Between 'Land Grabs' and Agricultural Investment: Land Rent Contracts with Foreign Investors and Ethiopia's Normative Setting in Focus

AuthorElias N. Stebek
Position(LL.B, LL.M, PhD. Candidate), Asst. Professor; Dean, School of Graduate Studies, St. Mary's University College
Elias N. Stebek
This article examines whether the land rent contracts and the Ethiopian legal
framework on rural land use rights can assure win-win mutual benefits
expected from large-scale land transfers to foreign investors. The article further
examines the challenges in the realization of the Seven Principles for
Responsible Agricultural Investments prepared by FAO, IFAD, UNCTAD and
the World Bank Group as a framework of standards for the current global
dialogue on large-scale farmland acquisitions. I argue that land-use insecurity
in the Ethiopian context results from the extensive powers of executive offices
that are empowered to dispossess holders and reallocate land to investors.
These powers can be even more discretionary where land transfers are made
without prior mapping and demarcation of protected forests and wildlife, and
where registration and the issuance of land-holding certificates to smallholder
farmers and pastoralists have not yet been made. The article suggests the need
to rectify the gaps in the land transfer contracts and most importantly, the need
to render the government a custodian (and not owner) of land in conformity
with the FDRE Constitution and to ensure that the termination of land use
rights is decided by courts so that executive offices would not perform the dual
functions of revoking and reallocating rural land use rights.
Key words:
Land grabs, responsible agricultural investment, land rights, farmland
acquisition, Ethiopia
Green revolutions that depend on unsustainable intensive agri-business rather
than broad based modernization of sustainable agriculture usually show an
initial period of boom in production. This is followed by an interim period of
stagnation and then the ultimate tragedy of a steady rise in fertilizer needs per
(LL.B, LL.M, PhD. Candidate), Asst. Professor; Dean, School of Graduate Studies, St.
Mary’s University College. The initial draft of this article was presented at a
symposium on land grabbing organized by the University of Pretoria Human Rights
Center and the University of Warwick Law School, held in Pretoria on Sept. 1-2, 2011.
176 MIZAN LAW REVIEW Vol. 5 No.2, December 2011
hectare at a magnitude that is greater than the rise in agricultural production.
Project documents are usually optimistic and laden with a long menu of
promises. Unfortunately, however, many elements factor in as the agricultural
investment projects unfold towards production and marketing. The downsides of
unsustainable green revolutions and large scale agricultural activities include the
pesticide treadmill as pests become resistant to pesticides. This leads to the
continuous spiral challenges of using stronger pesticide. Meanwhile, the pests
that survive pass on their genes (that are resistant to a particular pesticide) to
their offspring. In the process, organisms that are useful are killed to the
detriment of the fertility of the soil.
Normative and institutional factors can indeed reduce the environmental
and health risks involved in green revolutions and can also enhance their
economic benefits. That is why large-scale modern farming is required to
balance economic returns with social responsibility and environmental
sustainability. This can indeed rectify the downsides that are inherent in hasty
large-scale agri-business. In due course, such responsible agricultural
investments (which can be small-scale, medium or large) have the potential to
gradually bring about relief to a significant portion of Ethiopia’s highly
fragmented subsistence farms and overgrazed lands. This process, inter alia,
further envisages agro-ecological technology with a view to gradually
encourage smallholder farming towards consolidation rather than fragmentation.
Modern farming in Ethiopia had initially blossomed in the 1960s and early
1970s during which professionals in agriculture and other entrepreneurs joined
hands and started a significant number of small-scale and medium sized modern
farms. This was followed by the experience of post-1975, during which state-
owned farms were largely unsuccessful. Ethiopia’s experience to date and the
lessons gained from other green revolutions thus necessitate the examination of
Ethiopia’s normative setting as an institutional tool in regulating large-scale
farming towards responsible agriculture. Moreover, the contracts concluded
with foreign investors in large-scale farms in Ethiopia need to be assessed in
light of the elements of responsible agricultural investment.
Massive farmland acquisitions in Ethiopia involve multinational enterprises
(MNEs) from India and other countries. As indicated in the various sections of
this article, the farmland acquisitions primarily aim at agricultural production
for their home markets. The identity of the companies, the amount of land
allocation, the benefits of agricultural investments, the need to distinguish
agricultural investment from land grabs and the risks in large-scale farmland
transfers have attracted discourse among academics, researchers, policy makers
and activist critics. The article touches upon these issues in the course of
addressing its core themes. It discusses the rural land use rights regime in
Ethiopia that has made farmland susceptible to extensive acquisition by foreign
MNEs. It also briefly examines some contractual provisions in light of the need
for the embodiment of the potential benefits and promises into binding
The first section highlights the magnitude of large-scale farmland acquisition
in Ethiopia based on recent research. Section 2 presents official statements in
support of the land transfers and critical views thereof. The third section
examines the challenges in relation to the Ethiopian land law regime and their
impact in the implementation of the Seven Principles for Responsible
Agricultural Investment1 that are recommended by FAO, IFAD and UNCTAD.
Sections 4 to 7 deal with the core features of fairly negotiated contracts, the
profile of twenty-four land rent contracts concluded by the Ministry of
Agriculture and Rural Development (currently Ministry of Agriculture), and the
problems and gaps in the contracts. Finally, the conclusion, inter alia, highlights
the need for checks and balances in the adjudicative and executive functions of
the State in relation with land use rights. It further reflects upon the factors for
and the adverse impacts of rising consumerism and FDI-centered statistical
‘growth’ that misinform the notion of ‘development’ pursuits.
1. The Magnitude of Large-scale Land Acquisition in Ethiopia
1.1- Land available for allocation
The area of land that can be allocated for agricultural investment projects was
(in 2008) stated as 10 million hectares.2 In 2009 and 2010, lesser figures
between 3 to 3.5 million hectares were stated by “senior officials of [the
Ministry of Agriculture and Rural Development (MoARD)]”, currently Ministry
of Agriculture (MoA), and the figure was at times stated as 5 million hectares.”3
At present, land lease of 5000 hectares (or above) can only be done at the
federal level by the Ministry of Agriculture (MoA).
1 FAO, IFAD, UNCTAD and the World Bank Group, Principles for Responsible
Agricultural Investment that Respects Rights, Livelihoods and Resources, A
discussion note prepared to contribute to an ongoing global dialogue. January 25,
2 “(MoARD, 2008). This and other documents, available in in
2009 and mid-2010, have since been removed.” [in Dessalegn Rahmato infra note 3,
p. 10]
3 Dessalegn Rahmato (2011), Land to Investors: Large-Scale Land Transfers in Ethiopia
(FSS Policy Debates Series), June 2011, p. 10
Dessalegn states that ambitious figures were also stated in “the Ministry of Mines and
Energy’s (MME)’s bio-fuel strategy document” which assumes the availability of “24
million hectares of unutilized land suitable for growing bioethanol and bio-diesel
crops” The document states that leasing out these lands will not interfere with the
production of food crops and [does] not jeopardize the country’s plans for food

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