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Political instability and low commodity prices may lead South Korea’s Daewoo Logistics to delay or pull out of a controversial agricultural project in Madagascar, reports Reuters.
More than 125 people have been killed in a power struggle between President Marc Ravalomanana and Antananarivo mayor Andry Rajoelina over the past two weeks. 25 supporters of Rajoelina were gunned down by government forces during a protest in the capital on Saturday.
Low commodity prices are also a factor. The price of corn and palm oil have fallen by more than 50 percent over the past year.
Daewoo had planned to develop 1.3 million hectares (3.2 million acres) for the crops.
“We are not in a rush to push for the plan and want it to be delayed because weak corn prices and difficult financing conditions have made the deal less attractive,” Shin Dong-hyun, head of the project at Daewoo, is quoted as saying.
“Political instability in the country has also reduced its merit … We have done everything we are obliged to do under the contract and are awaiting a response from the Madagascar government to take the next step,” Shin said.
The proposed project had been a source of controversy in Madagascar. Rajoelina supporters accuse Ravalomanana’s government of selling what amounts to half of Madagascar’s arable land for a pittance at a time when one-third of country’s children are malnourished. All of the production would be for export.
South Korea to lease half of Madagascar’s arable land for corn, oil palm production
South Korea’s Daewoo has signed a 99-year lease for half of Madagascar’s arable land, reports the Financial Times. The firm expects to pay “nothing” for the lease. The agreement covers 1.3 million hectares (3.2 million acres) — an area half the size of Belgium. Daewoo says it plans to plant corn on 1 million hectares in the arid western part of the island and 300,000 ha (740,000 acres) of oil palm on land in the tropical east, a region that is home to the bulk of Madagascar’s rare rainforests. The company will produce the food for export and plans to import workers from South Africa, although a Daewoo spokesman said that the project could create up to 70,000 local jobs. The company expects the project to cost $6 billion over the first 25 years.