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Ethiopia to Charge More on Commercial Farm Leases

April 5, 2012

By Aaron Maasho


ADDIS ABABA (Reuters) - Ethiopia, which leases large tracts of land at cheap rates for commercial farming, plans to improve infrastructure and access to farmland and charge a premium to investors, an official said on Thursday.

The Horn of Africa country has allocated some 3.6 million hectares of land for firms seeking to invest in agriculture, often around remote and sparsely-populated regions in its west.

Indian-listed Karuturi Global, which is farming rice and palm cereals on its 10,000 hectares plot in the Gambella province, is among the 32 companies that have snapped up land.

Data on the Ministry of Agriculture website showed annual land rental rates for foreign firms ranging from $12.8 per hectare to just $1.15.

"We plan to build infrastructure by investing in roads, phone lines and electricity in these designated areas to add value," said Esayas Kebede, head of the Ministry of Agriculture's Agricultural Investment Agency.

"Companies often leased land for 20 to 40 years on certain prices per hectare, but the times will be reduced and the prices will increase upon completion (of infrastructure projects)," he told Reuters.

Around 400 companies submit applications for licenses each month, Esayas said, with a growing number of them from Europe.

"We have not issued a single license since November. We will resume once we have evaluated the performance of existing companies and have set up the infrastructure," he added.

He declined to comment on when Ethiopia might finish the infrastructure projects and hence resume issuing licenses. 

Apart from Karuturi, others investors include Indian firms Shapoorji with 50,000 hectares and BHO with 27,000 hectares, Saudi Star Agricultural Development with 10,000 hectares and China's Huana Dafengyuan Agriculture with 25,000 hectares.

A majority of them grow rice and cereals primarily for export, but the aim now was to increase plots for cotton plantations and for palm oil, Esayas said.


Ethiopia says its primary goal is to boost agricultural production with the introduction of modern farming methods and technology.

Yet the massive give-away of land in one of the world's poorest nations, and in other countries across Africa including Sudan and Madagascar - has attracted intense scrutiny and criticism from rights groups.

The Oakland Institute, a U.S.-based research group, says land deals in Ethiopia lack transparency, adversely impact the environment, and have led to the forceful resettlement of thousands.

"A vast majority of people in the targeted regions do not want to relocate, but have been threatened by local police," said the group's Nickolas Johnson.

"There is a disturbing parallel between land being vacated and the land being sold to investors for large-scale commercial agriculture."

Ethiopia says the relocations are part of plans to voluntarily resettle some 1.5 million people in its western regions to villages adjacent to roads and with better water facilities and more fertile land. 

A recent Foreign Affairs Ministry statement accused the Oakland Institute of launching a "campaign to promote poverty".

"We have to understand the huge potential that will benefit locals with work and enable our entry to the international market," Esayas said.

"This programme has transformed the country from an aid destination to an investment destination."