Feudalism Returns

Ethiopian Farms Lure Investor Funds as Workers Live in Poverty

By Jason McLure
Dec. 31 (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.


After being banished to the pages of history a century ago, feudalism has once again raised its ugly head.  This time the government of Ethiopia is the enabler of the darkest form of capitalism.  No, this is not the Capitalism of free markets, laissez faire, and Adam Smith, but one in which the government elected to serve the people instead serves them to the highest bidder (or very low bidder in this case) as indentured servants.  This time the feudal lords are Corporations rather than individuals and the serfs are, once again, those most vulnerable to exploitation - the poor.  Particularly troublesome is that this government has not learned from history that to allow exploitation on a grand scale leads to a worse form of government - Marxism.
Individual property ownership is one of the fundamental responsibilities a government has to its citizens to prevent the errors of the past.  To show strong moral leadership, the Ethiopian  government needs to cease such Corporate land agreements at once.


  1. Here I've been looking at California as proof that we're returning to feudalism. And don't forget that the Chinese are raping Africa for their wood and metals, too. Can you say banana republic? Read "One Hundred Years of Solitude" by Gabo if you really wanna get depressed.

  2. Possibly Mr. Mclure lives in Africa where this is possibly a relatively new situation. Because in the USA the government has been appropriating
    land/resources from 'the people' for corporate/government use for near a century.
    This insane government policy has re-distributed the American people from a land of self-sufficient property owners to dependent corporate

    So by Mr. McLure's standards Americans, in general, are nothing but surfs paying homage to their corporate-governmental overseers.

    And as for wages those are indicitive of the countries taxing rate and borrowing debt. Countries with lower tax/borrow basis can have a lower minimum wage rate without adverse condition to the wage earner.

    What is unsettling about this article is that a foreign organization(world bank) has been cited as the authority on what ethiopian wages
    should be.
    And that a foreign corporation has recieved the contract to direct the use of the ethiopian land. Neither of those organizations are of the ethiopian nation nor do they have alligence to the ethiopian people.


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