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How Your Valentine Day Rose is Grown

May 1, 2013
The Alternative

“The government will lock our doors tomorrow if I give you an interview about that!”, bristled the director of an Ethiopian environmental organization. “Let’s talk about ethnobotany instead.”

I had asked him about a sign I drove by daily: bright magenta, with the words “Karuturi Agro” written in a font usually reserved for children’s clothing stores. Though the sign was unthreatening, the business was not: in 2008, Bangalore-based Karuturi Global Ltd signed a 50-year lease for 300,000 hectares of so-called “wasteland.” The rate was absurdly low at USD 245 a week, 10% of what most other investors were paying. Karuturi Global, cut-flower industry leader, was now expanding to oil palm, sugar cane, rice, maize, edible oils and cotton on the Gambela plantation near South Sudan. And no one was allowed to talk about it.

Karuturi Global’s reception in Ethiopia is part of the large-scale arable land acquisition trend, often labelled as a “land grab.” According to Rights and Resources, India ranks #3 behind Indonesia and Malaysia in this practice, and over 80 Indian companies have acquired arable land in Ethiopia, Madagascar, Kenya, Senegal, Sierra Leone, Cameroon and Mozambique. This isn’t your family farm—this is a single industrialist, Ramakrishna Karuturi, owning chunks of land twice the size of Bangalore.

Forgetting to pay taxes

On April 19, 2013, the Kenyan government found Karuturi Global Ltd. guilty of tax evasion to the tune of nearly US $11 million, the first time an African government has brought a large multinational company to court for transfer mispricing through a fully public process.

In Kenya, Karuturi Global only has 200 hectacres leased. In Ethiopia, they have 312,180 hectacres (and you’re not allowed to talk about it).Karuturi Global underreported the value of their cut-flower exports to a Dubai subsidiary, thus evading the tax system that supports Kenyan citizens to access education, health, and other government services. “Karuturi has also been accused of human rights abuses, poor labour practices, threats to the environment and so on,” points out Devlin Kuyek of GRAIN, a small non-profit working with poor farmers in Ethiopia. “The World Bank Group did not grant Karuturi the political risk insurance it requested for its Ethiopian operations.”


Roses that became a flowering business

At face value, large-scale agriculture seems good for empty bellies. Mr. Karuturi had said, “A big motivation for taking up this project was the Ethiopian famine in 2008 when the project was offered to us. We believe, with this project, we can alleviate the shortage of many food crops in the country.”  While droughts may be natural, famines are man-made.

The same structures that cause famine are those that invite foreign investors to grow export cash crops: these structures see food as a commodity and not as a human right. Abera Deressa, federal minister for agriculture was quoted in an Oakland Institute report as saying, “If we get money we can buy food anywhere. Then we can solve the food problem.” But where will the money come from?Token payments for land transactions accompanied by huge tax breaks and investment incentives do not bring high returns and have high opportunity costs for local employment. According toPambazuka Press, in Mali, the area targeted by recent large land deals which could easily sustain 112,537 farm families (over half a million people, 686,478) is instead in the hands of 22 investors and will create at best a few thousand jobs.

“At first we thought we had taken big steps to stop the land grab in India. But now we realize that our progress here will just sending the Indian industrialists elsewhere – to Africa.”

Globally, farmers become irrelevant when the “culture” in agriculture is replaced with business. The so-called “wasteland” that now features Karuturi’s plantations was neither unused nor abandoned: in traditional agriculture, crop rotation and pastoralism are essential to food production. In order to de-inhabit the land, local indigenous communities were uprooted in a government “villigisation” project, detailed in the Human Rights Watch report “Waiting here for Death” and denied outright by Mr. Karuturi as “hogwash.” The Ethiopian government plans to relocate 1.5 million people out of prime land investment territories in the coming years.

As post-Green Revolution India knows, industrial agriculture as a solution to food insecurity is a ticket to the Titanic. One needs to look no further than Punjab to find evidence of the Oakland Institute’s warning: “The practice of industrial agriculture will lead to increased toxicity, disruption of nature’s system of pest control, creation of new weeds or virus strains, loss of biodiversity, and the spread of genetically-engineered genes to indigenous plants.” Ethiopians worry that industrial agriculture such as Mr. Karuturi’s model will promote dependence on government handouts and will damage smallholder self-sufficiency.

Agricultural lands will also be used to produce non-food products such as biofuels. According to Land Matrix, an online index of land deals, three quarters of global deals for agricultural land are classified for biofuel production. Biofuels will feed airplanes, not people.

Indian social movements are taking up the issue as their own. One attendant of a recent meet between East African and Indian activists, Kannaiayan Subramaniam of the South Indian Coordination Committee of Farmers’ Movements, told me, “At first we thought we had taken big steps to stop the land grab in India. But now we realize that our progress here will just send the Indian industrialists elsewhere – to Africa.”

18 years ago, Karuturi Global started as a 10 square kilometer farm near the Bangalore airport. Today, one in nine roses bought in Europe comes from a Karuturi farm. If the Ethiopian project is executed well, Karuturi will be one of the 10 largest food producers in the world as a major producer of sugar and palm oil. This kind of entrepreneurship and economic growth is what free-marketeers laud but indicates a neocolonial paradox. Though Manmohan Singh’s widely quoted position is that “The commerce between India and Africa will be of ideas and services, not manufactured goods against raw materials after the fashion of Western exploiters,” evidence until now has suggested otherwise.

For more information: FAQs from Oakland Institute on Indian Investments in Ethiopia

Background note to accompany 19 April 2013 press release:

Investigative article by Sputnik Limbani:

Oakland Institute article