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Ethiopia land grab

 
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Peter Fennell



Joined: 27 Sep 2007
Posts: 53
Location: London

PostPosted: Fri Apr 08, 2011 11:06 pm    Post subject: Ethiopia land grab Reply with quote

This article was circulated by email under the title 'land grab'

[url]
http://www.guardian.co.uk/world/2011/mar/21/ethiopia-centre-global-farmland-rush [/url]

This thread has been reproduced from emails


Last edited by Peter Fennell on Fri Apr 08, 2011 11:10 pm; edited 1 time in total
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Peter Fennell



Joined: 27 Sep 2007
Posts: 53
Location: London

PostPosted: Fri Apr 08, 2011 11:08 pm    Post subject: Ethiopia Land Grab Reply with quote

Dear Economists,

Ethiopia apparently has this land that ‘anything will grow on’ without expensive inputs (fertiliser) - but is dependent on food aid. Why?
So now this fertile land ‘in scarcely populated Gambella’ is being let on a 50 year lease. Rent sounds very cheap £150/wk for 2,500 sq mls = £7800pa for 250,000ha = £0.03/ha compared to £110/ha [1] for farmland in UK. We are not told whether there is a rent review? But apparently the tenant has to build roads not just on the land but to it – that costs £1m / mile (£2m in US, £6m in Russia [2]). 20 miles of road at £20m/50 yrs/250k ha = £1.60 in lieu of rent but could be much more. Saudis are building 20 miles of canal- that must be even more expensive.
‘Land grab’ is highly emotive and accusatory language. Can someone explain to me what is not to like about this investment.

Yours,
Peter

[1] statistics.defra.gov.uk
[2] http://www.telegraph.co.uk/sponsored/russianow/business/8102639/Road-building-in-Russia-six-times-more-expensive-than-in-the-US-or-EU.html
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Peter Fennell



Joined: 27 Sep 2007
Posts: 53
Location: London

PostPosted: Fri Apr 08, 2011 11:09 pm    Post subject: Anthony Jones comment Reply with quote

Anthony Jones said:

It is assumed that infrastructure development is a Governmental (community) expenditure. However, what happens when the Government is not rich enough (small tax base, reserves etc)?

It might be a sound idea to lease out the land upon condition that the economic rent is created by the lessee (by virtue of infrastructure development). However, do we know the terms of the lease? Rent reviews are one thing: When the economic rent starts to be generated the "rent" could increase. But what about looking after the land; is there any requirement in the lease for this? If not, the land could be extensively used, inrastructure built and then left to decay. The land would have been used for pure economic gain.

Yes, I agree Peter, it sounds awful, but perhaps we should open our minds to the possibility of private infrastructure development with suitable leaseholds as a means to economic development, and creation of economic rent which could be collected for the benefit of the community.

Can we find out more regarding the terms of this lease?

Best regards
Anthony
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Peter Fennell



Joined: 27 Sep 2007
Posts: 53
Location: London

PostPosted: Fri Apr 08, 2011 11:11 pm    Post subject: Andrew Purves response Reply with quote

Andrew Purves said:

Re: Ethiopa land grab I watched the video on the original link – this seems nothing more nor less than Enclosure as we taught the world to do it, with the variation that it is foreign companies putting up the fences and investing in the Capital of a modern day Agricultural Revolution, in order to exploit the land.

The current inhabitants, who have lived (albeit frugally) on the land for millennia are being given the opportunity by the government elite to move to urban developments where they can enjoy sanitation/housing/medical facilities which have not yet been built. They have become at a stroke landless labourers who will now have the opportunity to become wage slaves on the vast monocropping estates being created by profit hungry absentee landlords in the finest English tradition.

In an ideal world, we could lease some of this land, make it available to these people, give them credit to start productive enterprises only collecting any Economic Rent which may arise to re-invest in community infrastructure (roads, hospitals etc), as an enormous experiment to demonstrate the Natural Laws of Economics as we teach them as Anthony suggests.

Any enterprising volunteers?

Andrew
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Peter Fennell



Joined: 27 Sep 2007
Posts: 53
Location: London

PostPosted: Fri Apr 08, 2011 11:32 pm    Post subject: This is me this time! Reply with quote

Anthony
infrastructure is often by private sector eg. our railways originally
this to me is equivalent to a commercial let where the tenant puts in a lot of capital improvement
we won't know the lease terms but condition on reversion is typically covered by rent paid in advance and a deposit

Andrew
Is not a 50yr lease distinctly different from a freehold enclosure? It is a short time in the life of the land and if at the end it is well developed then it will command a high rent from the next lessee.
Also can you answer the original question: Ethiopia has this land that ‘anything will grow on’ without expensive inputs (fertiliser) - but is dependent on food aid. Why?
And how would you propose to solve that other than exactly by this sort of much needed capital infrastructure investment?
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Anthony Jones



Joined: 23 Mar 2009
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Location: Henfield, West Sussex, United Kingdom

PostPosted: Thu Apr 14, 2011 8:20 am    Post subject: Reply with quote

It seems to me that we need:
1. To find out the terms of the lease.
2. Consider whether we believe that the provision of infrastructure is a community responsibilty or not. Perhaps allowing private companies to provide railways etc was not a good idea!

Interestingly, the view from India is that Ethiopia is becoming 'the braed basket' for India.
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Peter Fennell



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PostPosted: Sat Apr 16, 2011 8:15 am    Post subject: Useless peasants? Reply with quote

I have not seen the video Andrew refers to. Perhaps someone could post a link?

Lease terms may be exploitive but there is nothing in the Guardian article to suggest it. If we simply infer exploitation then we are just Marxists.

But what is implicit in the article is the appalling atrocity of people hungry while good arable land stood idle. What use were the peasants on it if they were only feeding themselves?
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Brian Chance



Joined: 09 Nov 2008
Posts: 115
Location: Croydon Surrey U.K.

PostPosted: Tue May 17, 2011 8:32 pm    Post subject: Reply with quote

Peter

What Ethiopia really needs is practical advice on how to help itself.
This will include:-

Detailed expert study of local conditions using local knowledge to discover what is really needed.
Introducing improved varieties of seed and growing techniques.
Providing the necessary infrastructure, including roads and railways and micro finance.
Setting up markets, co-operatives and training facilities.
Obtaining the necessary long term finance.

The fundamental principle is that this must be the work of the people of Ethiopia and the vital knowledge from those of greater understanding must be directed to their benefit in such a way that the local people will then be able to take over and improve themselves.

One organization that could provide the knowledge is AGRA. It would be interesting to find out their view on the present proposal.

Brian
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