Global Policy Forum

Dispossession and Displacement Fears Voiced at South Sudan’s Food-for-export Farming Deals

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Though South Sudan was formed in July 2011, foreign investors have already bought or leased over 9 percent of the country’s farmland. An Egyptian private equity fund Citadel Capital has agreed to pay the South Sudanese government $125,000 per-year for a 30-year lease for 259,500 acres of farmland. The company plans to immediately scale-up planting for chickpeas from a 1,500 acre trial to 130,000 acres in the next 5 years. Investors like Citadel Capital insist that they are helping the agriculture of the host country flourish, but critics argue that large foreign investors displace and jeopardize the food security of local small farmers.

By Katrina Manson

Financial Times

November 6, 2011

When farmers start to plant chickpeas in a remote spot of South Sudan this month, they may well sow the seeds of a backlash.

South Sudan seceded from the north in July and this Egyptian-run plantation is the most advanced of several big-ticket farming deals detractors decry as "land grabs" in the world's newest nation.

Foreign investors are buying and leasing land across east Africa, from Ethiopia and Uganda to Sudan and Tanzania, often to grow cereals, vegetables and biofuels for export. Campaign groups say such food-for-export schemes will displace people, dispossess them of their land and degrade the environment, ultimately increasing the chances of conflict in fragile regions.

Egyptian private equity firm Citadel Capital, which has leased 259,500 acres for farming in South Sudan's oil-rich Unity State, is among dozens of foreigners to have struck large land deals in the new country for everything from forestry to tourism. Many such deals were struck even before independence. Agreements made since 2007 amount to nine per cent of South Sudan's surface land, at 5.74m hectares, says a report this year by Norwegian People's Aid.

Citadel managing director Karim Sadek denies that the land deal is exploitative and says the food grown will be sold locally. "The big bad wolf theory - the land-grab proposition - I don't see it applying," Mr Sadek told the Financial Times. He said that the government of South Sudan approved the deal Citadel signed with Unity State and Citadel will pay the state government $125,000 a year for its 30-year lease. "We're not owning the land, this is a rental; we have produced a sizeable investment so far that will be seen in the field; and the plan is for this project to sell locally."

The plantation has to date provided little employment locally with the 60 or so staff at the Citadel site mostly Zimbabwean. Mr Sadek says Citadel subsidiaries have already invested $24m, mostly on equipment, and hope to scale up planting from the 1,500-acre trial of chickpeas this year to 130,000 acres after five years. Citadel will also plant maize and sorghum and introduce on-site processing, such as milling, to add value.

"Our plan is basically to start slowly filling up the demand gap, replacing imports [by] a much cheaper proposition," says Mr Sadek. He adds that local production will lower costs. Imported maize currently sells for $1,000 a tonne, more than three times the international market price, he said. Observers say that given the size of its plantation, it is likely that Citadel could meet local demand for maize and still be able to export.

The land deals agreed by Citadel and others are complicated by the scale of the challenge faced by the new country.

Fighting still continues along the border and this year the north blockaded deliveries to the south, delaying Citadel's planned maize planting.

South Sudan is struggling to deliver benefits to those who spent decades fighting the north in pursuit of independence gained on July 9. It wants to diversify an economy that derives 98 per cent of revenues from oil. At the same time, it needs to subdue local militia groups and to feed an army that soaks up 40 per cent of state spending. Citadel plans to negotiate local food sales directly with the government, which - critics say - could mean maize is diverted to feed soldiers, not civilians.

"People didn't fight Khartoum [the north] only to lose their land," says Anuradha Mittal, executive director of Oakland Institute think-tank, who has visited the Citadel site and will next month report on the impact of large land deals on South Sudan. Ms Mittal fears some land licences are acquired merely as a conduit to explore for oil and minerals. "It's very important to halt and step back, [to] protect the valuable resources of the country instead of having these free-riders who are rushing in."

Some foreign investors have already found South Sudan a difficult environment to work in. US company Jarch Capital struck a deal for 800,000 hectares. The deal, which lacks government approval, has since stalled.

US company Nile Trading and Development negotiated a lease to grow biofuels along with mining exploration rights, but it too is on hold after local leaders complained they "unanimously with strong terms disavow or deny the land lease agreement", arguing in a July letter it was leased "behind the backs of the entire community". The 49-year tenure on this deal also outstrips the 30-year cap set by the Investment Promotion Act. South Sudan's community-owned lands may battle to retain ownership of their lands. "The communities say they'll chase them away or there'll be conflict," says Ms Mittal. 

Investors such as Citadel argue that they offer an opportunity South Sudan should not ignore. Mr Sadek argues South Sudan would lose out if it were not to develop virgin land. "This is not the Riviera; we're not talking about real estate value here, we're talking about productivity," he says.

"The land can remain as it is for the next 200 years, producing nothing, or you go in and you do serious risk money and produce - and for that you need to be rewarded."


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