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Indian dream of plentiful food from African farms runs into trouble

By Biswajit Choudhury | PUBLISHED: 01, Mar 2016, 18:19 pm IST | UPDATED: 01, Mar 2016, 18:19 pm IST

Indian dream of plentiful food from African farms runs into trouble Indian Agriculture Minister Radha Mohan Singh's call earlier this month asking Indian companies to produce pulses and oilseeds in Africa to meet the country's production shortfall may have emphasised the need to diversify agriculture.

But it also focusses attention on the lesser known and controversial operations of those who did acquire land in the 54-nation continent at a time when land acquisition was a hugely sensitive subject at home.

Is the Indian dream of bountiful food products at cheap prices from Africa souring? It may seem so.

"Foreign investors need to tread carefully and be sensitive to the needs of the local population when acquiring land in Africa," Alok Dikshit of Zambia-based Export Trading Company said on the sidelines of the India-Africa Agribusiness Forum in Delhi organised earlier this month by industry chamber FICCI.

The concern is provoked by the behaviour of foreign companies in Africa, said Dikshit, who has been working in the continent for over a decade. "As we know from our Indian experience, land acquisition has to go with proper rehabilitation of the displaced, which Indian companies in Africa have, sadly, a poor record of," Dikshit said.

A global initiative called Land Matrix ranks India as one of the top ten investors in land overseas. In Africa, India is the biggest investor in land in Ethiopia, where Indian companies account for nearly 70 percent of the land acquired by foreigners after 2008.

Nadia Paschetta, Tanzania country director of the ETG Farmers Foundation, who is of Italian origin, said the large-scale farming in Africa for export was affecting food security in the continent, besides the fact that only a fraction of people displaced from their land were expected to get jobs on the new highly-mechanised farms.

"Africa's land should stay with Africans. Foreign companies can produce and sell to us African companies and we will buy," she said.

Perhaps some of the dampening of initial enthusiasm for foreign capital in Africa also made Indian farmers realise that it may not be the promised land they thought it to be. Many of them have returned to India after having been enticed to Africa by attractive road shows held by Indian companies which had bought large tracts of land.

Local media recently reported the case of 50 farmers from Punjab who took land on lease in Ethiopia for around Rs.25 lakh (2.5 million rupees) but had to return within the year when faced with several challenges. Their land needed water, but there were few irrigation facilities and diesel for tractors was available only long distances away from the farms.

Besides, they were faced with the poor purchasing power of the locals.

"During the first year, we grew maize but there were no buyers. I sold the crop by driving the tractor from village to village as there is no concept of a 'mandi' (wholesale market) there," Puneet Singh Thind, a farmer who returned to Ambala, told reporters.

Initial attraction for Africa came from the fact that high cost of land in India and high input costs were making farming unsustainable in India.

"In Punjab, the average rate of land is Rs.30-35 lakh an acre. This goes up to around Rs.1 crore if you are buying land near the city. As compared to this, in Ethiopia we got 2,500 acres of land for an investment of around Rs.25 lakh," said Baljinder Singh, who has returned to Amritsar.

S.N.Pandey, an executive with Lucky Group, a company that has invested in Africa, had said earlier that "the cost of agricultural production in Africa is almost half that in India. There is less need for fertiliser and pesticides, labour is cheap and overall output is higher."

The scramble for land by other countries in Africa was sparked by the global food price crises during 2008-09, when prices of commodities like wheat soared 130 percent in a year and the UN Food and Agriculture Organisation's food price index shot up by 40 percent.

India's response to soften the impact of the food price crisis resulted in Indian firms acquiring 600,000 hectares of land in Ethiopia, for instance. Others which had acquired significant land holdings at throwaway prices in the continent are China, Saudi Arabia, Kuwait, South Korea and the European Union.

A World Bank report has shown that 45 million hectares of large scale agricultural land deals had been announced between 2008 and 2009.

By the first decade of the new millennium, statistics from East Africa, which has a large Indian-origin population, showed more than 80 Indian companies had invested around $2.5 billion in buying or leasing huge plantations in Ethiopia, Kenya, Madagascar, Senegal and Mozambique to grow foodgrains and other cash crops for the Indian market.

This large enterprise has been accompanied by accusations against Indian companies of indulging in environmental damage as well as complaints from locals about losing access to grazing land and water due to the foreign farm projects.

The Indian land dreams in Africa seem to have run up against reality.