Bloomberg | 23 April 2009 (update 1)
By Arnold Gay and Luzi Ann Javier
April 23 (Bloomberg) -- Food-importing nations from South Korea to Saudi Arabia may step up purchases or leases of overseas farmland to lock in supplies amid concern prices may again surge.
“We’re going to see more of this, especially from countries that are quite dependent on imports,” Brady Sidwell, head of advisory at Rabobank Groep NV’s Northeast Asia Food & Agribusiness Research and Advisory Group, said in a Bloomberg Television interview broadcast today.
Wheat, corn, rice, palm oil and soybeans rose to records in 2008 -- with rice futures in Chicago touching an all-time high a year ago this week -- amid importers’ and investors’ concern that supplies wouldn’t meet demand. The United Nations urged coordinated global action to solve a food crisis as inflation jumped and hunger increased.
“The food crisis is very much alive and well, it’s just been overshadowed a bit by the financial crisis,” Sidwell said, referring to the worldwide recession, which has fueled contractions in the economies of the U.S. and Japan, hammered global trade, and helped undermine food demand and prices.
Rice futures on the Chicago Board of Trade were at $12.825 per 100 pounds today. That’s about 49 percent less than the record $25.07 set on April 24, 2008. Prices collapsed over the past 12 months as output gained, rice export curbs were dropped in Vietnam and Cambodia and slower economic growth cut demand.
“These days, prices and stocks are back to pre-crisis levels, but many say, ‘If you think it won’t happen again, think again,’” said Jimmy Soh, managing director at Chye Choon Foods Pte, a Singapore-based importer. Last year it “was very tense” with “customers scrambling for supplies,” Soh said.
Saudi Arabia, the biggest Arab economy, will form a 3 billion-riyal ($800 million) company to invest in agricultural projects abroad as the kingdom seeks to increase food supply, the state-run Saudi Press Agency reported on April 15, citing Finance Minister Ibrahim Abdel Aziz al-Assaf.
South Korea, Asia’s second-largest grain importer, said on June 2 that “we need to farm grains overseas,” and last year the president said the country may sign 50-year leases for agricultural land in Russia’s Far East.
The Asian nation will lend money to companies to develop farms overseas, Minister for Food, Agriculture, Forestry and Fisheries Chang Tae Pyong said earlier this month. Hyundai Heavy Industries Co., the South Korean shipbuilder, also said this month it bought a stake in a Russian farm to grow crops.
South Korea has been a leader in seeking overseas farmland as it is 95 percent dependent on imported grains, according to Rabobank’s Sidwell. Still, China, the world’s most-populous nation, will not be investing in farms overseas, preferring self-sufficiency, Sidwell said.
China wouldn’t make overseas farm purchases to guarantee supplies, the Financial Times reported April 20, citing a deputy agriculture minister. The Asian nation plans to increase grain production 10 percent by 2020, the State Council said April 8.
“Food security is the first item on the agenda for political organizations such as Asean,” said Paul Risley, a spokesman for the World Food Program, referring to the 10-state Association of Southeast Asian Nations. When there’s no food security in the poorest nations, that translates into increased malnutrition and social unrest, Risley said in an interview today with Bloomberg Television.
Food importers may increase overseas farm purchases
URL to Article: https://farmlandgrab.org/post/view/2934