Karuturi Asks $100 Million to Start Sugar Plantation in Ethiopia
(Bloomberg) — Karuturi Global Ltd., the world’s largest rose grower, is seeking $100 million from development banks to finance a sugar-cane plantation in southwestern Ethiopia, Chief Executive Officer Sai Ramakrishna Karuturi said.
“We believe we have reached that level of traction and scale that would be appropriate for a development financial institution to look at,” Karuturi said in a June 7 interview.
Karuturi is in Ethiopia as part of a four-year-old commercial-farming drive the government says will bring jobs and foreign currency from exports grown on more than 4 million hectares. Rights groups and opposition parties have said people are being forced from their land to make way for private investment.
The company has approached the African Development Bank, the African Export-Import Bank and the Eastern and Southern African Trade and Development Bank “to raise another $100 million for a sugarcane estate,” Karuturi said. The AfDB is in the “very preliminary stages” of considering Karuturi’s request, the Tunis-based lender’s representative in Ethiopia, Lamin G. Barrow, said on June 8 in an e-mailed response to questions.
Financing may be easier to obtain now that Ethiopia’s donors have countered criticism from rights groups about projects, Karuturi said. The U.S government on May 18 denied allegations by Human Rights Watch and the Oakland Institute that a resettlement program involved coercion and abuse.
Karuturi has hired LT Foods Ltd., which is based in New Delhi, to mill and distribute rice grown in Gambella and is close to completing a deal to process sugar cane it plans to grow on 15,000 hectares, he said, without providing details.
The company is looking for an investor to extract edible oil from palm, corn and soya, as well as for partners to build and run warehouses and boreholes, Karuturi said. The company also farms cereals on 2,000 hectares near Bako in the central Oromia region.
The larger Gambella tract, leased for 50 years at 2 million Ethiopian birr ($112,733) a year, is an “enormous undertaking,” and the company has not yet looked at its option to rent another 200,000 hectares, Karuturi said.
Karuturi, which is listed on both of India’s main stock exchanges, plans to use $50 million of recent debt financing to almost quadruple the area it is farming, Karuturi said.
It may harvest as much as 60,000 tons of corn and rice in the third quarter, he said. Dutch contractors built 110 kilometers (68 miles) of flood barriers after Karuturi lost $15 million when its corn crop was inundated in September, he said.
Total production should be more than 150,000 tons next year and may reach 1 million tons annually in five years, Karuturi said, without providing a breakdown by crop. Other large-scale agricultural operations have suffered violence in Gambella. Five people died after gunmen attacked contractors for Saudi Star Agricultural Development Plc, which plans to grow rice on 10,000 hectares there, on April 28.
“More than 10 members of the group responsible for the attack were recently arrested in South Sudan by its military,” Ethiopian Communications Minister Bereket Simon said by phone yesterday.