Nov 20 2008

SA’s link to Daewoo project on Madagascar

Published by at 1:26 pm under Companies,Top Stories

According to the German business daily Handelsblatt agriculture experts from South Africa have been employed by South Korean industrial group Daewoo Logistics to help the company implement its (slightly controversial, but very ambitious) food venture on Madagascar.

Daewoo leased a piece of agricultural land the size of Belgium for 99 years on the island of Madagascar to produce maize and palm oil for the South Korean and world markets. Apparently, half of all agriculture land on the island is now occupied by the South Korean firm. 

“The project smells of neo-colonialism”, shouted a few bloggers in reaction to the news. But, this is probably the formula for economic exploitation without political involvement we’ll see more often in Africa in future.   

Here is what Handelsblatt wrote: Daewoo Logistics said it had taken a 99-year lease on 13,000 sq m agriculture land. That is roughly the size of the state Schleswig Holstein, one of Germany’s 16 states. Daewoo spokesman Dong-Hyan said the company expected to produce four million tonne maize and a half million tonne palm oil per year.

This is the biggest agreement of its kind to date. Experts of the UN agriculture organisation FAO warned against “neo-colonial” tendencies, but saw potential benefits for Madagascar.

The maize and palm oil will be for human consumption, animal feed and biosprit, said Yoon Deok-Ryong, senior advisor in the Korean ministerium for strategy and finance. Daewoo wants to produce maize on the western side of the island and palm oil on the eastern side.

The company started negotiating with the island government back in 2007. Madagascar is the fourth biggest island in the world with 20 million citizens. The leased land only equals 0.02% of the country’s surface, but about 50% of the available agriculture land. 

Abby Abbassian, secretary of FAO at the UN, aired reservations. “My concerns have to do with the legal aspects of a deal of this kind,” he said. “Will future governments of Madagascar adhere to an agreement entered into by a previous government? What if the island experiences a shortage of food supplies for own consumption,” asked Abbassian. 

Afterthought: It would be interesting to know more about South Africa’s involvement in the project (who, how many, with what we are helping on Madagascar). This project is so big, it could suck up all South Africa’s farmers…  

* Also good to remember is this paragraph from the Wikipedia entry on Daewoo:

It is unclear whether the association between Daewoo and the oppressive military regime in Burma, responsible for the bloody crackdown on peaceful monk-led anti-government protesters in September and October 2007 and the wholly inadequate warning and response to Cyclone Nargis in May 2008, will further hurt the reputation of the company. 

The Daewoo International President Lee Tae-yong, was convicted and sentenced in South Korea for illegally selling military hardware to the junta in Burma. These sales to the military were linked to the award of an offshore oil and gas exploitation concession to Daewoo. In court, President Lee defended his actions as being in “South Korea’s national interest” .

On 15 November 2007 Lee Tae-yong and thirteen other South Koreans were convicted of illegally exporting weapons technology and equipment to Burma along with other related charges.

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