Karuturi’s son dreams of becoming one of the world’s biggest farmers
From Awramba Times editorial desk
Dear Ethiopians, thanks to the ruling party in Ethiopia, Sai Ramakrishna Karuturi dreams of becoming one of the world’s biggest farmers, while millions of Ethiopians are repeatedly starving.
The country has already leased three million hectares – an area just smaller than Belgium – to foreign farm businesses, and the US based rights group said Addis Ababa had plans to lease another 2.1 million hectares. The United Nations has voiced concern that foreign companies are buying swathes of land. Human Rights Watch said 1.5 million Ethiopians would eventually be forced from their land and highlighted what it said was the latest case of forced relocation in its report, Ethiopia: Forced Relocations Bring Hunger, Hardship. “The Ethiopian government under its ‘villagisation’ programme is forcibly relocating approximately 70,000 indigenous people from the western Gambella region to new villages that lack adequate food, farmland, healthcare and educational facilities.
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Karuturis son dreams of becoming one of the world’s biggest farmers
April 2008. The government of Gambela state in Ethiopia had invited Sai Ramakrishna Karuturi to discuss his offer to lease 100,000 hectare for farming. Karuturi’s expectations of a deal going through were so low that he sent his public relations officer Ashok Sharma and some lawyers for the meeting. The managing director of the world’s largest rose exporter, the Rs 645-crore Karuturi Global (KGL), had better things to do with his time than take a 700-km ride from Ethiopia’s capital Addis Ababa for a deal that seemed unlikely to materialise.
But his father, Karuturi Surya Rao, promoter of a Bangalore-based cable maker, and also chairman of Karuturi Global, offered to join the troupe. Though the deal seemed unlikely, Karuturi senior was worried about his son’s soaring ambitions and wanted to make sure that no undue risks were being taken.
As it turned out, Karuturi was both right — and wrong. The state would not offer 100,000 hectare (ha). Instead, it wanted him to take 300,000 ha (or 741,000 acre, an area twice the size of the National Capital Territory of Delhi) on a 99-year lease at 20 birr (about $1.5) per ha per annum.
Karuturi senior wanted nothing to do with the deal. The team was walking out when Ram called for an update. “Sign it right now,” he shouted over the phone from Addis Ababa when he heard the terms. “I want it signed and sealed before they change their mind.” Karuturi senior could hardly believe what was going on. “What’s the point of taking land that you cannot walk (across)?” he asked his son on the phone.
“I can’t walk it, but I can fly over it, dad,” Karuturi replied nonchalantly, “This is my company. Let me handle it.” There was a deafening silence at the other end of the phone. Even as the agreement to make Sai Ramakrishna Karuturi the biggest land-holding Indian on Earth was being signed, Karuturi senior walked out in protest and sat in the car, fretting over the risk.
The 25,274 sq. km Gambela bordering South Sudan is among the poorer states of Ethiopia. A majority of its 300,000 populace is pastoral. Gambela and other states have since leased out land to others, including India’s Shapoorji Pallonji & Co. (50,000 ha) to grow biofuel, and Spentex Industries (25,000 ha) to grow cotton. To understand what prompted Gambela to make Karuturi an offer he could not refuse (another 12,000 ha was leased to KGL at Bako, near Addis Ababa), swing across 2,400 km to this animated discussion in Nairobi, Kenya.
A Chicken And Egg Situation
April 2012: John M.N. Mututho is livid. “Mr Minister, this time you better take this seriously,” he says. Tension hangs in the air in the 9th floor boardroom overlooking the Kenyan Parliament in Nairobi. It is from there that Mututho draws his powers to admonish the farm minister. He is the chairman of the Parliament-appointed Agriculture, Livestock and Cooperatives Committee. Mututho monitors the agriculture ministry’s budget proposal for self-sufficiency in foodgrain. “Honourable minister, we feel really heavy at heart. We really don’t like it,” says Mututho, on the ministry’s inability to achieve food security.
The discussion that follows could well have been a Cabinet discourse in the Nehruvian-era when India was food-scarce. But this is the state of granaries in many African nations. In 2011, Africa imported food worth $50 billion, most of which came as aid from the US and Europe. “We have a very nasty situation. We import everything except air,” Mututho tells BW just after the panel meeting. For the first time, Kenya is inviting foreigners for large-scale corporate farming. Land will be free of lease for 25 years. Kenya is facilitating deals by consolidating 131 agriculture laws into just four. There will be no restriction on exports either (but local prices are higher than international prices; farmers will find it lucrative to sell domestically).
Kenya joins Tanzania, Mozambique, Senegal and Sierra Leone, in offering vast tracts to feed their growing populations. NGOs, human rights groups and activists call it corporate colonialism and land grab, and are mounting pressure to desist. “There is opposition from west Africa… that we not give foreigners any more land. For Kenya, that does not stand,” says Mututho.
But it all began in Ethiopia which was a symbol of starvation in the 1980s. The $32-billion Ethiopian economy — about half the size of Reliance Industries — has the fastest-growing African GDP at 10 per cent. Around 75 million of its 120 million ha is arable. But only 15 million ha is cultivated. In 2003, Ethiopia set aside 3 million ha for commercial farming. Of that, 1 million ha has been leased, inviting the wrath of activists protesting natives’ displacement. “No debate has taken place. In a country where you have 13 million people dependent on food aid, (if) you unleash this development model where human development and consensus is being ignored, the fallout is huge,” says Anuradha Mittal, executive director of California-based policy research body, Oakland Institute. “They are trying to take potshots at non-European, non-American investors. It is almost racist,” counters Karuturi.
Acres Up To The Horizon
The elevated but non-asphalt road stretches 72 km from one end of the KGL farm to the other. It’s the highway to South Sudan, 100 km away. A white flag-waving party of 20 Sudanese refugees passes by. Acres of cultivable land meet the horizon as big bulldozers, earth movers and dumpers work round the clock to clear shrubs, anthills and trees; 65,000 ha have been cleared. The rest will be done by March, promises Karuturi during one of the gut-churning rides.
The Gambela project has enormous implications for him. Success here could open the floodgates for similar deals in other African countries. Failure could consign him to obscurity, besides attracting the ire of investors and financial institutions. As the sowing season approaches, visits to each of the sites are mandatory, followed by marathon problem-solving sessions at the main camp in Ilea that start post-dusk and go on till midnight, over loads of tea, soft drinks and beer.
Planning takes up most of the time. The last time he had a crop in the fields, Karuturi grossly underestimated nature’s influence on his farm that lies between the Baro and Alwero rivers. Floods consumed 60,000 tonne of maize sown on 12,000 ha. It was a $15 million write-off. “We were caught napping. Later, when I spoke to villagers, they showed me (water) marking on trees. It is so simple. It was there. I felt like an idiot,” says Karuturi. When he told the flood woes to rose buyers in the Netherlands, they had a ready answer: build dykes. The Dutch have mastered of it. Nearly 25 per cent of the Netherlands is below the sea level and 21 per cent of the population lives below sea level. Another 50 per cent land is barely 1 metre above the sea.
If Karuturi is nervous, he hides it behind the bravado. “I’m not boasting. It’s a wild west project,” says the 6-foot-tall farmer. “It has never been done before.” He expects to earn $500-700 million annually from this project when it is fully commissioned in three years. That’s six times the revenues KGL generates from rose exports. The $380 million investment ($128 million has been invested so far) is 12 times KGL’s FY11 net profit.
But his dreams are not prisoners of scarcity. “In a few years (we will) develop at least 1 million ha (2.47 million acre) of farmland in Africa and produce 8-10 million tonne food,” says Karuturi. What he does not say is, that could make his the world’s biggest farming company. “Size mein kya rakha hai (why go after size)? We want to be the best.” Kazakhstan’s Ivolga-Holding and Argentina’s El Tejar are the biggest with 600,000 ha (1.5 million acre) each. Karuturi believes at 1 million ha, he would be among the top 5 producers of maize, rice, palm oil, sugar and sesame.
He says exploratory talks are on with Tanzania, Mozambique, Senegal and Sierra Leone. “We have sent reconnaissance teams. We are looking at these four and DRC (Democratic Republic of Congo) as a funnel.” Discussions are at an advanced stage in Tanzania and Mozambique. “In Senegal, we have made an exploratory probe and in Sierra Leone we have made initial contacts,” says Karuturi.
Interestingly, the million ha dream cannot be realised by KGL all by itself. It does not have the $5 billion it will need. To realise the dream, KGL will have to morph into a farm management firm. For instance, the Gambela land itself will need $1.2 billion in investment — a tall order for the $115-million firm. “I want to be a farm-enabler. We want to build something like an agri SEZ. (We will) develop land suitable for farming, with irrigation, mechanisation, storage, post-harvest transportation and bring in agri entrepreneurs for a revenue share.” His proposal to convert millions of ha of fallow land into cultivable land through agri SEZs is pending with the Ethiopian government.