Land from the Tiller

Land from the Tiller?

Benishangul Gumuz Creeps Toward Commercial Farming

Since the 16th century the place located in western Ethiopia known as Bela Shangul, meaning “Rock of Shangul” named after a sacred stone found in the mountainous area of the present Benishangul Gumuz Region, is legendary for its vast area of fertile land suitable for agricultural production. The region was also the place where the Berta people originally settled when they arrived to Ethiopia.Initially, the Berta’s arrival from Sudan was marked by strong territorial conflict. For this reason, and to protect themselves from slave raids coming from Sudan, the Berta decided to establish their villages in naturally-defended hills and mountains, amidst rocky outcrops. After conflicts and raids receded during the 20th century, the Berta people moved to suitable lands to practise what they do best, farming.
Since then, the regional economy continues to depend on traditional agriculture which accounts for 93Pct of the economically active population although the region is endowed with potential natural resources that can be tapped. It has close to one million hectares of land demarcated for investment, especially for commercial agriculture.
Attracted by these huge untapped resources, Teklu Yemam and other 468 investors who registered capital close to 2.5 billion Birr are involved in large scale commercial farming in Benishangul Gumuz. The region also constitutes close to 19Pct of the land available for commercial agriculture in the country.
Ever since regions like Benishangul Gumuz where farming, hunting, gathering of wild foods and traditional gold mining are the way of subsistence, became ideal places for large scale farming, the regional governments have implemented different strategies to raise the productivity of the agricultural sector by attracting investors like Teklu, who invested on 300 ha of land.
Teklu, who graduated from Haromaia University in 2005 after studying Agricultural Economics, started to consider investing in large scale farming when he was working at the region’s agricultural bureau. After a year, he decided to engage in the sector by borrowing ETB 60,000 from his brother, Mulugeta, who also joined the sector in 2008.
“Although the job requires a lot of commitment and dedication, I am rewarded by the return I am getting at the end of the harvesting season,” Teklu told EBR. In the current harvesting season, Teklu managed to harvest close to 100 quintals of sesame and 300 quintals of soya beans. He is expecting close to ETB 500,000 revenue from this enterprise.
The availability of enormous land resources coupled with suitable weather conditions made regions like Benishangul Gumuz an ideal place for the nation’s policy makers to transform subsistence-oriented agricultural production practices into commercially viable market-driven farming.
In Ethiopia, the agricultural sector contributes close to half of the national output, provides employment for more than 80Pct of the labour force and generates close to 60Pct of the foreign exchange earnings of the country. This led the government to rely on the sector to transfer the economy to industrialization beginning from 2015.
It was during the Plan for Accelerated & Sustainable Development to End Poverty (PASDEP) the EPRDF led government emphasized making land available for large scale commercial agriculture with a focus on export diversification. However, the plan still focused on improving pro-poor subsistence farming in parallel with this shift to commercialization of agriculture.
The current Growth and Transformation Plan (GTP), expects small scale farms to gradually evolve into large-scale commercial farms that grow high-value and export-oriented produce. The five year plan also calls for doubling the national agricultural output, which stood at 180.7 million quintals at the end of 2009/10 fiscal year.
Ethiopia, however, paid attention to commercial farming in the 1960s and early 1970s after adopting the lessons gained from other green revolutions undertaken all over the world. However, most large scale commercial farms in Ethiopia especially state owned farms were unsuccessful.
With close to 75 million hectares suitable for annual and perennial crop production, Ethiopia started to attract a large number of foreign and domestic investors following the world food price hike in 2007, which motivated countries with limited cultivable land and water resources to acquire farmland in developing countries as their food security strategy.
In terms of availability of uncultivated land, sub-Saharan Africa stands first with a potential of more than 200 million hectares followed by Latin America and the Caribbean with available land of about 123 million hectares. Ethiopia, which has only managed to utilize 20Pct of the available land, has an estimated seven million hectares suitable for large scale agricultural investment, according to the available data at the Ministry of Agriculture (MoA).
Nevertheless, most investments were located in the central highlands of Ethiopia. Until 2007, Oromia Region accounted for one-third of the requested land, followed by Amhara Region with approximately 15Pct. However, there was a regional shift in the distribution of land investment licenses after 2007. About 73Pct of the total land area solicited was requested after 2007, and since then increasing shares have been requested from areas in Benishangul Gumuz, Gambela, Afar and SNNPR due to the availability of vast and fertile land.
For instance, population density in Benshangul Gumuz is sparse with a regional average of 14 people per square kilometre, according to 2007 census conducted by the Central Statistics Agency (CSA). The smallest population density is estimated at three persons per square kilometre and recorded in Guba, Yaso, Dangur and Sirba Abay districts while the largest population density is estimated at 62 people per square kilometres, which is recorded at Asosa, Mandura, Bambasi and Pawi districts.
This makes agricultural land relatively abundant in the region with average landholding size of 3.7 ha, which is higher than the national average of 1.19 ha, according to CSA’s Agricultural Sample Survey.
In addition to land accessibility, the agro-ecology of the region is conducive for growing different types of food and cash crops. Sorghum, millet and maize are the most dominant food crops grown in the region followed by finger millet, rice and teff. Oilseeds like sesame, Niger seed and sunflower are grown widely. In addition, pulses, vegetables, fruits, cotton, ginger and fibre crops are grown.
Due to the fact that 75Pct of the land in the region are found in low lands below 1,500 meter above sea level, however, the most important potential cash crops are sesame, cotton, mango and groundnut. Since 1994 a little over 450 investment certificates with a capital of 2.5 billion Birr have been given to investors engaged in commercial farming in the region with a land lease rate that ranges from ETB 30 to 100 a hectare.
During the 2012/13 harvesting season, investors in the region managed to harvest 1.35 million quintals of grain crops on close to 80,000 ha of land, which is only 8.1Pct of the area of land identified for large scale agricultural investment in Benshanguel Gumuz. The output from commercial farming in the region also constitutes 23Pct of the total agricultural output produced by small and large scale farmers in the region. The potential of commercial farming in the region influenced Teklu to apply for an additional 200 ha of land six months ago. However, he did not succeed because of the new system introduced in the region, claims Teklu.
Three years ago the regional government started to introduce a new system in order to screen the applications submitted by investors who wants to lease land from the regional government. “We also transferred most of the lands available in the region to the federal government’s land bank in order to ensure transparency and accountability, Ahmed Siraj, president of the region told EBR. “However, the regional government also have some land that will be distributed to trust worthy investors.”
The new system, however, seems to create problem for investors like Teklu and Zelealem Behailu who claimed to submit all the necessary documents required to access land from the region two years ago. Zelealem still farms on the 50 ha of land rented from an investor around Asosa, the capital city of the region. “Since I do not have a lease right I am not entitled to access any loan to achieve my goals,” Zelealem told EBR.
Instead he is dependent on the money he borrowed from an individual who is charging him double the amount of lending interest rate offered by commercial banks. Ahmed on the other hand refuted the claims of investors by saying if the investors have the capacity to develop the land the regional and federal government is ready to allocate land to them. “Previously land has been allocated to investors without following the right protocol, said Ahmed. “But this does not mean that it will be the case forever.”
The new system, however, affected the number of investment projects that came into the region. Data from the region’s investment bureau indicated that the region manage to attract 96,153 and 182 investors in 2006/07, 2007/08 and 2009/19 fiscal years, respectively. However, starting from 2009/10, the number of investment requests starts to decline. In 2009/10, only 111 investors received investment license while 56 and 50 investors are engaged in different activities in the region in the consecutive two years.
This, in turn, led to a sharp decline in net capital flows. During 2011/12, projects worth of 354 million Birr were registered by the region. This was almost equal to the capital flow registered in 2006/07, despite the region managed to attract projects worth of 679 million Birr in 2007/08.
Most of the investors who leased land previously did not have the capacity to utilize the land given to them, according to Ahmed. “So, we cannot call them investors since they do not have the financial capacity to develop the land. Instead most become investors after receiving the land and working for some time in the region.” An official of the regional administration who is not authorized to comment on the issue also told EBR that the regional government is currently looking at all the applications submitted by investors.
“The region is preparing 3,000 ha of land for investors, although, shortage of skilled man power is hindering the screening process, the official cited. Out of the 3,000 ha of land that will be allocated to investors, the majority is found in Guba Woreda, where the Ethiopian Grand Renaissance Dam is under construction.
Investors like Zelealem who requested land from the regional government, however, are concerned about the limited size of land the region is planning to hand out. “I requested only 300 ha of land but I know many investors who applied for more than 1,000 ha of land,” Zelealem told EBR. “I am not sure wheatear they will give me enough land to continue in the business.”
Teklu who requested additional 200 ha of land a year ago also have reservation on the regional administration capacity to meet the investors demand. Before I joined the sector five years ago, it took me almost a year to get land from the regional administration, said Teklu, who almost lost hope of acquiring additional land currently.
The claims of investors are not true, says Ahmed. “Investors can lease a land as long as they fulfilled all the requirements.” Bizualem Bekel, Agricultural Investment Support Directorate Acting Director at the Ministry of Agriculture also confirmed to EBR that the federal government is allocating land for investors who can meet all the requirements.
An agricultural economist and private consultant who used to advise large scale investors in the region also supported the officials’ opinion. In the last ten years, I have seen investors who received up to 500 ha of land with only ETB 100,000 capital, the expert said. “This clearly affected the productivity of the sector because most investors in the region only utilize a small portion of the land as the result of their limited capacity.”
The investment inflow registered in the region before 2010 is therefore inflated because most investors used to register a false capital, said the expert. “The regional government should take accountability for this mismanagement.” Ahmed also agrees with the expert. “We set up a new office and developed a new system that can ensure accountability and transparency,” said Ahmed.
One way or another, this affects the agriculture sector, which is set to carry the burden of the ‘transformation’ sought under the GTP and beyond, according to the expert. “So, the federal and regional government should bring a solution for the problem before it is too late.” EBR

2nd Year • January 2014 • No 11

Leave a Reply

Your email address will not be published. Required fields are marked *

Ethiopian Business Review | EBR is a first-class and high-quality monthly business magazine offering enlightenment to readers and a platform for partners.

2Q69+2MM, Jomo Kenyatta St, Addis Ababa

Tsehay Messay Building

Contact Us

+251 961 41 41 41