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Ethiopia Plans to Rent Out Belgium-Sized Land Area to Produce Cash Crops

Ethiopia will lease a land area about the size of Belgium to private investors for growing rice, cotton and other crops aimed at generating foreign-exchange, an Agriculture Ministry official said.

The Horn of Africa nation plans to rent out 3 million hectares (5 million acres) of farmland over the next five years, Abera Deressa, minister of state for agriculture, said in an interview in Addis Ababa, the capital, on Oct. 22.

The strategy forms part of a government policy that also aims to wean Africa’s second-most populous nation off a donor- funded food program that supports 7.8 million Ethiopians.

“Everywhere we want to increase the amount of land to be leased,” Abera said. “We have abundant land available.”

Ethiopia’s government has identified agriculture as the “major source” of the 11 percent growth rate targeted by the Finance Ministry in a five-year economic plan unveiled in August. The industry accounts for 80 percent of exports and 43 percent of gross domestic product in Africa’s biggest coffee- producing nation, Abera said.

Since August 2009, Ethiopia has leased about 200,000 hectares of land to 16 domestic and foreign companies, according to the Agriculture Ministry. Ten of the investors have started developing their allocated plots.

Saudi Star Agricultural Development Plc, owned by Ethiopian-born Saudi billionaire Sheikh Mohammed al-Amoudi, has taken 10,000 hectares in the low-lying western Gambella region, while Karuturi Global Ltd. of India has leased more than 300,000 hectares in Gambella and Baka, according to its website.

Food Aid

The government is advising American, Canadian, Chinese, Ethiopian and Indian investors to grow “high value” crops including soya beans, palm oil and bio-fuels, rather than cereals, to help feed the approximately 13 million Ethiopians that require some form of food aid, Abera said.

“If we get money we can buy food anywhere,” he said. “Then we can solve the food problem.”

The cost of plots ranges from 111 Ethiopian birr ($6.89) per hectare in peripheral areas such as Gambella and the north- westerly Benishangul Gumuz region, to 2,000 birr per hectare in the fertile Ethiopian Rift Valley adjacent to Addis Ababa, Abera said. Investors are being offered “good prices” to encourage investment, he said.

“Ideologically we are against rent seeking,” he said. “We want to see productive economic activity. We want to see investment. The advantage is more than from the land rent.”

To contact the reporter on this story: William Davison in Addis Ababa via Johannesburg at pmrichardson@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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