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South Korea's Daewoo Logistics Corp. recently said that it may delay its plans to plant corn in Madagascar after several weeks of violence in the African nation.

South Korea’s Daewoo Logistics Corp. recently said that it may delay its plans to plant corn in Madagascar after several weeks of violence in the African nation.

According to their website, Daewoo Logistics Corp. is a “leading 3PL, Shipping, Natural Resource Development company in Korea.” It was primarily a shipping and logistics company when it was established in June 1999. But since 2006, it started significant natural resource development projects on corn farm, palm oil, gum plantation, and coal mining. To that end, it established PT Daewoo Logistics Indonesia.

In October 2008, Daewoo announced that it plans to plant corn on one million acres of land in Madagascar. In November 2008, Daewoo successfully obtained the lease of the huge tract of land that is over half the size of Belgium for 99 years. It hopes to produce five million tonnes of corn per year by 2023, primarily to meet the increasing demand for corn in South Korea and cut its reliance on imports from the U.S. The planned corn farm in Madagascar will exist in addition to an ongoing development of a 50,000-acre corn farm in Indonesia in partnership with South Korea’s biggest feed maker, Nonghyup Feed.

According to 2007-2008 estimates by the World Agricultural Outlook Board, South Korea is the world’s fourth largest importer of corn, following Japan, the European Union-27 and Mexico.

In addition to corn, Daewoo also has plans to grow and produce palm oil on an additional 300,000 acres of land in Madagascar.

But continuing violence and political instability has hindered Daewoo’s plans in Madagascar. President Marc Ravalomanana, winner of both the 2002 and 2006 presidential elections, is currently in a power struggle with Andry Rajoelina, the former mayor of the capital Antananarivo who quit his post last week. Rajoelina has successfully tapped into the public’s frustration with the government and called for President Ravalomanana to step down. He accuses the president of misusing public money and being a dictator.

Violence in the country has been escalating in recent months. In January 2009, dozens of people died in a violent protest against the closure of an opposition radio station. On February 7, 2009, protests against Ravalomanana’s government ended when police protecting the president’s compound opened fire, killing 28 and injuring more than 200 protesters. Despite the casualties, Rajoelina promised that the protests against the President Ravalomanana will continue.

The lease deal with Daewoo also served as a background factor to the escalating political violence. President Ravalomanana had strongly supported the deal, arguing that it would create jobs for Madagascan farm workers. But Rajoelina opposed it, saying that many farmers would lose control of their land because of the deal.

Shin Dong-hyun, who is in charge of the Daewoo project in the country, said, “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.” He further said that they are waiting for a response from the Madagascan government about doing what they are obliged to do under the contract.

Source: www.AsiaEcon.org
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Source: www.asiaecon.org |

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