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Thorny Business: Ethiopian Rose Exports To Europe

by Pratap ChatterjeeCorpWatch Blog
March 5th, 2012

Photo: Ethiopian Roses. Planète à Vendre (used under Creative Commons license)

Delivering Ethiopian roses to European consumers on Valentine’s day has earned an Indian businessman the title of honorary consul for the East African country. Sai Ram Karuturi of Karuturi Global was appointed to his post last week at a formal ceremony conducted by Muktar Kedir, the Ethiopian cabinet affairs minister in Bangalore.

Karuturi, a former cable shop operator from Bangalore, gained favor with the administration of Ethiopian Prime Minister Meles Zenawi by taking advantage of the five-year tax holidays, duty-free imports of machinery, easy bank loans and land offered by the government, which is eager to emulate the lucrative agricultural export industry in neighboring Kenya. Over the last seven years Karuturi Global has acquired rights to 311,700 hectares of land in Gambela and Bako region in Ethiopia for the purpose of agricultural development.

But Karuturi’s practices in Ethiopia has also attracted less welcome attention from human rights activists. Investigators from New York-based Human Rights Watch paid a visit to a Karuturi lease area in Gambela in May 2011 where they found that maize, sorghum, and groundnut crops planted by local Anuak farmers had been cleared without consent and residents moved off their land. (Details can be found in the report ‘Waiting Here for Death’: Forced Displacement and ‘Villagization’ published this past January. The report also profiles another company – Saudi Star – which set up rice farms in Gambela)

The “villagization” program of the Ethiopian government gives farmers displaced by these land deals access to replacement land and also claims to provide them with better access to clean education, health and water. Many local people say the program is insufficient: “They told us …  that we would find plenty of corn and other food in the new place we were moving,” one woman told a PBS documentary crew. “But they don't give you enough food to fill you up. They give you food in a small container but it can't even feed a family for a day.”

Karuturi Global claims that “villagization” does not even exist. “This is a completely jaundiced western vision. They assume anything in Africa has to be done by the whites and the Chinese and Indians should have businesses only in their own countries,” Sai Ramakrishna Karuturi, told Mint, an Indian newspaper. “What they are saying about the Ethiopian government is complete hogwash. But I take respite in the fact that people decide to take potshots at you only if you are successful.”

One of his employees offered a more revealing explanation. “We exploit the economic opportunities which came about after the food price shock of 2007. The land is offered to us by the government, who is its legitimate owner. We don’t pay much rent but we create jobs,” Birinder Singh, the manager of Karuturi Agro Products told the BBC.

Human rights groups have not given high marks to Karuturi’s partners in the Ethiopian government either. Meles Zenawi’s administration, which has been in power for some two decades, has been heavily criticized recently for crushing political opposition using “anti-terrorism” legislation. Local media and opposition politicians have been jailed and an Amnesty International delegation was expelled from the country last August.

Karuturi Global and Saudi Star’s export-driven business model is part of a growing trend in the multi-billion dollar global agri-export trade that dispatch Third World produce to markets in the West. Until relatively recently, these exporters often bought agricultural products directly from local farmers albeit at low prices. But in recent years, many governments around the world have introduced new laws that allow multinational companies to lease land directly, displacing traditional farmers and their subsistence crops completely, sometimes even importing foreign labor to till the land.

A new report from GRAIN has compiled a list of 36 million hectares, a land mass equivalent to the country of Germany, has been leased by such companies around the world.