Wikileaks: Kuwaiti food security: Less than meets the eye...

Viewing cable 09KUWAIT1170, KUWAITI FOOD SECURITY: LESS THAN MEETS THE EYE...

 

	VZCZCXRO6385
PP RUEHDE RUEHDH RUEHDIR
DE RUEHKU #1170/01 3491055
ZNR UUUUU ZZH
P 151055Z DEC 09
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC PRIORITY 4313
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY

	UNCLAS SECTION 01 OF 02 KUWAIT 001170 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR NEA/ARP, EEB/TPP/ABT/ATP 
 
E.O. 12958: N/A 
TAGS: EAGR EINV ETRD EAID KU
SUBJECT: KUWAITI FOOD SECURITY: LESS THAN MEETS THE EYE... 
 
 ¶1. (SBU) Key Points 
 
-- Despite high profile press reports, the GoK has not 
invested in buying farm land in developing countries. 
 
-- The Kuwait Fund and the Arab fund have both provided loans 
and grants to support agricultural sectors in developing 
countries. 
 
-- There is some interest in agricultural investments, but 
concerns about host country corruption and the difficulties 
of actually obtaining food in a crisis are strong 
disincentives, making investment in increasing local storage 
capacity here a higher priority for food security. 
 
No Recent GoK Investments in Asian or African Land 
--------------------------------------------- ----- 
 
¶2. (SBU) Kuwaiti officials all contradicted press reports 
(including in the Economist) that the GoK had invested in 
Asian farm land as a way to ensure food security.  Ahmad 
Bastaki, the Executive Director for the office of Kuwait 
Investment Authority's (KIA) Managing Director flatly stated 
that the "only KIA investment" to come out of high-level GoK 
trips on this issue was "the time" of KIA's Managing 
Director.  Salah Al-Kulaib, the Chairman and Managing 
Director of Kuwait's (government owned) Kuwait Flour Mills 
and Bakeries Company and in charge of Kuwait's food security 
program, was equally dismissive saying that the GoK had made 
no such investments.  On the private sector side, Ahmad 
Al-Hamad, the Managing Director of the Kuwait-China 
Investment Company thought there might be some investment 
opportunities, but told Econcouns that his company had 
"pitched it" to KIA, but found no takers. 
 
¶3. (SBU) Al-Kulaib explained his concerns about buying 
developing country arable land as a food security measure. 
The first problem, he noted, was the lack of adequate 
infrastructure in a host country, which would complicate his 
efforts to bring the goods to market.  The second problem was 
one of corruption.  Officials in these countries, he said, 
would all be happy to sell land as long as it was the right 
land and the right person got paid off.  As an additional 
disincentive, the land in East Asia was also not appropriate 
for the type of rice Kuwaitis would eat: Basmati rice. 
Finally, of course, Kuwait would have no way of actually 
obtaining the food in genuine global crisis.  If the host 
country government didn't shut off exports in a food crisis, 
he suggested, it could be overthrown.  "We don't have an army 
to get it," even if we wanted to, he noted wryly.  He had, 
therefore, recommended against buying arable land and instead 
investing in building storage capacity sufficient for 
one-year of scarcity.  This appeared to be the route that 
most of the GCC countries were taking.  For his part, he was 
investing in dramatically expanding Kuwait Flour Mills' silos 
for purely commercial purposes.  The GoK had not yet made a 
decision on his suggested "strategic grain reserve." 
 
¶4. (SBU) Al-Kulaib said that he would be interested in 
investing in arable land, but only in countries that were 
already large agricultural goods exporters with a solid rule 
of law.  He expressed some interest in investing in the 
United States, Australia, and possibly Brazil, and asked 
whether Econcouns could give him any advice on U.S. 
agricultural investments.  With regard to Kuwait's one 
high-profile investment in agriculture, Sudan's Kenyana Sugar 
Company (30.5% KIA owned), he said we haven't gotten our 
money out of that for 30-years, though he acknowledged that 
it had been very profitable over the past year. 
 
Aid Programs for Agriculture 
---------------------------- 
¶5. (U) Kuwait-Based aid agencies provide assistance to food 
security and agricultural programs.  The Arab Fund for 
Economic and Social Development provides loans to support the 
agricultural sector.  According to the Arab Fund, its most 
recent loan of 12 million KD (USD 42 million) was to Yemen 
for agricultural and fisheries development in the Hadramut 
coastal Area.   The Kuwait Fund has also provided 
agricultural loans since its establishment.  According to the 
Kuwait Fund, it has provided over USD 2.3 billion to finance 
around 118 agricultural projects over the past 47 years.  The 
largest percentage of these loans has gone to Arab countries 
followed by Asia.  The Kuwait Fund has also provided loans to 
infrastructure projects that would directly or indirectly 
support agriculture and rural development. 
 
Private sector investments 
-------------------------- 
 
 
KUWAIT 00001170  002 OF 002 
 
 
¶6.  (U)  While the GoK appears to find the food security 
argument insufficiently compelling to justify investments as 
a matter of policy in developing nation arable land, private 
Kuwaitis are large overseas property owners and developers, 
particularly in countries like Lebanon, Syria and Egypt. 
While these are focused more on commercial or residential 
real estate, private Kuwaitis will invest wherever returns 
are expected to be high and could conceivably invest in 
agriculture.  These investments would be motivated out of 
profit rather than food security concerns. 
 
********************************************* ********* 
For more reporting from Embassy Kuwait, visit: 
visit Kuwait's Classified Website at: 
 
http://www.intelink.sgov.gov/wiki/Portal:Kuwa it 
********************************************* ********* 
JONES