Dawn | June 23, 2008
By Ashfak Bokhari
GLOBALISATION has taken yet another twist with some Middle Eastern countries deciding to grow their crops in other countries. The new strategy owes its origin to the current food crisis which has also hit the oil-rich Arab monarchies and emirates..
Since their agriculture is unable to meet their populations’ needs, they import about 80 per cent of the food stuff whose ensured availability, despite their prohibitive cost, is becoming uncertain as many producing nations have placed ban or curbs on the export of staple commodities. Many countries are building strategic stockpiles for bad times or for managing uninterrupted supplies to their domestic consumers.
Pakistan is among the countries being sought for the purpose by Saudi Arabia, UAE, Qatar, Bahrain, Egypt and other states in the region. Other countries are Thailand and Sudan where Arab states are buying unused agricultural land to carry out large-scale production of staple commodities such as wheat, rice, corn, soybeans and barley. Once ready, the harvested produce will be sent back to the owner country for consumption by the local citizens or to form part of strategic crop reserves. In these projects that the state would be acting as both food producer and trader with no intermediaries in most cases.
In a way, the new investment activity is reminiscent of the 19th century colonial plantation ventures in newly-conquered territories whose produce was shipped back to the colonial empires such as England. But in substance, it is not a colonial venture but a glimpse of how corporate ventures would look like in the future. The manpower working on these plantations will be a voluntary force, engaged on wage-labour basis, and not the slave labour. Nor will the question of breach of sovereignty be evoked for doing business on bilaterally agreed terms..
The United Arab Emirates is already buying large tracts of land in Pakistan for the same purpose. Bahrain is in talks with Thailand to set up a plantation project there to grow Jasmine rice as an alternative to Basmati rice, which is very popular in Bahrain. Qatar is interested in Sudan’s fertile soil, much of which is unused or used unproductively.
Egypt, with less capital to invest but traditionally having close ties with Khartoum, has already struck a deal with the Sudanese government to grow two million tons of wheat annually near Wadi Halfa, not far from the Egyptian border. It will spare Egypt of having to buy wheat overseas, for which it spends a large amount of its foreign-exchange earnings every year. Bottom of Form
Saudi Arabia intends to develop large-scale agricultural projects in Turkey and four other countries. Turkish finance minister had already invited Arab countries to grow crops in his country and Saudi Arabia was the first to show its interest. The other four countries are Ukraine, Pakistan, Sudan, and Egypt, according to the Financial Times.
The Saudis will launch projects covering at least 100,000 hectares of land in these countries to grow crops of wheat, corn, rice, soybeans and alfalfa – a feed for livestock – to build strategic food grains stockpile. They will engage its private sector in the ventures for they say it has the technology, enough experience and the money, to successfully launch them. The Saudi government is in fact keen to offer these opportunities to its private sector.
Turkish officials want Arab countries to come to their country, establish their own companies, produce the food stuff they need and then ship the products back to their own countries. Arab capital entering Turkey in the last three years has been to the tune of about $5 billion which is now to increase considerably.
Saudi Arabia is the world’s largest importer of barley and one of the largest importers of rice and is set to become one of the world’s top wheat importers as well when it phases out domestic production of the grain.
One of the Middle East’s largest private equity companies has been quietly buying agricultural land in Pakistan in the past year on behalf of the UAE government to grow crops and set up a large agribusiness network there to increase its food security, according to a report published in Financial Times last month. The report says that the government in Abu Dhabi has been holding talks with Islamabad about a framework for investment in its agricultural sector as it seeks to secure cheaper long-term supplies of staples such as wheat and rice. So far, about 800,000 acres of land has been purchased for the purpose.
The FT quoted a senior Pakistani official saying that the government had agreed in principle to allow the sale of rural farmland to the UAE investors. The government is, in fact, offering legal and tax incentives to foreign investors in agriculture to make Pakistan a granary for the Middle East.
The UAE is also talking to Sudan and Somalia which are offering land to foreign investors in a bid to develop their agricultural sectors, especially livestock and dairy. The Abu Dhabi Fund for Development (ADFD) recently said it would invest in a large farm project in northern Sudan to produce fodder initially before it is expanded to grow wheat, corn and potatoes. The project in Nile State, one of the world’s most fertile areas, will cover nearly 30,000 hectares (74,000 acres), just less than half of Bahrain’s area, and could also involve the UAE private sector as well.
Sudan, dubbed the Arab food basket, has the largest arable land in the Middle East, exceeding 70 million hectares. But only a portion of it has so far been exploited because of lack of financial resources and persistent conflicts. The Gulf emirates have long considered investing in agricultural projects in Sudan, Iraq, Syria and other fertile Arab nations to meet their fast growing food demand because of their rapid population growth, estimated at seven per cent in some members. But they have been discouraged by conflicts in these countries and their inter-Arab disputes.
The steady rise in the Gulf countries’ population, now estimated at 36 million, has coincided with a steady rise in farm prices, poor water sources and relatively small arable land to boost their food import bill.