Libya eyes new investment in foreign farmland

Reuters | 9 February 2011


Libya expects wheat imports to dip slightly on the back of an expected 50% rise in its wheat harvest this year, and is eyeing new investments in foreign farmland to ensure supplies, a government official said.

Speaking in an interview with Reuters, the energy exporter’s top cereals official also said larger irrigated wheat-planted areas and heavy state subsidies should at least double the country’s domestic wheat harvest by 2015.

The state-owned Libyan Foreign Investment Company (Lafico) has set up a company dedicated to investment in agricultural projects abroad, said Ali Arhouma who heads Libya’s Grain Production Authority. The purpose of the company is to ensure food security, he said.

“There are attempts to plant wheat in Ukraine, Turkey, Argentina and Brazil,” Arhouma said.

Libya, a country of about 6.8mn people, expects its wheat harvest to rise to 300,000 tonnes this year from 200,000 tonnes a year earlier, which would put its expected imports of the commodity at 1.3mn tonnes.

“We expect the overall (wheat) production for the upcoming 2010-2011 campaign to reach 300,000 based on the planted areas indicator,” Arhouma said.

Libya’s wheat needs reach 1.6mn tonnes annually of which 300,000 tonnes is produced locally and the remainder is imported, he added.

Like most Arab countries, Libya heavily subsidies staples and last month abolished taxes and custom duties on food products in response to a global surge in food prices and amid unrest in poorer neighbour Tunisia.

Rising food prices have been among the grievances of protesters who have taken to the streets in North Africa and the Middle East since the start of the year.

The Libyan government does not involve itself in direct imports of wheat but buys wheat flour from millers at market prices and sells it to bakeries at a subsidised price.

“Wheat is highly subsidised in Libya. The state buys flour from millers at around 400-500 dinars ($324.4-$405.5) per tonne and sells it to bakeries at 120 dinars,” he said.

The state also covers 50% of fertilizer and seed costs for farmers.

“Highlights of the development plan for the cereals sector point to a significant increase in the cereals harvest over 2011-2015. We expect our wheat harvest to reach 600,000 tonnes in 2015,” he said.

This would be achieved through state subsidies to farmers and a massive canal—called the Great Man-Made River—which will channel water from aquifers in the desert and add 90,000 hectares to the country’s wheat-planted areas.

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