrested in March last year and faces what Human Rights Watch called “spurious” charges of terrorism.

Akoth Adhom, a woman in her sixties, claimed she knew of villages in Gambella that had been forcibly relocated. Asked who controlled the land now, she said: “Al-Amoudi.” Yet there was little evidence, even anecdotally, of evictions specifically to make way for investors.

No one challenged the thrust of Saudi Star’s argument that there was enough land in Gambella to accommodate some big farms. But the Anuaks’ claim to their land was not based on title to this or that specific plot, explained Ojunni Ojulu Ochalla, a former nurse who escaped the 2003 massacre.

“It does not mean that there is someone on every piece of land. Even in the bush, you have demarcated land. Areas for hunting, fishing, conserving the forest, farming. The narrative that this place is empty: if you take the whole world, you are living only on a small part. But that doesn’t mean that, in the rest of it, someone can just walk in and decide they can do what they want to do.”