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BHO Bioproducts of India to Spend $120 Million on Ethiopia Farms

September 25, 2012

Bloomberg — BHO Bioproducts, a closely held farming company, said it plans to invest more than $120 million in rice and cotton production in Ethiopia’s western Gambella region during the next four years.

BHO signed a 25-year renewable lease at 111 Ethiopian birr ($6.14) a hectare a year for a 27,000-hectare (66,719-acre) plot in Itang district of Gambella region in May 2010, Chief Operating Officer Sunny Maker said by phone from London today. “It’s incredibly rich, fertile land,” he said. “It should be all cleared within the next three years.”

Ethiopia’s government, which according to the London-based Overseas Development Institute is one of the world’s top five recipients of food aid, has set aside 4 million hectares of land for commercial agricultural investment, primarily to grow cash crops for export to earn the country foreign exchange. Critics including the Oakland Institute, a California-based advocacy group, have said the projects will increase hunger and that investments have displaced people. A total of 360,099 hectares has been leased under the program nationwide, according to the Agriculture Ministry’s website.

By 2017, the project may generate about $135 million a year from sales divided equally between domestic and international markets, Maker said. The company may receive a total of 100,000 hectares if the government is satisfied with its performance, according to its contract.

Rice will be rain-fed, while cotton will be irrigated using ground water, he said. Although the company has rights to water from the Baro River “we’re not looking to take water from outside,” Maker said.

Billionaire Investor

Other investors in Gambella include Bangalore-based Karuturi Global Ltd., the world’s largest rose grower, with a 100,000 hectare plot close to BHO’s, while Saudi billionaire Mohamed al-Amoudi’s Saudi Star Agricultural Investment Plc is growing rice on 10,000 hectares in the region. There are nine Indian companies, eight domestic businesses, six owned by Ethiopians living abroad and one Chinese company that have leased large tracts, according to the ministry.

BHO Bioproducts, which is registered in Addis Ababa, the Ethiopian capital, is nearing investment of $5 million so far, Maker said. The project will be financed by its owners, who also hold Delhi-based Bharat Herbals Oils, investors the company is in discussions with, and possibly the state-owned Development Bank of Ethiopia, he said.

Resettlement Program

The government has set aside 877,000 hectares in Gambella, about 42 percent of the state, for investment. A resettlement program in the region has forcibly displaced tens of thousands of indigenous Anuak and Nuer people, partly from investment areas, New York-based advocacy group Human Rights Watch said in January.

Ethiopia’s government said the report contained “fabrications” and that the program was unconnected to leases and was to provide people with better access to services. Five people employed by Ghulam Rasool Co., a closely held Pakistani engineering company working for Saudi Star, died in April after being shot gunmen. “We’ve had no issues and no displacement of people,” Sunny said. “We have not come across anything of that sort.”