GCC seeks food supplies abroad

| 25/07/2008 | Reply

DUBAI – Faced with a scarcity of fertile
land, water shortages and surging world food prices, wealthy Arab
states in the Gulf are seeking to secure their food supplies by
investing in agriculture abroad.

Saudi Arabia and the United Arab Emirates,
the top food importers among Arab countries in the Gulf, are now
looking to Asia and Africa as opportunities for agricultural

UAE President Sheikh Khalifa bin Zayed
al-Nahayan said in Kazakhstan on Monday that his country, which imports
around 85 percent of its food, is interested in the central Asian
nation “to diversify its sources of food supplies.”

Investing in agriculture abroad “is part of
our strategic investment in general,” UAE Economy Minister Sultan bin
Said al-Mansuri said earlier this month.

Rapid growth fuelled by record oil revenues
has triggered a huge influx of expatriates in the Gulf, steadily
boosting populations and stretching the ability to meet demand for
mostly imported foodstuffs.

The total population of the six members of
the Gulf Cooperation Council – Bahrain, Kuwait, Oman, Qatar, Saudi
Arabia and the UAE – rose from around 30 million in 2000 to more than
35 million in 2006, according to GCC statistics.

This figure is expected to reach nearly 39
million by 2010 and 58 million by 2030, according to a Dubai-based Gulf
Reseach Centre (GRC) report.

Although these nations have huge oil
reserves they are among the world’s poorest in natural water resources
and arable land – just two percent of the vast Saudi desert kingdom and
one percent of the UAE.

GCC food imports cost 10 billion dollars in
2007, said the GRC study, although some press reports put the figure
much higher. Saudi Arabia, with a population of about 24 million,
remains the largest food importer.

Amid surging food prices and a fear of
shortages caused by export bans from major crop-producing countries,
GCC states now want food lifelines.

For Saudi Arabia investing in agriculture abroad marks a shift from its own costly crop self-sufficiency scheme.

“In the 1970s and 1980s Saudi Arabia
developed its own agricultural sector for food security,” said Monica
Malik, economist at the Dubai-based EFG-Hermes investment bank.

“However the sector had to be highly
subsidised by the government for it to be economically viable given the
climatic conditions,” she said.

In a kingdom with scarce water reserves a
tonne of barley requires roughly 1,212 cubic metres (42,801 cubic feet)
of practically exhausted ground-water reserves, the GRC said.

Malik said the issue of food security has worsened globally given the sharp rise in food prices and demand.

“A number of GCC countries are looking at
establishing agricultural ventures in nearby countries such as Sudan
for this food security and as a cheaper alternative to domestic
production,” she said.

“Proximity is important, as is a good
relationship with the other country to secure food supplies,” Malik
added. Close ties with partner countries could protect the GCC against
export bans in times of crop shortages in exporting countries, she

One reported UAE project to develop more
than 70,000 acres (28,328 hectares) of arable land in Sudan is in line
with this strategy. Riyadh has also held talks with Khartoum on
agricultural projects, the Financial Times reported last month.

Africa’s largest country has abundant water resources including the Nile River, the world’s longest.

But Sudanese agriculture remains massively
underdeveloped, although it employs 80 percent of the workforce, with
much of the population reliant on subsistence agriculture.

Egypt and Pakistan have also been targeted
by Saudi Arabia and the UAE for food projects. Both Muslim countries
have large expatriate communities in the Gulf that send home huge
amounts of money annually.

“There are some projects we are negotiating
with the UAE related to food security for the UAE,” Egypt’s foreign
trade and industry minister, Rashid Mohammed Rashid, was quoted by the
Emirati daily The National as saying this month.

In Pakistan, the UAE is considering buying
more than 100,000 acres (40,470 hectares) of farmland worth 500 million
dollars, press reports said. Private UAE firms such as the Dubai-based
Abraaj Capital have also reportedly been buying agricultural land in

According to the reports, when Pakistani
Prime Minister Yousuf Raza Gilani visited Saudi Arabia in June he
offered hundreds of thousands of acres of agricultural land to the
Saudis in return for oil.

But agricultural exporters including Egypt
and Pakistan recently imposed export bans on certain crops after riots
triggered by food shortages at home.

Host countries for agricultural investment may therefore be unable to allow exports because they have to feed their own people.

One issue reportedly delaying UAE
investment in Pakistan is the Gulf state appearing to want “blanket
exemption” from Islamabad’s agricultural export policies, according to
a Pakistani official cited by The National.

Category: Middle East & Africa

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