Gulf seeks farms abroad

http://www.gulfnews.com/business/Economy/10215725.html

 

By Shakir Husain, Staff Reporter
Published: May 23, 2008, 23:53

Dubai: Investors in the Gulf region, which is heavily reliant on imports for its food needs, are seeking new grounds for investments in farmland overseas.
While funds from the region have always shown a preference for urban trophy assets in the West, soaring agricultural commodity prices and food price inflation have turned farmlands attractive.

Dubai-based think-tank Gulf Research Centre, in its Food Inflation Report, which was released this month, noted that the six-member Gulf Cooperation Council’s (GCC) own agriculture production is on the decline, and its exposure to unstable global food supplies will increase in the future. It has called on the GCC to develop links with countries rich in arable land.

 

“Self-sufficiency is not an option for the arid and increasingly populous GCC countries. Therefore, close dialogue with exporter countries and investments in agricultural projects in Africa, Southeast Asia and Eastern Europe could add to the GCC’s food security. Buffer stocks of basic food items could be contemplated as well, in order to reduce exposure to market volatility,” the report noted.

Similar calls have been made recently amid shortages of food staples like rice as top exporters such as India and Vietnam cut down on exports to meet domestic consumption.

The argument is that matching the region’s cash liquidity with fertile lands in developing countries would benefit both investors and the recipients of capital.

In a recent Gulf News interview, Al Fahim Group chairman Saeed Abdul Jalil Al Fahim advocated investments in Sudan’s agricultural sector. “As a result, we will not only end up in getting food at more affordable prices, but this will also contribute to the economic welfare of our country and Sudan as well,” Al Fahim said.

Countries like Pakistan are already promising favourable investment conditions to Gulf investors.

Pakistan’s minister for privatisation and investments told a forum in Dubai recently that his country would offer “100 per cent ownership rights” in dedicated agriculture zones, and investors would be able to export the produce to their countries.

UAE and Gulf-based investors have already pledged $3 billion for Pakistan’s agricultural sector. Saudi Arabia is reportedly considering direct investment in Thailand’s rice fields.

Dubai-based private equity group Abraaj Capital is believed to be working with the UAE government on agriculture projects in Pakistan to secure cheap and long-term supplies of grains.

When contacted by Gulf News, Abraaj officials declined to comment on their investment strategy in the farming sector. Eckart Woertz, chief econ-omist at the Gulf Research Centre, believes more Gulf money would flow into agricultural lands outside the region.

“It is a relatively new trend, but it will increase. In the 1970s, there was a plan to make Sudan the bread basket of the Gulf after the US threatened to cut food supplies following the oil boycott. That plan was abandoned, but it is clear now that Gulf countries will have to think about investing in agriculture in other areas. Their agriculture is in terminal decline due to lack of water while their population is growing rapidly,” he said.

Countries in Africa, Southeast Asia and Eastern Europe are seen as “natural candidates” for receiving such funds.

Just one per cent of land in the UAE is arable, while in Saudi Arabia’s case it is three per cent compared with 24 per cent in Britain, 40 per cent in Poland and 10 per cent in Iran.

It is estimated that the GCC states import 60 per cent of the food they consume. In the UAE, imports are needed to meet 85 per cent of food requirements.

 

Gulf seeks farms abroad

By Shakir Husain, Staff Reporter
Published: May 23, 2008, 23:53

Dubai: Investors in the Gulf region, which is heavily reliant on imports for its food needs, are seeking new grounds for investments in farmland overseas.
While funds from the region have always shown a preference for urban trophy assets in the West, soaring agricultural commodity prices and food price inflation have turned farmlands attractive.

Dubai-based think-tank Gulf Research Centre, in its Food Inflation Report, which was released this month, noted that the six-member Gulf Cooperation Council’s (GCC) own agriculture production is on the decline, and its exposure to unstable global food supplies will increase in the future. It has called on the GCC to develop links with countries rich in arable land.

 

“Self-sufficiency is not an option for the arid and increasingly populous GCC countries. Therefore, close dialogue with exporter countries and investments in agricultural projects in Africa, Southeast Asia and Eastern Europe could add to the GCC’s food security. Buffer stocks of basic food items could be contemplated as well, in order to reduce exposure to market volatility,” the report noted.

Similar calls have been made recently amid shortages of food staples like rice as top exporters such as India and Vietnam cut down on exports to meet domestic consumption.

The argument is that matching the region’s cash liquidity with fertile lands in developing countries would benefit both investors and the recipients of capital.

In a recent Gulf News interview, Al Fahim Group chairman Saeed Abdul Jalil Al Fahim advocated investments in Sudan’s agricultural sector. “As a result, we will not only end up in getting food at more affordable prices, but this will also contribute to the economic welfare of our country and Sudan as well,” Al Fahim said.

Countries like Pakistan are already promising favourable investment conditions to Gulf investors.

Pakistan’s minister for privatisation and investments told a forum in Dubai recently that his country would offer “100 per cent ownership rights” in dedicated agriculture zones, and investors would be able to export the produce to their countries.

UAE and Gulf-based investors have already pledged $3 billion for Pakistan’s agricultural sector. Saudi Arabia is reportedly considering direct investment in Thailand’s rice fields.

Dubai-based private equity group Abraaj Capital is believed to be working with the UAE government on agriculture projects in Pakistan to secure cheap and long-term supplies of grains.

When contacted by Gulf News, Abraaj officials declined to comment on their investment strategy in the farming sector. Eckart Woertz, chief econ-omist at the Gulf Research Centre, believes more Gulf money would flow into agricultural lands outside the region.

“It is a relatively new trend, but it will increase. In the 1970s, there was a plan to make Sudan the bread basket of the Gulf after the US threatened to cut food supplies following the oil boycott. That plan was abandoned, but it is clear now that Gulf countries will have to think about investing in agriculture in other areas. Their agriculture is in terminal decline due to lack of water while their population is growing rapidly,” he said.

Countries in Africa, Southeast Asia and Eastern Europe are seen as “natural candidates” for receiving such funds.

Just one per cent of land in the UAE is arable, while in Saudi Arabia’s case it is three per cent compared with 24 per cent in Britain, 40 per cent in Poland and 10 per cent in Iran.

It is estimated that the GCC states import 60 per cent of the food they consume. In the UAE, imports are needed to meet 85 per cent of food requirements.

 

 

 

 

 

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