Posted: Mon Jun 30, 2008 9:54 am Post subject: Oil states buying up farm land in Africa
It seems like the Gulf states are becoming aware of the fact that in a post-easy-food&fuel world, land resources are very important.
They have begun buying up land and farms in Africa.
Nice. They act just like me. I must be on the right track. I haven't seen an Arab on my African farm, though. Not yet.
Quote:
Gulf eyes oil-for-food pacts
By Meena Janardhan
DUBAI - Recent attempts by Persian Gulf countries to invest in farmlands abroad to counter soaring inflation and guarantee long-term food security could prove to be a win-win situation in the short term for both the oil-rich region and its investment-hungry neighbors, but continued high oil prices may neutralize the gains in the long-run, say experts.
With Gulf countries importing 60% of their food on average, Saudi Arabia and the United Arab Emirates (UAE) are taking the lead in investing in Asia and Africa to secure supplies of cereals, meat and vegetables.
The move reverses a recent Gulf trend of acquiring plush assets in the West in favor of acquiring agriculture lands in developing countries, who themselves face a crisis amid high oil price-induced inflation and even food shortage.
Calling for transforming the buyer-seller relationship in the energy sector between India and the Gulf countries into a more substantial and enduring relationship, Indian External Affairs Minister Pranab Mukherjee told the Emirates Center for Strategic Studies and Research last month, "I see India's requirement for energy security and that of the Gulf countries for food security as opportunities that can be leveraged to mutual advantage."
Similarly, during Prime Minister Yousaf Gillani's visit to Saudi Arabia in early June, Pakistan sought US$6 billion in financial and oil aid in return for "hundreds of thousands of acres [hectares] of agricultural land, which could be tilled by the Saudis."
Such arrangements are likely to become increasingly common since inflation and food shortage are likely to worsen worldwide in future, said Shoaib Ismail, a halophyte agronomist who studies utilizing plants for food, fuel, feed and fiber.
Worried about inflation fueling social unrest, major food exporters to the Gulf countries resorted to export curbs. For example, India - the world's second-largest rice exporter in 2007 - banned all non-basmati rice shipments in March. Simultaneous moves elsewhere triggered a wave of panic buying, causing benchmark Thai prices to triple.
"The Gulf region is not conducive for sustainable agriculture and has been dependant on imported food, which it has been able to buy at the prevailing international price without difficulty. However, when oil and other natural resources diminish in future, the region cannot maintain the same level of dependence on external food supplies," Ismail told Inter Press Service.
Just 1% of land in the UAE is arable, while in Saudi Arabia it is marginally better at 3%. In comparison, 24% of land in Britain and 40% in Poland is arable.
As a result, Saudi Arabia plans to stop purchases of wheat from local farmers by 2016, abandoning a three-decade programme aimed at self-sufficiency that has depleted the country's scarce water supplies. Reeling under shortages of rice, Saudi Arabia has approached India, which annually exports 500,000 to 600,000 tonnes of rice to the kingdom.
"Given that global political scenarios vary constantly, the Gulf countries could come under pressure in future food negotiations," added Ismail of the International Center for Biosaline Agriculture in Dubai.
Explaining the willingness to invest over the long term, Ismail said the Gulf countries are cooperating with developing countries that have similar cultural, religious and political backgrounds, and with whom they have had longstanding ties. "They could get basic commodities at relatively low prices, thereby reducing their dependency on Western countries; and food-exporting counterparts get investments that could offset hardships related to increasing cost of land, water and fertilizers."
The Gulf countries unsuccessfully attempted to convert Sudan into their breadbasket in the 1970s after the US threatened to cut food supplies following the oil boycott.
This time, however, media reports indicate that the UAE government and private entities like Abraaj Capital have already acquired about 324,000 hectares of farmland in Pakistan. As incentive, Islamabad is offering legal and tax concessions to foreign investors in specialized agriculture and livestock "free zones" and may also introduce legislation to exempt such investors from government-imposed export bans.
The Gulf countries are increasingly receptive to such arrangements because they view this as an opportunity to import food at 20% to 25% less cost, thereby addressing domestic inflationary pressure, which was officially about 12% in the UAE last year and perhaps double unofficially.
Since self-sufficiency is not an option, apart from dialogue with exporter countries and investments in agricultural projects abroad, "buffer stocks of basic food items should be contemplated to reduce exposure to market volatility," the Dubai-based Gulf Research Center's Food Inflation Report recommended in May.
With oil prices likely to remain well over $100 a barrel, the Gulf countries are estimated to reap a cumulative windfall of about $9 trillion by 2020, allowing them to intervene in the market through various measures ranging from price caps to subsidies.
But one of the chief reasons grain prices have increased is due to a rise in production costs, particularly from higher energy expenditure, estimated at about 40%. Thus, "what makes the UAE's export earnings increase is also what causes its imported food to increase apace," Dalton Garis, of The Petroleum Institute in Abu Dhabi, explained in the UAE's Gulf News last week.
Commenting on the viability factor of the new initiative, Ismail explained, "India, Pakistan and Sudan have closer ties with the Gulf compared to [major rice grower and exporter] Thailand. While political stability would be a factor in Sudan and Thailand, India and Pakistan are likely to be attractive destinations because of their relations with the Gulf countries, which pre-dates oil."
Encouraging the new public-private partnerships, Ismail said he preferred a proactive private sector role because "it can bring about significant results" quickly. The government, he said, should "serve as facilitator and oversee policies and regulations."
But questions remain about how such direct arrangements would work or how domestic shortages, inflationary pressures and politics in the food exporting countries would pan out in the long run.
Anticipating a second wave of trouble as the Gulf region's population booms in the years ahead, Ismail stressed that "with all limitations to make agriculture sustainable in this region, efforts should also be made to produce vegetables [in greenhouses], fruits and other crops. There should be clear prioritization for primary agricultural products [grains and pulses] and secondary products [fruits and fodder]. It is possible to make the latter sustainable with relatively marginal land and water resources."
Posted: Mon Jun 30, 2008 9:58 am Post subject: Re: Oil states buying up farm land in Africa
Loads slow? Are you surfing the same PO.com I am....
But really, posting the entire article should be fine as long as you cite the source.
So your buying land in Africa? _________________ "Battle not with monsters, lest ye become a monster, and if you gaze into the
Abyss, the Abyss gazes also into you."
Ammo at a gunfight is like bubblegum in grade school: If you havent brought enough for everyone, you're in trouble
Posted: Mon Jun 30, 2008 10:10 am Post subject: Re: Oil states buying up farm land in Africa
Specop_007 wrote:
So your buying land in Africa?
Well, not really buying. I lease it, together with local partners. We grow food and biofuels.
We also teach local farmers how to triple / quadruple their yields with minimal effort. It's rather easy, because they start from extremely low yields. _________________ The Beginning is Near!
Joined: Sep 16, 2004 Posts: 4455 Location: Southwest WI
Posted: Mon Jun 30, 2008 10:36 am Post subject: Re: Oil states buying up farm land in Africa
Have fun.
Nigeria has some excellent farmland. I know Rwanda is an excellent place to farm, alongside the Tutsi's.
Kenya might be OK, along with a few other countries, but i'd be very cautious...you might wake up with your arms hacked off. _________________ "Oil is going up because we use too much oil, and the capacity to replace reserves is dwindling"
-President Bush 11/07/07
Posted: Mon Jun 30, 2008 10:51 am Post subject: Re: Oil states buying up farm land in Africa
lorenzo wrote:
Specop_007 wrote:
So your buying land in Africa?
Well, not really buying. I lease it, together with local partners. We grow food and biofuels.
We also teach local farmers how to triple / quadruple their yields with minimal effort. It's rather easy, because they start from extremely low yields.
What?? Where are you from?? _________________ "Battle not with monsters, lest ye become a monster, and if you gaze into the
Abyss, the Abyss gazes also into you."
Ammo at a gunfight is like bubblegum in grade school: If you havent brought enough for everyone, you're in trouble
Posted: Mon Jun 30, 2008 11:48 am Post subject: Re: Oil states buying up farm land in Africa
frankthetank wrote:
you might wake up with your arms hacked off.
Not everybody is indoctrinated by Western media and their nonsense about Africa.
It's a very large place, and most of it is very peaceful, stable and screaming for entrepreneurs and investors.
I happen to work in one of the more difficult places, the Democratic Republic of Congo. If you read the Western media, you would never go there, because there's even a war going on in that country.
Of course, nobody ever tells you that the country is the size of Western Europe, and that 99% of its regions and people are very friendly, peaceful and willing to cooperate.
It's not an easy job, but there is so much opportunity, and the rewards are so big (not only personal rewards, but social ones as well), that it's really worth it.
So yes, there is the occasional story of a white development worker getting kidnapped and killed in Congo. But it's very exceptional. The country is really stable now in most of its parts.
You have a far bigger chance of getting killed in an average U.S. city, than in any place in Congo. _________________ The Beginning is Near!
Posted: Mon Jun 30, 2008 12:10 pm Post subject: Re: Oil states buying up farm land in Africa
It's funny how our government makes them look stupid and careless and whatever else, but the countries in the middle east are making smarter moves than our government.
1. They are starting to restrict how much they sell the to global economy.
2. They are buying up fertile land
3. They never needed much oil for their daily lives to begin with.
Very strange... _________________ Tired of high gas prices? Then stop driving to work, duh..... Learn to Work from home
Joined: May 19, 2005 Posts: 797 Location: Merry Ol' USA
Posted: Mon Jun 30, 2008 1:06 pm Post subject: Re: Oil states buying up farm land in Africa
I think what's scary about this article (at least from an American point of view) is the end result, which isn't really stated: continued flowing of our resources from the United States, and to a large extent, Europe, out of those areas and back into other countries. In other words, the countries that have what we need (SA et al) are not turning those dollars back into our economy through the purchase of grains, buildings, airplanes, etc long term but beginning to set up their own feifdoms where they can purchase all the food they need, those people will get some money back to buy the oil, money that ultimately came from us.
They're sidestepping us. We'll still need their oil, because of our lifestyle & economy, so they'll be flush with our money, but they'll be trading it back to someone else, creating a one-way pipeline of funds out of America. Which can only serve to make us poorer long-term. And if things work out for them, as they're on their downslope and oil is running less full-throttle, as we need less of it through demand destruction they'll have less to sell anyway. Of course, we'll probably just bomb the living crap out of them to get what's left. _________________ After fueling up their cars, Twyman says they bowed their heads and asked God for cheaper gas.There was no immediate answer, but he says other motorists joined in and the service station owner didn't run them off.
Posted: Mon Jun 30, 2008 1:32 pm Post subject: Re: Oil states buying up farm land in Africa
burtonridr wrote:
It's funny how our government makes them look stupid and careless and whatever else, but the countries in the middle east are making smarter moves than our government.
1. They are starting to restrict how much they sell the to global economy.
2. They are buying up fertile land
3. They never needed much oil for their daily lives to begin with.
Very strange...
Indeed: they are playing the game brilliantly:
1. they invest their oil money in renewables while keeping the West addicted to oil (see Qatar and Dubai's recent mega solar projects; and their announcement that they are going to build entire cities that don't use a drop of oil or gas)
2. meanwhile, they buy up quality land to grow and control the flow of biomass - which will be the single biggest and most important resource of the future
Our governments are making the opposite moves: keep being involved in consuming oil, and moving out of Africa. Not smart. _________________ The Beginning is Near!
Joined: Apr 27, 2007 Posts: 4353 Location: The Great Sonoran Desert
Posted: Mon Jun 30, 2008 1:49 pm Post subject: Re: Oil states buying up farm land in Africa
So does anyone still think that Gates and the Rockefellers spending quite a bit of time in Africa in the past 3-5 years is a mystery?
Africa - vast natural resources and a disorganized population.
Gee - any other examples of this come to mind?
Like - Native Americans in oh - 1700-1880's...in North America
Naw...its all tin foil. _________________ "There must be a bogeyman; there always is, and it cannot be something as esoteric as "resource depletion." You can't go to war with that." Emersonbiggins
"... hope is a rotten-thighed whore" Niko Kazantzakis
Posted: Mon Jun 30, 2008 5:48 pm Post subject: Re: Oil states buying up farm land in Africa
Buying land in Africa does not mean you will always own that land. Outside of South Africa and Botswana in the south and some of the Arab states in the north, the rule of law can be somewhat tenuous. It will be different country to country though. You are more likely to be allowed to farm in peace (as a multinational) in say Zambia than say Mali.
Joined: Jul 17, 2004 Posts: 490 Location: Amerika (most of the time)
Posted: Mon Jun 30, 2008 6:09 pm Post subject: Re: Oil states buying up farm land in Africa
dorlomin wrote:
Buying land in Africa does not mean you will always own that land. Outside of South Africa and Botswana in the south and some of the Arab states in the north, the rule of law can be somewhat tenuous. It will be different country to country though. You are more likely to be allowed to farm in peace (as a multinational) in say Zambia than say Mali.
Why are you using Mali as an example? Mali is a stable country with a flourishing democracy and respect for rule of law. I lived there for two years and miss the country very much.
You are right though that rules change from country to country in Africa (but by and large) the majority of Africa is pretty stable and ripe for investment. _________________ Simon's Law: Everything put together falls apart sooner or later.
I don't think of all the misery, but of all the beauty that still remains.--Anne Frank
Joined: May 19, 2005 Posts: 797 Location: Merry Ol' USA
Posted: Mon Jun 30, 2008 10:07 pm Post subject: Re: Oil states buying up farm land in Africa
big_rc wrote:
dorlomin wrote:
Buying land in Africa does not mean you will always own that land. Outside of South Africa and Botswana in the south and some of the Arab states in the north, the rule of law can be somewhat tenuous. It will be different country to country though. You are more likely to be allowed to farm in peace (as a multinational) in say Zambia than say Mali.
Why are you using Mali as an example? Mali is a stable country with a flourishing democracy and respect for rule of law. I lived there for two years and miss the country very much.
You are right though that rules change from country to country in Africa (but by and large) the majority of Africa is pretty stable and ripe for investment.
One thing I think would hold true for almost any part of Africa is that Middle Easterners, Indians & Chinese by and large don't come with the baggage that Westerners come with, and would thus have a more likely positive outcome buying up land to farm than if Western powers tried this. _________________ After fueling up their cars, Twyman says they bowed their heads and asked God for cheaper gas.There was no immediate answer, but he says other motorists joined in and the service station owner didn't run them off.
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Then stop driving to work, duh..... 
