Food Security Jonathan Hanahan
Where: Ethiopia To Feed: Saudi Arabia What: Investment and development In August 2008, Ethiopia’s Prime Minister told the Financial Times that he is eager to give Saudi investors access to ‘hundreds of thousands’ of hectares of farmland for investment and development.
Update KSA: A group of Saudi-based investors will launch later this year a 7-year plan worth $1 bn in Africa to reduce dependency on rice imports and supply the Middle East region. The so-called 7X7 project aims at developing and planting 700,000 hectares of farm land to produce within seven years 7 million tons of rice. ‘We are looking at three to four countries: Mali, Senegal and may be Sudan and Uganda’ (Arab News, August 4, 2009).
Where: Sudan To Feed: UAE What: Wheat, maize, potatoes The UAE Government is investing in 378,000 hectares of farmland in various Sudanese states. According to some sources, Khartoum is providing the land for free.
Where: Pakistan, Sudan, Turkey To Feed: Saudi Arabia What: Rice and wheat In August 2008, The Saudi Fund for Development announced that it will set up a $566 million special investment vehicle for buying land abroad for domestic food production. According to the Asian Times, Pakistan has requested $6 million of oil and financial aid in return for access to its farmlands. Where: Pakistan To Feed: UAE What: Rice, wheat, dairy Abraaj Capital, together with the UAE Government, acquired 800,000 acres of supposedly ‘barren’ farmland in Pakistan over the last year. Reports are also circling that the Emirates Invest ment Group and the Abu Dhabi Group are not far behind in seeking similar deals. Overall investment from Abu Dhabi in Pakistani agriculture is said to be worth $3 billion already. Where: Pakistan To Feed: UAE What: Unspecified The UAE Government is in bilateral talks with Pakistan to purchase $400500 million worth of farmland. The deal would involve 100,000-200,000 acres in large holdings in Pakistan’s Punjab and Sindh provinces. Under the deal, the UAE investors would be able to purchase land directly in Pakistan for agribusiness operations or enter into joint ventures with Pakistani farmers. The talks are focused on large holdings in order to keep transport and logistics costs down, and the attraction of joint ventures is to cut out middlemen. The UAE is also requesting to exempt the lands entirely from Pakistan’s export policies. Where: Pakistan To Feed: Qatar What: Rice One Qatari firm is reportedly eyeing the acquisition of Pakistan govern ment’s Kolurkar farm in Punjab to produce food to export to Qatar. The head of Pakistan Farmers Forum says that if the Qataris get the land, it may dislocate 25,000 villagers.
Where: Indonesia To Feed: Saudi Arabia What: Rice, grain In August 2008, the Binladen Group signed an agreement to invest at least $4.3 billion, on behalf of a consortium of fifteen Saudi investors to develop 500,000 hectares of rice land in Indo nesia. Binladen has been described by some sources as the principal firm ‘tasked’ by the Saudi government to deal with the Kingdom’s long-term food supply problem. With ‘acquisitions’ of land already in the Papua and Sultra provinces, the group has considered reserving some rice for local markets ‘so that the people there don’t cause us problems’. Where: Cambodia To Feed: Qatar What: Rice Qatar sealed a deal to access Khmer farmland for production and export of rice to Doha. In exchange, Cambodia will receive technical assistance as well as an invitation for Hun Sen to visit Qatar in 2009 to make a bit for Cam bodia to ‘corner the gulf rice market. Cambodia is hoping to become the world’s top rice exporter by 2015 despite continuing domestic hunger’. Where: Cambodia To Feed: Kuwait What: Rice In August 2008, Kuwait inked a bilateral deal with the Cambodian Government in which Kuwait will receive access to Khmer rice lands to produce rice for export back to Kuwait, with any surplus going to international markets. Cambo dia will receive agricultural technologies and a $546 million loan to develop irrigation and road infrastructure in Battambang, Cambodia’s rice-growing province.
Where: Philippines To Feed: Bahrain What: Rice and livestock In May 2008, Bahrain’s Trade Minister went to The Philippines to secure access to ‘large plots of land’ to grow basmati rice for Bahrain’s consumption. According to some reports, the project aims not only to serve Bahrain’s food security but also provide employment and raise supplies to local communities. Where: Thailand To Feed: Saudi Arabia What: Rice A delegation of Saudi businessmen visited Suphanburi province to explore the potential of leasing land for their own rice production, and rice export joint ventures with local counterparts to supply the Saudi market. Any surplus would be sold to other Gulf nations. Public debate regarding scrutiny of the project revealed unreleased details that Taiwanese and US investors already had bought land in Thailand to grow crops for export abroad. Where: China To Feed: … What: Poultry In 2008, Goldman Sachs invested $300 million to acquire full control of more than ten poultry farms in Hunan and Fujian provinces. Goldman already controls Henan Shuanghui and holds a 13% stake in China Yuran Food Group (China’s top two meat processors). Where: Everywhere To Feed: UAE What: Rice, Livestock, Dairy Al-Qudra Holdings plans to acquire 400,000 hectares of land in Australia, Croatia, Egypt, Eritrea, India, Morocco, Pakistan, Philippines, Sudan, Syria, Thailand, Ukraine and Vietnam. The land is to be acquired through a mixture of 20-30 year leases, concessions and out right purchases. The CEO of Al-Qudra states reported that 40% of the total investment would go to maize crops although no decision has been made about whether to convert it to Ethanol. This investment plan may expand to port operations, breeding, and manu facturing of irrigation equipment.
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Where: Africa To Feed: GCC What: $1 billion investment Three Gulf Firms announced the creation of AgriCapital, a new Islamic investment fund in August 2008. The $1 billion investment vehicle will engage in land purchases overseas to produce food for the region through a separate investment bank specially created for this purpose.
Volume 23
KSA Update: Saudi Arabia announced in January 2008 that it would cut domestic wheat production by 12.5% a year to conserve the kingdom’s scarce water supplies and rely entirely on imports by 2016. Recent reports show that planted areas are actually falling closer to 40%. ‘Saudi’s wheat planted areas falling quickly.’ (Arabianbuisness.com, February 2, 2010.)
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Where: Africa To Feed: UK (Private Investment) What: Unspecified In October 2008, the Financial Times reported that Lonrho was putting together funds to acquire 20,000 hec tares of farmland in Angola in order to make money from global food trade in a time of high prices. It is part of a wider, ‘aggressive’ strategy to acquire ten times that amount for the same purposes across Africa. The Angola Government is reportedly trying to attract $6 billion worth of new agri cultural investment with corporations from Brazil, Spain, Portugal, Argentina, Canada and the US.
1 Consumer Expenditures (US Dept. of Labor, US Bureau of Labor Statistics, April 2009). 2 The UAE’s population is expected to double by 2030. 3 Most African nations involved in land grab deals have significant food shortages themselves and rank extremely high on the World Hunger index, i.e,. Ethiopia. 4 Qatar received 40,000 hectares to farm in exchange for building a $5.6 billion port on the tourist island of Lang.
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deals. In many cases, the terms are not disclosed, making it difficult to determine their benefit to host countries. In other cases, the terms appear to be vague and unenforceable.’ As food prices stabilized in 2008-2009, deals were increasingly investigated and the UN stepped in to regulate these transactions. 2009 proved to be the year of defending the family farmer threat ened with displacement for consolidated, industrial proportioned farming. While the process is still heavily scrutinized, the potentials for both sides are encouraging depending on who is talking. From the view of a country in need of development, who wouldn’t invite these development leaders to their land? Increased production, thanks to Gulf tech nology and infrastructure, promises to heighten productivity, benefiting not only the importer but also the host country. And on top of being fed, the host country might also score a new port or much needed infrastructural work.3 With food production increased and infrastructure laid, the host countries also have the potential to boost local trade and employment opportunities.4 But the concern is what will remain when the land grabbers leave. With the access to land also comes the rights to its resources. ‘With the land comes the right to with draw the water linked to it, in most countries, essen tially a freebie that increasingly could be the most valuable part of the deal’, says Peter BrabeckLetmethe, Chairman of Nestle. ‘Let me refer to it not as a land grab, but the global water-grab.’
Al Manakh 2
The food crisis of 2007-2008 led to soaring food prices and protectionist reactions from foodproducing countries. Import-reliant nations have reacted anxiously about the future availability of food. The climate has always made farming in the Gulf region difficult, leading to new policies abandoning certain crops, if not agriculture alto gether, to conserve diminishing water reserves•. Gulf countries now import close to 80% of their food, which resulted in increased prices for its residents. The population spends on average 20% of its disposable income on food compared to 12% in the US.1 Whether inevitable or desired, population increases will require Gulf nations to secure food for its growing need.2 Led by the UAE and Saudi Arabia, and competing with other coun tries like China and private investment groups in both the United States and UK, these countries are in search of securing the rights to underutilized farmland in developing nations throughout Africa, Asia, and South America for export of crops to their countries. For import dependent countries, this is an opportunity to control their future needs; for investors, it is a way to broker deals and make a profit. The initial firestorm of deals came so quickly that details were unspecific and not always transparent. Throughout Africa•, leaders were granting foreign governments and investors ownership of large tracts of land for little more than the promise of improved infrastructure. These deals of 2008 came under heavy scrutiny. ‘Most of the land deals documented by this study involved no or minimal land fees’, said a report, written by the Food and Agriculture Organisation (FAO) and the Inter national Fund for Agricultural Development (IFAD), together with the International Institute for Environ ment and Development. ‘Amid the land rush, ques tions persist about the prudence of the property
AAAID
Gulf-Africa: A Political and Resource Alliance
Established in 1976, the Arab Authority for Agri culture Investment and Development (AAAID) began with the objective of contributing to the issue of establishing food security in the Arab region through investment and development of agricultural resources. All Arab nations are eligible to join, and current member countries have empha sized the role of the AAAID toward contributing to progress in agricultural investments in the region. The authority acts as promoters, financiers and implementers of projects and research along with establishing cooperation with international, regional and national organizations. Research and invest ment projects range from introducing zero-tillage farming technologies in Rain-Fed sectors in attempts to increase crop yields on an average of 300% to establishing a program with 100 million in capital to finance small farms enabling them to face the rise of prices in production.
Affiliated Companies
Australia
Source GRAIN, http://www.grain.org/go/landgrab
Maurita 0.09 Syria 0.05 Somolia 0.05 Tunisia 0.1 Oman 0.1 Bahrain 0.1 Jordan 0.05 Lebanon 0.05 Palestine 0.05 Yemen 0.05 Comoros 0.05
Source AAAID website
‘ The limited financial resources of the Arab Authority, and the absence of infrastructure in the agricultural sector in a number of Arab countries, still represent its current and future concerns, and pose challenges facing its role not only in bridging the food gap, as food security cannot be achieved by eliminating the food gap only, or by mass production or abundance of supply, but also by securing sufficient income to the poor to buy food and other necessities, as well as the provision of basic services.’ Ali Bin Saeed Al-Sharhan, President of AAAID.
In an effort to develop a strong economic and political tie between the Gulf and Africa, the Gulf Research Centre (GRC) organized the Gulf-Africa Strategy Forum held during February 23-34, 2009. The forum centered around six separate discussion sessions exploring the past, current, and future potentials of a bond between the two regions. The sessions ranged in topics from ‘Establishing the Road Map’ and ‘Trading partners’ to ‘The need for a Regional Political Voice’ and ‘Social Develop ment Challenges’. The conference received heavy participation from Saudi Arabia with close to 60 representatives from the Saudi Ministry of Trade & Commerce. The UAE also sent representatives from their Ministry of Foreign Trade.
Morocco 0.6
Brazil
Saudi Arabia
Burma Cambodia Croatia Egypt Eritrea Ethiopia
Kuwait
Georgia India
Algeria 1.5
Indonesia Iraq
Egypt 3.0
Kazakhstan
Saudi Arabia 22.5
Qatar 7.5
Laos
UAE
Morocco Pakistan Iraq 15.0
Philippines Senegal Sudan Syria
Qatar
Tajikistan Thailand Turkey Uganda Ukraine
Kuwait 19.5
Uzbekistan Vietnam Yemen
U.A.E 15.0
Bahrain
Volume 23
Confirmed and Potential Land Grab Deals
Al Manakh 2
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Member States and Capital Investments (Million Kwaiti Dinars)
CONFIRMED DEALS POTENTIAL DEALS
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Update India: Emaar MGF, Emaar’s Indian collaboration, was found to have an Indian land bank 68% agricultural. Putting money into agricultural land had been ‘barred’. (dnaindia.com, December 5, 2009).
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Sudan 15.0