Ethiopian farms lure Bangalore-based Karuturi Global Ltd. as Workers Live in Poverty

Jason Lutes, Bloomberg

Until last year, people in the Ethiopian settlement of Elliah earned a living by farming their land and fishing. Now, they are employees.

Dozens of women and children pack dirt into bags for palm seedlings along the banks of the Baro River, seedlings whose oil will be exported to India and China. They work for Bangalore-based Karuturi Global Ltd., which is leasing 300,000 hectares (741,000 acres) of local land, an area larger than Luxembourg.

The jobs pay less than the World Bank’s $1.25-per-day poverty threshold, even as the project has the potential to enrich international investors with annual earnings that the company expects to exceed $100 million by 2013.

“My business is the third wave of outsourcing,” Sai Ramakrishna Karuturi, the 44-year-old managing director of Karuturi Global, said at the company’s dusty office in the western town of Gambella. “Everyone is investing in China for manufacturing; everyone is investing in India for services. Everybody needs to invest in Africa for food.”

Companies and governments are buying or leasing African land after cereals prices almost tripled in the three years ended April 2008. Ghana, Madagascar, Mali and Ethiopia alone have approved 1.4 million hectares of land allocations to foreign investors since 2004, according to the International Institute for Environment and Development in London.

Emergent Asset Management Ltd.’s African Agricultural Land Fund opened last year. On Nov. 23, Moscow-based Pharos Financial Advisors Ltd. and Dubai-based Miro Asset Management Ltd. announced the creation of a $350 million private equity fund to invest in agriculture in developing countries.

‘Last Frontier’

“African agricultural land is cheap relative to similar land elsewhere; it is probably the last frontier,” said Paul Christie, marketing director at Emergent Asset Management in London. The hedge fund manager has farm holdings in South Africa, Mozambique and Zimbabwe.

“I am amazed it has taken this long for people to realize the opportunities of investing in African agriculture,” Christie said.

Monsoon Capital of Bethesda, Maryland, and Boston-based Sandstone Capital are among the shareholders of Karuturi Global, Karuturi said. The company is also the world’s largest producer of roses, with flower farms in India, Kenya and Ethiopia.

One advantage to starting a plantation 50 kilometers (31 miles) from the border with war-torn Southern Sudan and a four-day drive to the nearest port: The land is free. Under the agreement with Ethiopia’s government, Karuturi pays no rent for the land for the first six years. After that, it will pay 15 birr (U.S. $1.18) per hectare per year for the next 84 years.

More Elsewhere

Land of similar quality in Malaysia and Indonesia would cost about $350 per hectare per year, and tracts of that size aren’t available in Karuturi Global’s native India, Karuturi said.

Labor costs of less than $50 a month per worker and duty-free treaties with China and India also attracted Karuturi Global, he said. The $100 million projected annual profit will come from the export of food crops, including corn, rice and palm oil, he said. The company also is plowing land on a 10,900- hectare spread near the central Ethiopian town of Bako.

The project will give the government revenue from corporate income taxes and from future leases, as well as from job creation, said Omod Obang Olom, president of Ethiopia’s Gambella region and an ally of Prime Minister Meles Zenawi’s ruling party.

“This strategy will build up capitalism,” he said in an interview in Gambella. “The message I want to convey is there is room for any investor. We have very fertile land, there is good labor here, we can support them.” The government plans to allot 3 million hectares, or about 4 percent of its arable land, to foreign investors over the next three years.

Surprised Workers

Workers in Elliah say they weren’t consulted on the deal to lease land around the village, and that not much of the money is trickling down.

At a Karuturi site 20 kilometers from Elliah, more than a dozen tractors clear newly burned savannah for a corn crop to be planted in June. Omeud Obank, 50, guards the site 24 hours a day, six days a week. The job helps support his family of 10 on a salary of 600 birr per month, more than the 450 birr he earned monthly as a soldier in the Ethiopian army.

Obank said it isn’t enough to adequately feed and clothe his family.

“These Indians do not have any humanity,” he said, speaking of his employers. “Just because we are poor it doesn’t make us less human.”

One Meal

Obang Moe, a 13-year-old who earns 10 birr per day working part-time in a nursery with 105,000 palm seedlings, calls her work “a tough job.” While the cash income supplements her family’s income from their corn plot, she said that many days they still only have enough food for one meal.

The fact that the project is based on a wage level below the World Bank’s poverty limit is “quite remarkable,” said Lorenzo Cotula, a researcher with the London-based IIED.

Large-scale export-oriented plantations may keep farmers from accessing productive resources in countries such as Ethiopia, where 13.7 million people depend on foreign food aid, according to a June report by Olivier De Schutter, the United Nations special rapporteur on the right to food. It called for ensuring that revenue from land contracts be “sufficient to procure food in volumes equivalent to those which are produced
for exports.”

Karuturi said his company pays its workers at least Ethiopia’s minimum wage of 8 birr, and abides by Ethiopia’s labor and environmental laws.

‘Easily Exploitable’

“We have to be very, very cognizant of the fact that we are dealing with people who are easily exploitable,” he said, adding that the company will create up to 20,000 jobs and has plans to build a hospital, a cinema, a school and a day-care center in the settlement. “We’re going to have a very healthy township that we will build. We are creating jobs where there were none.”

The project may help cover part of the $44 billion a year that the UN Food and Agriculture Organization says must be invested in agriculture in poor nations to halve the number of the world’s hungry people by 2015.

“We keep saying the big problem is, you need investment in African agriculture; well here are a load of guys who for whatever reason want to invest,” David Hallam, deputy director of the FAO’s trade and markets division, said in an interview in Rome. “So the question is, is it possible to sort of steer it toward forms of investment that are going to be beneficial?”

Buntin Buli, a 21-year-old supervisor at the nursery who earns 600 birr a month, said he hopes Karuturi will use some of its earnings to improve working conditions and provide housing and food.

“Otherwise we would have been better off working on our own lands,” he said. “This is a society that has been very primitive. We want development.”

Comments

  1. your notes are interesting . carry on it.

  2. These indians have no humanity.
    How very right!. Just because they are providing jobs and bringing some development for the Africans, does not mean that they can suck the blood and eat the bones of the poor Africans.
    What is the gOverment of the country doing.? I bet that they have got something in their pockets and bank accounts for themselves. Bloody corrupted AFrcan govt and politicians. It is this kind of people who will sell the souls of the poor and the downtrodden.

    And the bloody Indians are the draculas who suck dry the blood of these poor souls.!
    I hope that when evrything goes smoothsailing for these Indians, one fine day an Ethopian with the dreams of Martin Luther King and the fanaticism of Mugabe and Idi Amin put together, will appear and nationalize this particular farm and give it back to those locals who gave their blood , sweat and tears toiling that land.

    By the way , I am an Indian too, but not from INdia.

  3. hai ashok,
    where r u ?
    ur not in india isnt it?
    ok good,
    but one thing first i want to tell u, that we r indians, we all are hard workers, brilliant, we can managed to live all over the world, additionly doing bussiness and working in IT also, MANITHANEYAM ULLA MANETHARGAL NAMA INDIANS OK?
    we guide africans, let them to do like this, they dont knw how to do/?we guide them we pay them , ethiopian govt invite all the countries to do agriculture in their country, do u knw tht first? dont blame our people?its not easy to do agriculture , doing agriculture is a wonderful hard work? farmmers are our god, so pls keep silence or dont comment others like this. think twice before comment others like this, bye

  4. Great enterprise Dear Karuturis.The New gen “Gandhi” in African place. I congratulate you n wish and pray that you contribute better to the humanity. Farmers world wide need support. In the long run the people of Euthopia will surely reap the benifits.
    Dear Ashok from your comments I am sure you have no clue of agriculture and you are truely “ETHIOPEAN’ in your thinking.

  5. Dhananjay Kodavari says:

    Fantastic Mr. Ram

    Infact it happened to look at your info as karuturi is starting a new ceramic factory near my farm

    I totallysurprised when i saw your joutney as enterprener like greenrevolution days in this IT revolution decades where in world countries are leaving the primary goal for the human as agriculture production.

    Best of luck

    -Dhananjay Kodavati

  6. sir,
    we are also joining to ethopian agriculture.please send the information.

  7. sridhar buggaveeti says:

    Dear Sir,

    We are from Khammam District. We inspired to hear speach of Sri Karuturi Sury Rao at 21st Nov 2010 at khammam Kammavari Vanabhojanalu.

    After this meeting we the friends with five members of team discussed about Sri Karuturi praposal. We are intrested to do agriculture at Ethiopia. We belongs to agriculture back ground. Here the agriculture is not workoutable.

    So we are very intrested about Ethiopia. Please guide in this regard

    Buggaveeti Sridhar
    cell no +91 9848156198.
    Khammam
    Andhra Pradesh

  8. dear sir
    gm hanumantha raos cell no pls

    animi reddy
    91 9440114161
    eluru
    west godavari

  9. I am very much dissappointed by Karturi’s project. Firstly, the wage it pays to workers is too low and below the UN poverty line. Secondly, as noted above it is employing only about 20000 peopl after grabing more than 300 thousand hectares of land. There are also several problems – shame Mr Karuturi.

  10. dear karuturi
    we all know that all human will be temptated by the good incom,
    cheap labour, avalablity of rich natural source.
    but u should give back 90% what u get from there to the developement of that country by providing good decent wage, developing infrastructure, building hospitals, for all the basic needs of humans.etc,:
    please don”t only think of filling ur pockets with USD,
    please ,the people of euthopia should not think that we are not human.
    DONT LET US DOWN,.
    BEST OF LUCK KARUTURI

  11. varaprasad karuturi says:

    hi sir im from eastgodavaridistrict, ankampalem village, im doing mca in madras, my digree completed at june2011, so have any vehicancy in ur global
    mena help me sir

  12. sridhar says:

    Hi,

    People are speaking only about the Less wages. But none of them are bothered about the plantations in Ethopia farms. For your kind information , Karuturis are still developing the Farms. So how can they manage to pay very high wages as of now. It takes some months to complete the development and to start the cultivation. This Karuturi came with a strategy to develop Africa but not to exploit Africa. So , Please do support them and dont go with the ones who are unable to tolerate the growth of others. Surely you can expect good wages as soon as the cultivation begins. Go a head Karuturi. All the best to you , Mr.Ram

  13. Bhavani prasad babu Chinthapalli says:

    Hi,
    It is the spirit of Indian, who planned and served the Ethiopia by investing money and mind. They will give a lot of job opportunities to the people of Ethiopia in couple of years. They are very courageous to do this. Everyone has to appreciate the management of Karuturi Global Ltd. I wish them all success.

  14. @shell,

    hi shell, this so called ashok is not Indian… a paki in disguise of Indian

  15. I am confused.. What to believe?

    -Achu

  16. praveen kenya says:

    anybody knows karuturi hrd office e-mail id. if u knows send me praveenud@yahoo.co,.in

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