Ethiopia: A World Champion Of “Land Grabbing”?

Courtesy of The Ethiopian Times, a report on the impact of Ethiopian land being leased to agro-industry investors on very long terms and below market rates.  As the article notes:

Ethiopia is the world champion of “land grabbing” – the practice of renting out vast expanses of farmland to local and, in particular, foreign investors. In 2011, 3.5 million hectares were allocated, while the projected figure for 2015 is 7 million hectares, an area twice the size of Belgium.[i] By way of comparison, 12 million hectares are farmed by the same number of smallholders, who make up four-fifths of the Ethiopian workforce. It is not hard, then, to imagine the anticipated leap forward in agricultural output, especially given that the productivity of these new mechanised farms should be much greater than that of traditional peasant farmers. As a first approximation, medium sized yields and export of just half of their production should, in the medium term, bring in about US$ 10 billion in foreign currencies, at a time when the deficit in the balance of payments is the Achilles heel of the Ethiopian economy and its GDP currently stands at US$ 30 billion.

“They gave the land to us and we took it… This is green gold!” exclaimed one of the largest investors.[ii] The rents are “ridiculously low by any standard” (theoretically starting at US$ 8 dollars per hectare per year), the leases are for up to 99 years, finance facilities and tax breaks are increasingly generous as the share of exported produce goes up. Some are calling it “the deal of the century”.[iii] The authorities, who are solely responsible for this operation, because land is public property, [iv] challenge the term “land grabbing” and retort that these are “win win arrangements.” They say that only “abandoned” or “unutilized” land is open to the investors “on the basis of clearly set out lease arrangements… to make sure everybody will benefit from this exercise.”[v]

But the indictment of journalists and researchers, who have only recently been able to peek beneath the of this operation shrouded in secrecy, seems irrefutable.

“The government of one of the most vulnerable countries in the world is handing over vast land and water resources to foreign investors to help the food security efforts of their home countries, or to gain profits for their companies, without making adequate safeguards and without taking into account the food security needs of its own people.” The mechanism that they set up can be summarised as follows: Ethiopia rents out land to investors so that they can export their produce, and then import the same produce, grown somewhere else, to feed its own people. In the end, “the damage done… outweighs the benefits gained.”

The Ethiopian regime is anything but impulsive. It has obviously weighed up the pros and cons of land grabbing, especially since, for the large part, these were known in beforehand.[vi] So why did they throw themselves headlong into it?

The rush of investors for farmland is a global phenomenon, on a scale never seen before.[vii] But why has Ethiopia responded to this demand with such a staggering offer? There are two main factors – the influence of Ethiopia’s long heritage and the radical change of direction taken by the new “post revolutionary” ruling class over the past decade.[viii]

“Land was the sign, the source, the stake, the object of wealth and power; conversely, wealth and power gave access to the land.”[ix] Haile Selassie, officially the sole and unique landowner, gave land to those whose support he wanted or to reward services rendered. They derived most of their income from a “feudal” exploitation of this land, on condition that they also handed over a substantial portion to the Crown. The Kings of Kings used this deduction as his economic weapon to attain the supreme goal of centralising power, at the expense of local “feudal” lords.

This mode of feudal extrication was even more brutal in areas on the edge of the Abyssinian plateau that had been conquered and subjugated at the end of the 19th century. The State handed out two thirds of these lands to its supporters, with outrageous favouritism shown to the Amharas of Shoa, which was the epicentre of imperial power. This particular form of what researchers have dubbed “internal colonialism”, which included settlers from the plateau, was justified either on racial grounds – the light-skinned “Northerners” from the plateau, versus the “black” people, the chankilla (slaves) of the South –or on social grounds – the “Northern” farmers versus the agro-pastoralists or pastoralists of the South– and on the basis of a myth, whereby these vast lands were an almost deserted Eldorado, a natural outlet for the insatiable hunger for land arising from the extreme density of the Abyssinian plateau. All of this also fuelled a spontaneous emigration of “Northerners”.

For the imperial regime, agriculture was the engine for development. But as the regime came to an end, it oscillated between two strategies. For the first, which remained marginal, “small farmers are efficient and are capable of being the engine of growth and economic development” on condition that they receive help to increase their remarkably low productivity. Whence the timid appearance from the 1960s onwards of “package programmes.”[x] In the second strategy, which dominated and received the support of international organisations, these “subsistence farmers” are incapable of “productivity growth”. Salvation could only come from the development of “large and mechanized farm enterprises.” Hence the emergence of “agrarian capitalism” or “mechanised feudalism”[xi] through land concessions given to private Ethiopian, and sometimes foreign, investors. This was ultimately the case for about 2% of cultivated land.

When the Derg took power in 1974, with its Marxist-Leninist ideology backed by the student movement, its priorities was to eradicate this “feudal” class of “landlords” by one of the most radical agricultural reforms ever undertaken: “land to the tiller.”[xii] It became public property. But the State maintained a sort of crown right over its administration, beginning with granting use rights to peasants over a parcel of land roughly proportional to the size of their family.

In a break with the imperial regime, its economic strategy was aimed first at the mass of smallholders. It made widespread use of the ‘packages’. But it very quickly adopted the “socialist” dogma of agricultural development with the emphasis on large mechanised farms. Once nationalised, the large private farms became rather like sovkhozes, and failed in much the same way. Migration from the plateau to the lowlands increased dramatically through forced “resettlement” drives.

When the current regime came to power in 1991, it did not touch the 1974 agrarian reform. The thread running through history remained unbroken – land rights continued “to define relations of power between the state… and smallholders and their communities.”[xiii] But unlike its predecessors, the current regime put subsistence farmers at the centre not only of agricultural development but development in general, with a level of public support unequalled in Africa and probably in the world. The aim was to lift the peasant masses out of their abyssal poverty, to achieve nationwide food security, and to stimulate the foundations of an industry encouraged by the demand for basic commodities by the fringe of the newly “rich” peasants.

Ten years on, the failure of this strategy has become patent, not for want of public funding, but mainly because the authorities applied it using the same top-down approach as its predecessors. The authoritarian recruitment of small farmers deprived the strategy of a key element – their empowerment. In fact, the authorities refused to let this happen. As the evidently “enlightened” avant-garde, they alone could decide what the peasants had to do and to impose this on them. And this empowerment could above all have undermined their hegemony.

Agricultural productivity languished (and is still at a standstill). Food security stayed (and remains) a mirage. Emergency food aid and, since 2005, a vast programme of cash for work and food for work programmes (the Productive Safety Net Programme) continue to be needed for one out of six Ethiopians, on average. Industry stagnated too.

This economic failure was coupled with a major political setback. The regime was convinced that its efforts to help the peasant masses would guarantee their unswerving support. It was confident that there would be no risk in opening the political arena more than ever for the 2005 elections, in order to gain national and international legitimacy. But the rise of the opposition shook the regime. The millions of small farmers mostly followed the rural elite, spearhead of the opposition movement.[xiv]

In the early 2000s the convergence of these two factors and the elimination of the ruling party’s “left wing” after its worst internal crisis led to a Copernican revolution, dubbed “Renewal”. It had two inextricably intertwined strands. Since 1991, development had primarily been “indigenous” – or introverted. It needed to mobilise the relatively homogeneous mass of small farmers as a whole, with the aid of massive but undifferentiated state support. Development was to become primarily “exogenous” – or extravert. Following a “structural change”, Ethiopia now had to follow a new dogma – to become part of “the mainstream of the global market economy”. What is at stake? Nothing less than “to ensure national survival as a country.”[xv] But becoming part of this mainstream now requires expansion of the tiniest and most capitalist sectors, led by the “new entrepreneurs”. To this end they are being promised the (much-demanded) freedom to do business and an almost complete monopoly on public support – in other words, the fast track to becoming rich. In political terms the ruling power expects, in return, that they will guarantee their support, using their position as opinion leaders for the peasant masses and even the urban population – i.e. that these new entrepreneurs become the regime’s new constituency.

This explains the appearance of the “model farmers” within traditional agriculture. They are chosen on the basis of their ability to grow “marketable farm products”. They attract the bulk of State agricultural support and are automatically – and if necessary forcefully – enrolled as members of the ruling party. Rural society is becoming socially and economically polarised. At the top is the emergence of a slender class of “kulaks”, while the mass of small farmers is left to fend for itself. “Those who take advantage will prosper, and the rest will lose mercilessly”.[xvi]

But “the key actor in this agricultural development will be relatively large-scale private investors.” The regime is returning to the old philosophy, whereby “the growth of large and mechanized farm enterprises” is the engine for growth in the agricultural sector. Once again, the “tractor ideology”, with its endless fields, farmed by an armada of machines, is definitely the only prospect for the future.

Ethiopia was unable to reach its goal of rapidly increasing its share of global commerce by relying solely on its traditional exports (coffee, oil seeds, etc.) from small producers. It hopes to use its very low labour costs to become an exporter of basic manufactured goods, but this will take time and success is by no means certain. The ruling power had no choice but to seize the golden opportunity presented by this global “land rush”. A combination of factors – the dogma of Ethiopia entering “into the mainstream of the global market economy,” the decision that “the agriculture sector will continue to be the engine of growth” and that it could only be fuelled by “relatively large-scale private investors,” the observation that Ethiopia is unable to raise the investments needed on its own –led unavoidably to its only immediately available asset of any value, its land, being put on the market, and to offer it to the only economic forces able to exploit it quickly: foreign investors. From the Ethiopian government’s perspective on the economy, land grabbing is far from being a foolish whim or a bit-part player. It has the starring role.

But there also has to be a healthy supply of investors. Given the competition in Africa, the Ethiopian authorities need to align themselves with the prevailing conditions and accept that they cannot control the process, at least in the short term.[xvii] Nothing must get in the way of this unbridled “Go West” spirit.

This economic logic fits completely with the prevailing political logic. The radical Marxist “revolutionary elite” made a complete U-turn when it came to power in 1991, promising democratisation and a free market economy. In fact, using the same mechanisms of “communist engineering” based on “democratic centralism” that had been so useful for sizing power, this elite continued to consolidate their control to the point of achieving a monopoly. Today, due to ‘the effective “fusion” of party and state’,[xviii] Ethiopia is de facto ruled by a ‘monolithic party-state,’[xix] dominated by a handful of leaders where Tigreans – 6% of the population – are over-represented.

This achievement of political monopoly cannot be divorced from what the researcher Jean François Bayart calls a “Thermidorian situation”,[xx] characterised by the “revolution of interests”. The new “revolutionary elite… is turning into a dominant class via the primitive accumulation of capital that comes with holding power, according to the classical procedure of straddling institutional, family and business interests.” It uses this political hegemony “to accumulate wealth or the means of production under the cover of “free trade”” and “joining the global market.”[xxi]

The first phase of this metamorphosis started as soon as the new government took office. The promised liberalisation of the economy led to a wave of privatisation but it was modest in reality. It left out the main public asset, land, as well as the banks, insurance companies, telecommunications and electricity utilities. The rest was just an illusion. “Privatisation became monopolisation.”[xxii] Through endowments supposedly created to stimulate rehabilitation, mainly of the Tigray State, the leadership plundered the “privatised” enterprises. Operating with a total lack of transparency, and enjoying a great many privileges, “State-owned enterprises and ruling party-owned entities dominate the major sectors of the economy.”[xxiii] Their profits “are not being rolled over… but diverted elsewhere.”[xxiv] Most of what was left over has been pocketed by a few oligarchs under the protection of top leaders of the party State. Lower down the scale, it is essential for any private entrepreneur to be able to count on the support of a powerful official to run his business.

For a long time, the land – especially rural but also urban – and as a result agriculture, was left out of this grabbing process, remaining effectively public property. But an – unfortunately very poorly documented – process of “rampant privatisation” started at the end of the 1990s, mainly in urban areas. The first to benefit were senior officers during the war with Eritrea (1998-2000), who were rewarded with land that they then built on, mainly as a means of speculation. This privilege gradually extended to high-ups in the nomenklatura, then to those lower down. There is a return to a major feature of the pre-revolutionary period. Those in power started to reward their most devoted servants with land. And, inversely, owning land became the main gateway to wealth. For anyone visiting Addis Ababa, the construction boom will be the first thing that strikes them.

Mutatis mutandis, the same process has percolated into the rural areas. Its most glaring manifestation is the recent eruption of floriculture, mainly run by foreign companies. But the amount of land involved is still small, about 1 600 hectares. In contrast, land grabbing started as early as 1996 with a total lack of transparency, but almost exclusively for the benefit of Ethiopian nationals, at least up until the mid-2000s. The first regions to be targeted were the irrigated lands of the Awash, Afar, bordering the Tigray region, and Kaffa, the main coffee-producing region. Even today, 95% of the investors are Ethiopians. Their farms are generally much smaller, a few hundred hectares at most. For want of skills and resources, fewer than 20% of these farms would have started to be developed. Essentially, then, these Ethiopians have made an investment, with what they themselves called “easy” access to loans and facilities for acquiring the land, if they had not been given it “for free.” This “preferential treatment” applied especially to Tigreans.[xxv] Once again, the central authorities used the allocation, and even gifts, of rural land to reward or consolidate what they considered to be their most loyal supporters, again with an ethnic bias. Once again, the age-old push toward the lowlands resumed, still presented as a deserted Eldorado.

“Land leases are tantamount to near ownership”, declared one of the largest foreign investors.[xxvi] With land grabbing, this process of land privatisation took on a new dimension. “What is being grabbed or transferred are rights belonging to individuals and communities”. Who is doing the grabbing? “The dominant classes, especially landed groups, capitalists, corporate entities, state bureaucrats and village chiefs… at the expense of citizens and grassroots communities.”[xxvii] And at the top of the list, in Ethiopia, the nucleus of the party State. It seized the monopoly on land grabbing for any land over 5 000 hectares. Previously, any real estate transaction, no matter what the size of the land, was handled by each of the nine States in the federation. It is this nucleus that laid its hands on the land rights by disappropriating the local communities, and then according itself the right – and the power that goes with it – to reallocate them to investors, all at its total discretion. Moreover, so long as the land was farmed by locals, there was hardly any surplus and this tended to remain within small local commercial and financial circuits. With land grabbing, output worth billions of dollars entered commercial and above all financial circuits controlled by the central power.

So, after industry and services, a new wave of centralisation of economic resources has been added to the already extreme centralisation of political power. They offer each other mutual support. Once again, land is playing a major role in rejuvenating the superimposition of wealth and power, public and private elites. A “revolutionary” interlude is coming to an end. And this has at least two major consequences.

Land grabbing is leading to the ““South Africanisation (of the agricultural structures)… meaning structures dominated by large, settler-type estates existing side by side with a host of impoverished small farms struggling to survive in the shadow of these estates.”[xxviii] It “marginalises” the rural population. It reinforces the “disempowerment” of traditional peasants, when the opposite is needed for them to become an “active agent in all matters affecting their lives.” In this way it is shattering the relative egalitarianism of the rural world that has been in place since 1974, by polarising society, and nurturing class division, another aspect of which is the ongoing “kulakisation” of the small farmers.

The present regime has instituted a federal system. It considers that the hypercentralisation, even Jacobinism of its predecessors had exacerbated the centrifugal forces, mainly ethnically driven, to the point of threatening the unity of Ethiopia. The perpetuation of this unity requires a genuine balance of power between all of the “nations, nationalities and peoples of Ethiopia”. But land grabbing is part of a process of re-concentration, which renders the federal system even more artificial.

The issues involved in land grabbing go beyond the economy. On top of the tensions born of the government’s rejection of all forms of democratisation, on top of the mounting ethnic tensions, it helps to sharpen the divide between the classes. It is going to turn the entire political landscape upside down, deepening the divisions within Ethiopian society.

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About This Blog And Its Author
Seeds Of A Revolution is committed to defining the disruptive geopolitics of the global Farms Race.  Due to the convergence of a growing world population, increased water scarcity, and a decrease in arable land & nutrient-rich soil, a spike of international investment interest in agricultural is inevitable and apt to bring a heretofore domestic industry into a truly global realm.  Whether this transition involves global land leases or acquisitions, the fundamental need for food & the protectionist feelings this need can give rise to is highly likely to cause such transactions to move quickly into the geopolitical realm.  It is this disruptive change, and the potential for a global farms race, that Seeds Of A Revolution tracks, analyzes, and forecasts.

Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has long held a keen interest in natural resource policy and the geopolitical implications of anticipated stresses in the areas of freshwater scarcity, biodiversity reserves & parks, and farm land.  Monty has lived, worked, and traveled in more than forty countries spanning Africa, China, western Europe, the Middle East, South America, and Southeast & Central Asia, and his personal interests comprise economic development, policy, investment, technology, natural resources, and the environment, with a particular focus on globalization’s impact upon these subject areas.  Monty writes about freshwater scarcity issues at and frontier investment markets at