With food prices rising across the globe, adventurous foreign investors can find excellent business opportunities in Ukrainian agricultural sector despite (or perhaps due to?) the global economic crisis.
While other property markets crumbled last year, global farmland values initially kept rising. But recently that resilience has been tested. Andrew Shirley investigates whether agriculture is still a good investment.
“We have a land fund in South America, we have in Ukraine. Now we are developing one in Africa. We need to acquire land for farming,” says Guy de Montule, Louis Dreyfus’ chief executive officer for Middle East and Africa
Saudi Arabia and the UAE are worldwide leaders in buying farmland in third-party countries, followed by China and Japan, says the World Bank.
Saudi Arabia, one of the world's biggest rice importers, has received the first batch of rice to be produced abroad by local investors, state news agency SPA reported on Monday.
King Abdullah received today Saudi Arabia's Minister of Commerce and Industry accompanied by two Saudi businessmen Mohammad Hussein Al-Amoudi and Abdullah Hassan Al-Masri on the occasion of the arrival of the earliest produce of their rice to the Kingdom.
"We are seeing a land grab bigger than anywhere else in the world, and it has attracted a mighty cast of characters," says Kingsmill Bond, chief strategist at Troika Dialog, a Moscow brokerage firm.
Just how much security the new land investments may provide countries and corporations remains uncertain, experts say. Future governments in countries now renting or selling land may well fail to abide by deals their predecessors cut, particularly if they face food or land shortages at home.
The initial welcome given to rich countries’ investment in African farmland by agricultural and development officials has faded as the first ventures prove to be heavily weighted in favour of the investors. The FAO warned of such a trend when it said this year that the race to secure farmland overseas risked creating a “neo-colonial” system.
South Korea's Daewoo Logistics will plant corn in Madagascar, a company official said on Tuesday, with a long-term aim to replace more than half the corn it currently imports from mostly the United States.
Due to the lack of arable land in its home market, Savola must look abroad for agricultural land and has named Sudan, Egypt, Ethiopia and Ukraine as target countries where it plans to buy the land necessary to grow seeds such as sunflower and corn seeds.
Arabia is phasing out its domestic wheat growers and seeking to shift production overseas.
