Africa seeks equitable trade terms with Gulf countries
Gulf News | February 21, 2012

Africa seeks equitable trade terms with Gulf countries

GCC states' land rush on continent ‘not a food security solution'

By Deena Kamel Yousef, Staff Reporter

Dubai -- African officials have called for greater equity and fairness in trade with the GCC countries that use agricultural land in Africa to feed their populations while famines continue to ravage the continent.

Wealthy Gulf countries with no arable land are buying or leasing farmland in poorer African countries that need capital and have land to spare, but the measure is being used in the face of turmoil in global food markets and increasing food security risks, the officials told Gulf News during Gulfood 2012.

"When there is a famine in Africa but food is being exported out of African countries, something does not add up," said Johnson Weru, director of the economic and external trade division of Kenya's Ministry of Foreign Affairs.

A fair approach to trade between Africa and the Gulf countries, who are historical trade partners, is required for the mutual interests of both, he said.

"We need a negotiated approach so that the interests of both sides are balanced. If this negotiated approach is not balanced, it is likely to encounter resistance and a sense of disequilibrium," Weru added.

Land purchases are not a solution to the food security problem facing arid and food import-dependent Gulf countries, African officials say.

Mutually beneficial trade

"It is not good for the food security of the Gulf to just own agricultural lands. It's like African countries buying oilfields from Abu Dhabi. We cannot just do that. They keep their oil, we keep our food and then we exchange them, in a mutually beneficial way," said Weru.

The International Food Policy Research Institute (IFPRI), a think-tank in Washington DC, estimates that 15 million to 20 million hectares of farmland in poor countries have been subject to transactions or talks involving foreigners since 2006. That is the size of France's agricultural land. In a conservative figure, the IFPRI calculated these deals are worth $20 billion (Dh73.5 billion) to $30 billion.

The Gulf countries traditionally source their food from far-flung countries, but Africa is a geographically closer, historically older trade partner and can export fresh foodstuffs, Weru said, adding: "We shouldn't have to knock on the door hard, we should find it open. We should get priority."

Ironically, Africa is one of the top re-export destinations for packaged foods sold by the Gulf countries, a re-export manager from a UAE packaged food manufacturer said on conditions of anonymity.

African government officials were divided on whether the measures adopted by the Gulf countries to ensure their food security was a development opportunity for African farmers or actually a land grab.

"We cannot have large parts of agricultural land exported to the Middle East and Asia when the [African] people are hungry, without food and without jobs," Weru said.

Other African officials see an opportunity in the trend of rich food importers buying or leasing farmland from poorer countries.

Technology transfers, jobs for local farmers, increased production and foreign investments pouring in from the UAE, Saudi Arabia and Turkey are boosting Ethiopia's agriculture sector, said Tsega Teka, a representative of Ethiopia's Ministry of Trade.

"Nowadays we have unused land because of the lack of capital. We need investors to increase production and create jobs. Now we have more investments in land which is seen to be positive," she said.

Ethiopian opposition parties are creating the perception of a land grab by foreigners to criticise her government, Teka said, which is defending itself by pointing at the benefits of employment and land use.

According to a report by the Economist Intelligence Unit, if the GCC presses ahead with investments in agriculture overseas, it could potentially give a significant boost to agricultural production in poor countries.

"GCC states might also be able to supply these countries with cheap fertilisers at cost prices.

"At the same time, there could be a risk of a political backlash against GCC investors, like any foreign landowners, especially in times of food shortages," the report said.

Philip McCrum, a Middle East analyst and business consultant at Quill Analysis, told Gulf News: "This so-called ‘plantation agriculture' will attract increasing criticism of neo-colonialism from various quarters.

"Ever sensitive to criticism, Gulf states are likely to limit their agricultural investments and will choose them with care."

The UAE has taken a more holistic approach to food security, diversifying its food import sources rather than concentrating investments on land purchases, according to Yacoob Abba Omar, South Africa's ambassador to the UAE.

UAE's smart strategy

"The UAE government's strategy is smarter: Instead of buying land it has focused on the lifecycle of food security… it has looked at 17 or 18 countries selling sugar or tea for example and sourced them from there. It's more market-based," he said.

While hundreds of deals are made to secure food supplies during Gulfood, the other side of the coin must be looked at: the people starving in Africa and how to help them through mutually sustainable trade and investment relationships, African officials said.

"Gulfood is an opportunity for an export-led delegation to increase the potential of African exports. We cannot develop African potential until we increase the export of agricultural goods," Weru said.

South Africa-UAE trade

Two-way Street

An Abu-Dhabi based investor has recently purchased 11,000 hectares of farmland in the northern province of Limpopo in South Africa, a South African government official told Gulf News.

The cattle farm was bought for "agricultural purposes" at the end of last year, said Yacoob Abba Omar, South Africa's ambassador to the UAE. The UAE's agricultural investments in South Africa have been limited but there is "huge potential" for large-scale agribusiness projects, he added. Last year, South Africa's agriculture trade with the UAE reached Dh1.1 million, growing 3.5 per cent compared to 2010.

The UAE is South Africa's largest trade partner in the GCC. Trade between the UAE and South Africa is approximately Dh7.3 billion. The UAE ranked the 20th largest export market for South Africa, said Abba Omar. Oil is South Africa's biggest import from the UAE. In the past eight years, the 230 South African companies in the UAE invested Dh18.3 billion here in polymers, chemicals, hospitals and the hospitality sector, he added.

— D.K.Y.
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