A Sheikh, Ethiopia and Pitfalls of Journalism

“Last year, Al Amoudi, whom most Ethiopians call the Sheikh, exported a million tons of rice, about seventy pounds for every Saudi citizen.” This is the remarkable claim of Frederick Kaufman in an article in Harper’s Magazine about the agro-investment of the Saudi billionaire in Ethiopia’s Gambela province.

Mr. Kaufman calls it “the great grain robbery” and alludes to the namesake event in 1972 when the Soviet Union appeared as a large buyer of US grains for its livestock program, bidding up prices to the ire of American consumers.

To put it into perspective: one pound of rice gives about five servings, so 70 pounds make 350 servings. Every Saudi eats a bowl of Ethiopian rice each day according to Mr. Kaufman!

Saudi Arabia imported 1.3 million tons of rice in the trade year 2013/14 according to the US Department of Agriculture and does not have domestic production. This would mean that Ethiopia accounted for the large majority of Saudi rice consumption. As rice constitutes 11 per cent of the calorie intake of Saudis according to the FAO it would also mean that Ethiopia has provided almost a tenth of Saudi Arabia’s dietary needs! An astonishing feat for a country that was the largest food aid recipients of the World Food Program (WFP) in 2012. If true, it would be alarming.

Alas, it does not show in the trade statistics. The PSD database of the US Department of Agriculture has no record of Ethiopian rice exports whatsoever. The COMTRADE based Trade Map database of the International Trade Center not really: In 2012 it reports Ethiopian rice sales of $4,000 to Saudi Arabia out of total exports of $5,000. That is virtually nothing.

Mr. Kaufman does not share the source for his 1 million ton claim. Unfortunately for him, almost three quarters of Saudi rice imports come from India and another 10 percent from Pakistan according to the Trade Map statistics. South Asia is where basmati rice is mainly grown, which the Saudis prefer over the sticky white rice that is grown in South-East Asia and the US. This preference is also why Al Amoudi has tried to introduce basmati cultivation in Ethiopia with the help of Pakistani experts and foremen.

Cereal yields in Ethiopia are around 2 tons per hectare according to the World Bank, on the higher end compared with most other African countries, but considerably below Thailand (3.1 tons) the US (5.9 tons) or Vietnam (5.5 tons). As Al Amoudi has just started his project and is introducing a new crop it is unlikely that he can produce very much above the national average. This would mean that the production of 1 million tons of rice in Ethiopia would require 500,000 hectares of land.

Al Amoudi has a lease for 10,000 hectares. Mr. Kaufman does not tell us from where Al Amoudi might have gotten the other 490,000 hectares. Not to mention that Al Amoudi has considerable production problems and it is unclear at this stage whether his project will succeed.

Mr. Kaufman also does not share with us how Al Amoudi managed to get 1 million tons of rice out of Gambela, a remote province with poor infrastructure and far away from any port. The Indian investor Karuturi who launched farming operations in Gambela as well and is now in serious economic trouble mulled exporting cereals with barges via South Sudan, a very unlikely scenario given the current civil war there. Mr. Kaufman himself describes dirt roads that start right after the airport in Gambela; he also speaks of “pilot rice paddies” without suggesting how one would be able to produce 1 million tons of rice with such limited operations.

In case it has not become clear by now: Mr. Kaufman’s central claim of 1 million tons of Ethiopian rice exports to Saudi Arabia is certifiably bogus. Harper’s does not seem to have a fact-checking department, which is rather surprising for a magazine of that size.

Mr. Kaufman says hat “the terms of the deal have never been released.” This is not exactly true as the lease agreement of September 2009 was posted on a website of the Ethiopian government before taken offline in 2012. For convenience I post it here.

For a 50-year lease of 10,000 ha of land Saudi Star pays 300,000 Ethiopian Birr annually. This is currently equivalent to just $15,321 and the contract does not even make stipulations for inflation adjustment. Al Amoudi has announced that he intends to lease an additional 290,000 ha from the Ethiopian government, but so far 10,000 hectares is what he’s got, to the best of my knowledge.

So with $1.53 per hectare the lease terms are even better than the $7 of Mr. Kaufman’s estimate and considerably lower than the $1,250 per year and hectare that he mentions for Zambia. Zambia is a more mature agricultural market with export outlets towards South Africa, so its land prices should be higher, but Mr. Kaufman is right to wonder how such lease terms come about and whether political backroom deals might have something to do with it.

He has apparently been in the country, if only for a few days, he has met with decision makers and he has visited Al Amoudi’s Saudi Star project. There have been indeed problems on the project as the killing of Pakistani foremen has shown and Ethiopia’s strategy of Agricultural Development Led Industrialization (ADLI) has been accompanied by grievances and state led resettlements as I point out in Oil for Food.

Mr. Kaufman had a unique chance to tell us something about such problems at the crossroads of subsistence lifestyles, development ambitions, foreign direct investment, political conflict and influence trading. Unfortunately he didn’t. He chose to make bogus claims and tell us a land grab story that is sexy and sells. After all Saudis are authoritarian, religious fanatics who do not let their women drive. Isn’t it perfectly logical to add a neo-colonial land grab to that list? And isn’t that what the reader wants to hear? Including unverified rumors about Mr. Al Amoudi’s alcohol intake, Al Qaeda financing and predatory attitudes of his men?

When reading the article one cannot escape the impression that this is neither a story about Al Amoudi, nor about disenfranchised Ethiopians, but about the author himself – an intrepid Indiana Jones who takes the reader by the hand on a journalistic hit and run mission to the dark heart of Africa. To beef up his credentials, Orientalisms are dropped and suggestive language is used without serving any obvious analytical purpose.

Based on a second hand account he refers to locals who live “in picturesque villages, undisturbed by modernity”, all the while Gambela is increasingly affected by a rather modern civil war in neighboring South Sudan. Corresponding refugee flows are shortly mentioned in a footnote. At no point one gets an idea about the local population and how it has been affected by the Saudi Star project. Mr. Kaufman has apparently not interacted with them. Meanwhile he suggests that the Saudi Star compound with its white barracks and satellite dishes seems to belong to a “Bond villain.” Our hero has to face down “fat black beetles” that attempt to crawl in his bed while spending the night there, remarkably on the invitation of the men of the very “Bond villain.” (It also would appear to me that the villains in Bond movies usually have more assuming residences than white barracks).

Al Amoudi was born in Ethiopia to an Ethiopian mother and a Saudi father and later migrated to Saudi Arabia where he made his money. To call him a “billionaire from Ethiopia” obscures more than it illuminates and it would have been interesting to learn more about Saudi-Ethiopian relations and what role Al Amoudi plays in them. Instead, we jump from Alexander the Great’s quest for the Nile sources to Ethiopia “the khat capital of the world”, only to end up again with Al Amoudi, who is termed a “whisky drinking marauder”, like all the folks of international organizations who hang out at the bar of the Sheraton in Addis, which he owns.

In short, another piece of sensationalist journalism and a disservice to a more sober and credible discussion about land grabs and associated development challenges.

The Water Energy Food Nexus in Drylands

I have just returned from the conference about the Water Food Energy Nexus in Drylands that CIDOB has organized together with the OCP Policy Center in Rabat, King’s College London and Texas A&M University.

Approximately two billion people live in arid countries. One third of the global population will be most affected by water scarcity and climate change. Efficient management of water resources for food and energy production is a developmental challenge that requires holistic approaches. The water-food-energy nexus highlights that food, water and energy security are inextricably linked and that any decision in one of the three sectors has consequences for the other.

Nowhere else this nexus is as evident as in dry lands and in the MENA region in particular. Energy will be required to pump, treat and desalinate water for domestic and agricultural purposes. Water will be required to produce energy. About 1-2 percent of global energy consumption can be attributed to the production of nitrogen fertilizer alone. Such development challenges call for a nexus approach to broaden the analysis from a mere ‘blue water’ focus to the more efficient use of soil moisture (‘green water’) and sustainable policy options.

Tony Allan of King’s College pointed out that the nexus between water, energy, and food was first conceptualized at World Economic Forum 2011, which was then followed by a high profile conference organized by the German Ministry of Economic Cooperation (BMZ).

Since the 1980s there have been growing sustainability concerns about the various hydraulic missions that have been undertaken since the 1850s. The constant rise in irrigation since the 1960s coincided with declining food prices – until 2008. Further irrigation growth is unsustainable. There has been a peak of World Bank dam financing in 1980.

As a result the focus has shifted from blue water to green water since the 1990s and the latter’s major role in food and virtual water trade. About 70 percent of global crops are rainfed and rely on green water.

Sustainable intensification, protection of farm livelihoods, supply chain management, waste and consumption issues are crucial in Allan’s view. This was echoed by Brian Chatterton, a farmer and a former Minister of Agriculture of South Australia and Lynn Chatterton, an independent consultant. They complained that farmers have not been at the center of attention of the international agro research establishment, which has focused on higher yields instead of lower costs and ecological factors, which are crucial for farmers. They also deplored a relative neglect of pastoralists in extension services, symbolized in the FAO’s closure of its pasture department.

The Chattertons described the green revolution as an abject failure in dry lands because its application of nitrogen fertilizer relies on reliable rainfalls, yet they were optimistic that yields can be improved without more water and irrigation and pointed out that productivity in Australian drylands is 2-4 times higher than in the MENA region without more water and in similar climatic conditions. In the same vein Kris Dodge of ICARDA demonstrated how adapted seeds and plowing techniques, rain harvesting and supplemental irrigation can improve yields in the MENA.

Existing reporting and accounting rules do not account sufficiently for natural resources like water as inputs as Tony Allan, Martin Keulertz of Purdue University and myself pointed out. Rainfall frequency is often reflected in land prices, at least in developed markets, there are also varying pricing schemes for irrigation water in some countries, yet often water remains external to the economy. In case of damage there are only limited sanctions in place to internalize costs, while its provision as a public good is compromised by limited state capacities that have been weakened after decades of neo-liberal reform.

Thus there is a danger that the nexus is conceptualized in apolitical and technocratic terms, as Harry Verhoeven of Oxford University deplored. Often there is a focus on technical fixes, presumably neutral scientific policy choices and “governance”. Yet politics rather than governance matter in water, energy and food allocation and imply control over people. Such politics entail winners and losers as Verhoeven outlined in a depiction of the political economy of the nexus in the Nile Valley.

Other country examples included Jordan, Lebanon, Syria, Egypt, Yemen, Qatar, Darfur, USA, Ethiopia, Senegal, Tunisia and Morocco. Bassel Daher of Qatar Foundation demonstrated his nexus tool that shows trade offs between water, food and energy allocation in the case of Qatar and could be applied to other countries. Samer Talozi of the Jordan technology University in Irbid showed that 14 percent of Jordan’s electricity production is used for water treatment and pumping. Holger Hoff of the Stockholm Environment Institute and Potsdam Institute for Climate Research and Rabi Mohtar of Texas A&M outlined latest trends in nexus research and forthcoming conferences and research initiatives. Musa Mckee of SOAS, London showed interlinkages between culture and water, food and energy allocation.

Caroline King of the Ecosystems and Human Development Association (EHDA) made a case for improved green water management, particularly in Yemen and Talal Darwish of the National Center for Remote Sensing (CNRS) in Beirut  showed that the effects of climate change in Lebanon have been mainly in the form of irregular rainfall patterns. Decline of overall rainfalls was relatively benign in comparison.

Gabriele Cassetti of Milan Politecnic introduced the TriNex cooperation platform for nexus related projects between European and Egyptian universities that is funded by a Tempus grant of the European Union. Ansoumana Bodian of the Université Gaston Berger (UGB) showed a model how to investigate the effects of rainfall run-off on water resources in Senegal. Rachid Doukkali of Institut Agronomique et Vétérinaire Hassan II and Omar Aloui of Agroconcept demonstrated changes in water and land use in Morocco and related food security issues. Francis Ghilès of CIDOB discussed recent developments in the natural gas industry in North Africa.

Saqib Mukhtar of Texas A&M described problems of the Texan Ogallala aquifer that are similar to challenges in the MENA: Agriculture in Texas uses 80 percent of groundwater and 35 percent of surface water. 66 percent of all groundwater comes from the Ogallala aquifer that stretches all the ay up to South Dakota. Its current recharge rate only covers about 15 percent of withdrawals. Given the accumulated over-extraction it would require 300-1000 years of recharge to go back to the level of the 1940s when large scale irrigation took off.

Brendan Bromwich who worked for many years for UNEP in Darfur showed unintended consequences of water provision in refugee camps against the backdrop of a society that still relies on wood as primary fuel. The water supplies prompted a brick stone industry that required wood and considerably contributed to deforestation. Hence alternative building materials are needed to safeguard energy and soil resources.

Guy Jobbins of the Overseas Development Institute pointed out that Moroccan subsidies for drip irrigation rather benefit wealthier and literate farmers as ‘urfi land of the poor cannot be mortgaged. He also showed the limits of technical fixes: Drip irrigation improves efficiency, but it has not reduced water consumption in Morocco as it prompted farmers to increase the irrigated area and switch to more commercial but water intensive crops. Rural electrification in Morocco went up from 18 percent to 97 percent between 1995 and 2011 and caused a massive growth in installed pumps and irrigation.

As for climate change Mark Mulligan of KCL departed from the current consensus and argued that African dry lands will possibly receive more rather than less rainfall in the future, which could compensate for the negative effects of higher temperatures on agricultural productivity. Rabi Mohtar of Texas A&M pointed out another often forgotten nexus between energy and water: About 70 percent of the water that is used for unconventional oil and gas production via fracking remains underground and is withdrawn permanently from the hydrological cycle. This could diminish water availability in the long run.

Daniel Yeo of the Global Green Growth Institute in Addis Ababa outlined Ethiopia’s strategy of agricultural led development and the role of its dam program while pointing out cleavages between academic and political mindsets. The latter was also highlighted in the concluding key-note address by H.E. Miguel Moratinos, the former Spanish Minister of Foreign Affairs.

In sum water, food and energy are inextricably linked via various nexi and should not be regarded separately. However, a purely technocratic approach should be avoided given the importance of political economy issues in allocation procedures.

Chinese Agro-Investments in Africa

Last month I was at a conference about Chinese agro investments in Africa at SAIS/ Johns Hopkins University in Washington.

Deborah Brautigam differentiated five types of such investments: 1) media myths and false reports; 2) former aid projects that have now been privatized; 3) construction contracts; 4) government projects that were launched more than a decade ago; and 5) real, current projects.

There are only a few current projects in the category 5) and they target food production for the domestic African market, not for export to China, which would not make commercial sense for logistical reasons.

Like in the case of the Gulf countries there is a certain disconnect with media reports and their inflated numbers about land grabs.

That having said China has recently shown strong interest in food related investments, but they have focused on the trading and food processing sectors with a view of improving food safety and catering to the increasingly diverse diets of the Chinese population.

Among such investments have been Tnuva, the Israeli cheese and consumer foods supplier, US pork producer Smithfield Foods, the UK breakfast brand Weetabix and Australian winemaker Hollick. Chinese grain trader COFCO has recently spent $1.5bn on a stake in a sugar, soyabean and wheat joint venture with Hing Kong based Noble Group.

It seems that China prepares to compete with the Cargills and Nestlés of this world rather than directly gobbling up farmland in the upstream sector. There are some large food processing companies in the Gulf that operate internationally like Kuwait based Americana. Gulf countries have also shown a similar, if more subdued interest in trading companies as I describe in Oil for Food, but compared with China they have arguably less capacities to realize such strategies.