Global Policy Forum

Karuturi Global Plans $500 million Investment in Tanzania Food Production

Amidst the worst drought in 60 years in the Horn of Africa, foreign investors are continuing to harvest tons of crops for export, decreasing food supply in the region. A delegation of 35 investors are currently visiting Tanzania, Uganda and Ethiopia in hopes of expanding their already large land holdings. Karuturi Global Ltd, the world’s largest rose grower with operations throughout India, Ethiopia and Kenya is seeking to acquire land in Tanzania: 200,000 hectares for palm oil, 20,000 hectares for sugar cane and 150,000 for cereals. In an effort to compete with China, Indian companies like Karuturi are trying to strengthen economic ties with Africa and see huge potential in the agricultural sector of East Africa.

By David Malingha Doya


August 18, 2011

Karuturi Global Ltd. (KARG), the world’s largest rose grower, may invest as much as $500 million in food production and processing in Tanzania as it expands operations in East Africa.

The company plans to lease land to grow palm oil, sugar cane and cereals in Tanzania, to add to land it has acquired in Ethiopia where it already grows the same crops, Managing Director Sai Ramakrishna Karuturi said in an interview. Karuturi is currently visiting Tanzania, Uganda and Ethiopia as part of a delegation of 35 Indian investors who are considering investing $2.5 billion in the three countries, he said yesterday.

“There is huge potential for the agriculture sector in East Africa,” Karuturi said. “The region has 120 million hectares (297 million acres) of arable land, the same size of arable land in India.”

Companies from India are boosting economic ties with Africa amid competition from China, its regional rival, whose trade with the continent totaled $106.8 billion in 2008, according to Consultancy Africa Intelligence’s website. Trade between India and Africa currently stands at $50 billion, according to the African Union.

Karuturi Global’s investment in Tanzania will “mainly come from our internal resources,” Karuturi said, without providing further details. The company is seeking 200,000 hectares of land for palm oil, 150,000 hectares for cereals and 20,000 hectares for sugarcane, he said.

Other Indian companies represented among the delegation visiting East Africa include McLeod Russel India Ltd. (MCLR), the world’s biggest tea grower, Kaveri Seed Co., Crane Global Solutions Ltd., and The Escorts Group, Karuturi said.

Regional Trade

Trade between India and Tanzania in 2009 totaled $1.1 billion, according to Karuturi Global. Indian and Ethiopian trade was $272 million in the same year, while trade with Uganda totaled $220 million, it said in an e-mailed statement.

The Bangalore-based company would develop the land in Tanzania gradually, for example at a pace of about 10,000 hectares annually for an anticipated palm-oil plantation, Karuturi said.

Tanzania has 44 million hectares of arable land, though only 24 percent of that is being utilized, according to government data.

In Ethiopia, Karuturi may receive an additional 200,000 hectares of land from the Ethiopian government if its current 100,000-hectare concession is developed within two years, the Agriculture Ministry said in May.

Financial Interests

The financial interests of Indian companies including Bharti Airtel Ltd. (BHARTI), Bank of Baroda (BOB) and Reliance Industries Ltd. (RIL) in East Africa currently totals about $1.4 billion and that amount may grow by more than $400 million next year, according to Indian High Commissioner Kocheril Velayudhan Bhagirath.

“We will consider a line of credit of $92 million to the Tanzanian government after it completes implementing the existing line of credit,” Bhagirath said yesterday by phone from Dar es Salaam.

Tanzania is currently repaying a $40 million-loan from the Export-Import Bank of India, which the government used to buy 1,000 tractors, supplied by Agri-Machinery Group of Escort Ltd.

The group of Indian investors leaves for Uganda tomorrow, and will be in Ethiopia on Aug. 21 for meetings meeting with government officials and prospective investment partners, Karuturi said.


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