Tuesday, 18 November 2008

New on Gulf's shopping list: Foreigners' farmland (IHT)

New on Gulf's shopping list: Foreigners' farmland
The Associated Press
Monday, November 17, 2008
NAHEL, United Arab Emirates: In the dunes around this sun-scorched desert village, where camels still plod along dusty roads an hour south of Dubai's skyscrapers, farmers are making the wasteland bloom.
Row upon row of bell peppers grow plump in a temperature-controlled greenhouse. Lilies and roses bud nearby, and strawberries are on their way, all thanks to sophisticated water-saving irrigation.
Yet even high-tech establishments like the Mirak Agricultural Services farms here and elsewhere in this riverless country will never feed the region's rapidly growing population. It is that realization that is persuading wealthy Gulf Arabs to look far beyond their shores for more fertile acreage - tens of thousands of hectares, in some cases.
There are simply too many mouths to feed and not enough water. Lush urban landscaping and ambitious agricultural projects here and in Saudi Arabia, which once spent so much on farm subsidies that it exported surplus wheat, are quickly draining aquifers, including some that are millennia old and cannot be refilled.
That stark reality, and rising food prices, is sending the region's leaders scrambling to lock up even more long-term food supplies abroad. And where once the region was content to spend its petrodollars on food sold on the open market, Gulf nations now are quietly scouring the globe for rich farmland to rent or buy outright.
The prime ministers of Qatar and Kuwait traveled separately to Cambodia this year to discuss securing paddy land for rice-growing. Sheik Khalifa bin Zayed Al Nahyan, president of the United Arab Emirates, visited Kazakhstan in central Asia, where agricultural investments were on the agenda.
Dubai World, a sprawling conglomerate controlled by that emirate's government, last month said it was creating a new subsidiary targeting global investments in a wide range of commodities, including food.
Plans are also accelerating in the private sector.
The Saudi Binladin Group, for example, is considering investing more than $4 billion to grow food in Indonesia, said Salim Segaf al-Jufri, the Indonesian ambassador to Saudi Arabia. Under the proposed project, the company would produce basmati rice in Sulawesi, Papua and western Java.
Most such talks are continuing in private. Of those companies that could be reached for comment, none made officials available to discuss their investments in detail. That may be because many of the deals are being hatched in volatile countries, such as Pakistan and Sudan, that have serious domestic food concerns of their own. The idea of shipping off homegrown crops to feed rich foreigners could stir dissent.
"These are countries that come with a lot of political baggage," said Eckart Woertz, program manager for economics at the Gulf Research Center, which estimates the Gulf's conventional water resources will be gone within three decades. "People riot when they don't get food."
Experts say the agriculture investments could be a win-win situation. The Gulf gains food security, while poorer developing countries benefit from added jobs and improved technology.
But there are concerns, too.
The head of the UN Food and Agriculture Organization, Jacques Diouf, has warned that foreign land acquisition and long-term leasing schemes, if done poorly, risk "creating a neocolonial pact" and "unacceptable work conditions for agricultural workers."
Even so, some countries are seeking out investment.
Pakistan, already a key source of labor for the Gulf, has been among the most active. This spring, Islamabad helped organize a show in Dubai aimed at increasing investment in the country's agricultural and dairy industries.
Huma Fakhar, managing partner at MAP Services Group, a market research and trade consultant which sponsored the event, said Pakistan was a logical choice for Gulf investment.
Fakhar said an investor from Abu Dhabi, whom she declined to name, last year bought about 16,000 hectares, or 40,000 acres, of farmland in the Pakistani province of Baluchistan. Two UAE firms, Emirates Investments Group and Abraaj Capital, have also expressed interest in investing directly in Pakistani agriculture, she said.


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