MENAFN | 23/04/2009
(MENAFN - Arab News) In 2008, food prices were fast-rising in Saudi Arabia, in the GCC as well as the rest of the world. Skyrocketing food inflation partly triggered by shortages, rising transportation costs, the heavy concentration on bio-fuels as well as global speculation in commodities.
For Saudi Arabia, ensuring medium to long-term food security seems to be a top policy priority, in order to avoid similar difficulties. As it stands, according to the Gulf Research Center (GRC) report on food inflation, in absolute numbers Saudi Arabia is the largest Arab food importer in the GCC followed by the United Arab Emirates and Kuwait. In 2008, it is estimated that food imports in the GCC totaled more than SR43 billion.
When it comes to food security, Africa has gained a new degree of strategic importance. Saudi Arabia as well as other GCC countries is not the only ones trying to invest in agriculture in Africa. Entering the race to secure food reserves is China where land has become scarce, water more polluted and population growth is soaring. The necessity to diversify China's food imports is crucial.
Consequently, China has taken a lead in efforts to boost Africa's farm production. At the China-Africa summit in November 2006, it was agreed that Beijing will set up, among many other projects, 10 agricultural centers in different parts of Africa.
In order to ensure that Saudi Arabia's investments are having the maximum positive impact, Kingdom should carefully plan its response to the pressing needs of Africa's fast-growing economies in order to ensure that their activities do not turn into a damaging venture for African nations. Indeed, foreign investments can sometimes prove harmful for the recipient countries as self-interest prevails and the impact on the local population is overlooked. The issue of land ownership in Africa is very sacred and foreign investors need to be aware of the local sensitivities. When investing in Africa one should be careful so as not to antagonize local landownership rights.
Also, we have to be mindful that agriculture investments in other countries has a trick-down in their respective economies by employing local people, using seeds and fertilizers from domestic markets as much as possible.
By doing this, we will gain their support and acceptance. In 2008, the director general of the Food and Agriculture Organization Dr. Jacques Diouf said that the race by food-importing countries to secure farmland overseas to improve their food security risks creating a "neo-colonial" system. Saudi Arabia should always be mindful of such concerns when formulating its policy. A major challenge for any foreign investment program that aims at food exports from Africa and Central Asia and Pakistan is the consideration of local needs of food consumption, as most of the countries in question are, at this stage, net food importers themselves. Investments would need to be on such a scale that they could improve local food security and thereby social and political stability, and produce an exportable surplus on top of it. The magnitude of this challenge and related works on infrastructure and logistics can be imagined. The task will be achievable only in close cooperation with the respective African and Central Asian farmers, governments and communities.
The recently-announced agriculture investment firm owned by the Public Investment Fund, capitalized at SR3 billion, that will invest in foreign projects is on the right direction. It will participate with Saudi investors by granting them financial support for their projects abroad. Hence, the government is not just a political or infrastructure facilitator. Such public-private partnerships are important due to their political and economic weight.