Karuturi Global Africa agriculture foray-goldmine or landmine?

Earlier this year, I blogged about Karuturi Global's foray into Africa and its professed noble goals of meeting African food security etc (http://financeandcapitalmarkets.blogspot.com/2011/03/meeting-food-security-in-africanot-from.html). Since then, many things have changed which I thought should be highlighted in this post, for readers to take a balanced view

1. Water Wars:-The 5 upstream nations sharing Nile waters, entered into a treaty to improve their share of Nile waters, contrary to the historical preferential rights of Egypt and Sudan. While Egypt and Ethiopia are trying to resolve this(http://www.upi.com/Business_News/Energy-Resources/2011/09/23/Egypt-Ethiopia-mull-Nile-dams-dispute/UPI-28691316789638/), there is bound to be disputes and lack of clarity, which would hit investor sentiments
2. Land grab accusations grabbing momentum:-Karuturi's deal is held up as the perfect example of a sweetheart deal by activists, who overlook the capex it has to incur. But in case the Arab spring reaches Ethiopia resulting in a regime change, then I would not be too optimistic about the fate of Karuturi. Even its MIGA guarantees will not compensate much for loss of profits. 
3. Investors shunning risk:-With the turmoil in USA/EU, Karuturi would be hardpressed to find financing for expanding in the way it wished. Ditto for getting JV partners for food processing and storage. The way things are going, its completed sowing may be the peakk output
4. Climate risk:-Karuturi lost its first corn crops when around 12000 acres were flooded this year. The loss of $15MM was around 1/5th of the company's market cap at that time(http://www.ethiopianreview.com/content/34462) . Given the rising risk of climate change, such shocks may only increase in the years to come. 

Of the 4 risks, I would rate expropriation and climate risk as the main two factors, and it would be interested to see how the company deals with these risks. 

Meeting food security IN Africa(not FROM Africa)-does this reduce Karuturi Network's risks?

Karuturi Networks is the world's largest exporter of uncut roses, with a 9% market share in the European uncut roses markets. Rather than merely resting on its floriculture laurels, it began to purchase agricultural land in Africa much before it was fashionable to do so. The intention is to cultivate cereals on these lands, presently 3,00,000+ ha of them. Their strategic rationale for the same(as expressed in investor relations presentations) was that contrary to the popular perception of Africa as a water starved desert, many parts DO have a strong agricultural competitive edge with Only a small portion of arable land in production, good access to water, incentives for investment, lower input prices and favourable supply/demand dynamics.

And their rationale for local sales is interesting. They figure that with a Ethiopian domestic market of around 85 million people there is ample scope for local sale Also, they plan to exploit the preferential trading area COMESA (The Common Market for Eastern and Southern Africa), stretching from Libya to Zimbabwe.
Below is the map of their target markets.

One might wonder whether they are biting off more than they can chew. But what is going for them, is their earlier successful globalization of the cut roses business where they have successfully set up rose production/export hubs in Africa, and plan to do so elsewhere. Their awareness of the global food market does seem astute, even if they are operating on the present low scale.

Floriculture Business graphic, 2011

My take:- While local sales do reduce the expropriation risk(as happened in Zimbabwe where white farmers had to offload their landholdings at fire sale prices), it may widen their operating cycle if payments are delayed. Also,  while the political environment in Ethiopia is stable, the perceived political risk around it(its neighbours) may weigh adversely on the stock.