The not-so-rosy realities of running a large agriculture project in Africa

Africa’s agricultural potential has come under the spotlight in recent years. The continent holds around 60% of the world’s available and unexploited cropland, and with growing demand for food from emerging markets, Africa is expected to play an important future role in feeding the world. However, despite the lucrative returns that foreign investors can achieve by investing in African agriculture, the on-the-ground realities of operating in the continent is often less rosy. In many cases establishing a large-scale commercial agriculture project in Africa is a long and rocky road.

During the recent Ethiopia Investment Summit, held in Addis Ababa, representatives from two foreign companies that have invested in agriculture projects in Ethiopia, gave an interesting glimpse into the everyday challenges they experience.

Virgin land

Indian agribusiness company Karuturi first started operations in Ethiopia in 2005 with a 10 hectare flower farm. Today it is a major producer of cut roses in the country. Karuturi has also started with the growing of cereals, rice and sugar from its 100,000 hectare farm in Gambella province, in western Ethiopia.

The land that Karuturi is farming on has never been cultivated. “We are talking of virgin lands, which have never been ploughed for hundreds of years. We are trying to do that for the first time,” said Birinder Singh, executive director of Karuturi Agro Products.

Morrell Agro Industries, a US company, has also invested in 10,000 hectares of farmland in south-eastern Ethiopia, 200 kilometres from Somalia, where it grows drought resistant wheat seed.

Wallace Odd, executive vice president of Morrell Agro, said that the company had to put in a lot of work to make the soil suitable for agriculture. He explained that it takes three to five years in order to aerate the soil and to “get it to do the kind of things that land has to do to grow seed. We are finding that we are having to rip [up to] six feet deep to turn it.”

The dusty soil also struggles to hold water. “We have found that 75% to 83% of the water runs off. When you look at the soil and the top soil, it is very dusty and it takes an awful lot for that dust and that type of dirt to hold the moisture,” said Odd. To overcome this Morrell Agro made divots, the size of half a tyre, in the field that act as small “holding tanks” for the water.

Workers, villages … and wild animals

Another challenge faced by Karuturi is the scarcity of workers in the thinly-populated area of Gambella. Singh noted that when Karuturi’s farm is fully developed it will require around 25,000 people to work in the fields. Urbanisation is also not helping the situation. “Able-bodied men who can work on the fields are leaving the villages and going to the urban areas … What is left behind is children and women,” said Singh.

Karuturi has, however, discovered that people are willing to relocate to the area if they are given proper housing. “We are creating large-scale infrastructure in terms of bringing people from outside our farm … People live in straw houses and if you are able to create infrastructure and provide them proper housing, people are ready to come and stay over there.”

Morrell Agro learned some hard lessons with managing the local villagers. There are five villages in the area, each with its own idea of how the company should be farming, and how many people from the village should be employed.

“We had to deal with villages. We had to deal with compensating people for land, and that gets very emotional. Our first farm manager was a little aggressive. He was too aggressive in the culture. He got hit in the back of the head with an axe, and we had to medically evacuate him …” Odd explained.

Things have improved considerably for Odd and his team. “We’ve worked with the villages … We determined what the problems are … We’ve built a school. We’ve put in two wells. Right now, from one well, we have 500 to 800 people a day coming to get water from that well … So a lot of what we are doing is to blend in with the culture, in with the communities.”

Some of the difficulties faced by these farmers are also more unusual. Next to Karuturi’s farm is a major national park with around 800,000 antelopes. To protect its crops from the animals, Karuturi has now requested the government to give it permission to put solar powered electric fences around its farm.

Government support

Singh said that the Ethiopian government has assisted Karuturi with some of the problems it were facing. For example, Karuturi was struggling to find quality seeds and agro-chemicals in the local market, but the government has allowed it to directly import these inputs. Four mobile network towers have also been installed on its farm. “Communication has become easy, internet has become easy.”

He underlined the importance of making the challenges experienced by commercial farmers known to the government. “For the country this type of commercial farming is new. As we are new to the country, the country is new to this concept of commercial farming. There are enough interactive sessions where you can put forward your points. If the decision makers are convinced that there needs to be a policy change, it happens.”

Looking ahead

Despite the challenges, both companies remain optimistic about their ventures in Ethiopia.

“We are glad to be here … We are passionate about Ethiopia … and we look forward to working here, and working with the challenges and helping to solve the difficulties of doing business as well as the difficulties of farming,” said Odd.

Said Singh: “There are challenges, there are concerns, but still Ethiopia is a wonderful country to cut into agriculture. It offers an excellent recipe for agriculture – excellent lands, water, fertility of the lands, cheap labour … stable government, and a corruption free regime.”

“Agriculture is a journey, and we have only made a beginning. The results cannot come overnight,” he added.