Let me start with my conclusion. Despite its claimed disadvantages, commercial farming will contribute positively to the future of poor countries like Ethiopia, even if (some of) it might be done by foreign investors.

The first obvious demerit of commercial agriculture is environmental loss. With the start of commercial farms like Karuturi’s and Al Amoudi’s in Gambella, for example, Ethiopia will lose its only remaining natural forests. But it is obvious that doing nothing would not save the forests either. Much of central and northern Ethiopia, which used to be densely forested a few decades ago, is completely barren now because of the increasing population pressure. There is no question that poverty is the worst enemy of the environment. If it could improve productivity and create jobs, commercial farming will perhaps improve even the fate of the environment. For that matter all countries that are rich today at some point exploited their natural resources intensively before succeeding to replenish them eventually.

Another disadvantage of commercial farming is loss of independent livelihood for some farmers. When their grazing land is taken over by commercial farms or when they cannot freely farm any open land they find anymore, some farmers will eventually be forced to be laborers to commercial investors. But then again, what would be the other alternative? Collectivization is evidently more efficient (especially if you want to export), but household-led farming, in spite of all its disputed efficiency, has failed to lead to any meaningful economic change. Taking the example of Ethiopia again, almost all Ethiopian farmers till the land the way their ancestors did thousands of years ago. Given the current population growth, the future of this country in terms of food availability is definitely bleak without an increase in agricultural productivity. Loss of individual livelihood can thus be considered a little price to pay for the greater good of making sure that there is enough food supply. It should not be forgotten that, almost always, early years of economic transformation are very painful. Many people today don’t remember the widespread dissatisfaction and mass revolt that persisted throughout Europe when the continent was in rapid changes in the early 20th century. This eventually led to the emergence of communist governments in some countries and strongly welfare-oriented governance in others. My point is that change will unavoidably create discontent and inequality which should not be shunned but managed accordingly.

The third and perhaps the toughest challenge for countries like Ethiopia to give away land for foreign investment is the future population pressure. It is very easy to foresee that, given the current population explosion, food demand would skyrocket in 20 or 30 years. Population control is of very urgent need in much of Africa, but that is a different story. Even so, commercializing agriculture remains the only viable option to satisfy the increasing food demand. By increasing domestic production, commercialization can avert the import of food aid outside the country. By increasing productivity, it also enables to feeding more people with the existing resources. Obviously, the fact that most owners of the commercial farms are foreigners adds more complexity to this. But it should be noted that the coming of foreign commercial farms initiates the domestic industry too (see the floriculture industry in Ethiopia as an example). It can be argued that in the long run at least half of the commercial farms will be domestic. On the other hand, even the export-oriented foreign farms will be beneficial to the country because they generate hard-sought foreign currency. If we don’t become too preoccupied in the issue of food, future population growth will also create huge demand for imported commodities such as oil and other consumer products. Without developing their domestic production capacity by exploiting their resources of comparative advantage, countries like Ethiopia will not be able to generate the foreign currency they will need to satisfy their large future demand for imports.