Ethiopian government has revised its agricultural land lease price, which has been attracting many investors for the past years, reported New Business Ethiopia from Addis ababa.

Government believes that agricultural land in the country was not getting proper value and protection. The directorate has now prepared revised agricultural land lease price and expect that it will soon be approved by the government.

According to the information New Business Ethiopia obtained from Ethiopian Ministry of Agriculture, the new lease price takes into consideration the distance of the farm to Djibouti port, Port Sudan and central market – Addis Ababa.

According to the Agricultural Investment Support Directorate at the ministry, which has prepared the revised lease price, if the farm is located 700 kms away from Addis Ababa, the investor is expected to pay 111 birr (around 8 USD) / hectare per annum for rain-fed agriculture.

As the area gets nearer to the central market Addis Ababa, the price will increase by 4.05 birr per kilometer and as it goes far from 700 kms from Addis Ababa, the price declines by 4.05 birr per kilometer.

When it comes to irrigation farming the lease price will be 158 birr per hectare per annum and it will increase or decrease per every kilometer by 4.17 birr. According to this draft lease term, this lease price is subject to revision in every 10 year. And the investors lease the land for 25 years for annual crops and 45 years for perennial crops.

The Directorate hopes that the revised price will encourage genuine investors; create competitive balance among investors and regional investment balance.

So far investors are not paying for water and the Ministry of water plans to introduce water fee as the current situation shows that some area residents like Afar have suffered from water shortage because of agricultural investment, especially when investors bring many daily-laborers to their farms from other parts of the country.

So far, the Directorate has identified 2.9 million hectares of land as potential for commercial agriculture all over the country. Out of this, three regions have transferred a total of 1.74 million hectare to the Directorate - 180,625 in Southern Region, 834,199 in Gambella and 724,984 in Benishangul Gumz Region.

Of which it has allotted a total of 59,931 hectares of land to investors - 34,431 in Southern region and 25,431 in Benishangul Gumz.

All commercial agricultures going on in the country including the giant Karuturi and Saudi Star agricultural projects are expected to sign the revised lease price agreement and are expected to be registered and monitored by this centralized Directorate.

The main reason for establishing this directorate by the Ministry is said will make sure that the land is used properly for the desired purpose (mainly generate foreign exchange by producing exportable agricultural products) by the investors.

“The Ministry has realized that previously land is abused by some investors. Some investors were renting the land they rented from government to others, while different regions do not have clear records on the size of land they distributed to investors,” says expert at the ministry, who choose to not to be named.

“In fact, some investors were not providing the necessary facilities such as healthcare for their employees who work on their farms, some investors do not even have transparent bookkeeping and pay taxes to the government properly,” she added.

The revised agricultural land lease price prepared by the directorate is expected to be approved by the government soon.
The directorate is established at the Federal Ministry of Agriculture and Rural Development in January 2009 to regulate all investments in agriculture.

Its mandate includes identifying potential land for agriculture in the country, taking this land from all regions and transferring it to investors. It also monitors activities of the investors and provides both technical and administrative support to these investors.

The previous agricultural land lease price varies from one region to another. For instance in Oromia Region if an investor wanted to be engaged in coffee, tea, sugarcane, or any other perennial crops on an area of more than 100 hectares, he/she will get land free of lease for the first 4 years.