Financial Times | April 27 2009
By Andrew England
Driving south-east out of Riyadh, the highway soon snakes its way through scruffy desert and offers a glimpse of something of the unexpected in Saudi Arabia.
There you find “fields” where once there was only desert, with huge irrigation pivots that appear longer than a football pitch is wide, spraying water on to crops. Saudi Arabia has neither rivers nor lakes, yet the desert-kingdom boasts a thriving dairy and arable industry. The latter is largely the result of an initiative during the 1970s oil boom for the kingdom to become wheat self-sufficient. After spending tens of billions of dollars, the project succeeded – amazingly, to the point where the kingdom was a wheat exporter in the 1980s.
But last year the government acknowledged that producing 2.5m tons of wheat a year was unsustainable and production is to be phased out by 2016. The decision coincided with a food crisis that triggered a massive spike in prices and caused producing countries to introduce export restrictions.
In Riyadh’s corridors of power, the food crisis raised a worrying question: even with its huge chest of petrodollars, could the import-dependent kingdom secure food for its growing population?
From there, the next significant Saudi agricultural project was born.
This time, though, the kingdom wants to invest abroad rather than pour water into its desert, with a plan for private companies to set up farms overseas and haul the produce – rice, wheat, soya beans and corn – back to Saudi Arabia.
It is a programme that is ambitious and controversial in equal measure. As the plans have emerged, with officials scouring the world for land in countries as distant as Australia and Argentina, many eyebrows have been raised – particularly as much of the focus has centred on Africa.
At the heart of the debate is whether oil-rich Arab states should use their wealth to harvest crops and ship them home from poor African nations that suffer perennial food shortages and struggle to feed their own populations in the best of times. In Ethiopia, for example, several million people depend on food assistance come rain or shine. Yet it is likely to make it on to a list of at least 20 countries Saudi officials are compiling to recommend to their private sector.
And throughout Africa, where desertification and rapid population growth has made fertile soil an ever more precious commodity, land is often at the centre of disputes and abused by corrupt leaders.
At worst, the plans of Saudi Arabia and others are seen as neo-colonial. And leaders would do well to remember that a land deal in Madagascar involving South Korea’s Daewoo contributed to an opposition uprising and the fall of that nation’s president.
The good thing is that Saudi officials I have spoken to seem to be aware of the minefields their schemes could ignite.
The bad thing is that many on the outside aren’t yet convinced. “What we have seen is a bad use of what is otherwise a good idea,” Jacques Diouf, head of the Food and Agriculture Organisation, told the Financial Times.
The point is that many understand Saudi Arabia’s desire to secure food resources. Nor would they dismiss the positives that increased investment could – if properly handled – bring to underdeveloped nations that lack infrastructure and their own wealth to make use of their resources.
But what the international community require is genuine transparency about what is involved and assurance that the Saudis will understand the dynamics and needs of the local communities where they plan to work.
Saudi Arabia, which has garnered much of the attention because of its size, should not be seen in isolation. Other Gulf states – the United Arab Emirates, Qatar and Kuwait – have also made noises about similar schemes. Yet they have been even less open than Saudi Arabia, and secrecy is only likely to fuel doubts.
If these countries are to succeed and avoid potentially explosive pitfalls, transparency and perception will be crucial. Worryingly, these are issues Arab nations have a poor track record of managing. Whether or not governments have learnt the lessons of past mistakes will be crucial in the sustainability of their new ventures.