Bitter harvest

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Gulf nations are gobbling up vast tracts of foreign farmland from developing nations that can ill afford to sell them. Is this much-needed investment, or a thinly-disguised land-grab?

Flanking the banks of Kenya’s largest river, the Tana River delta is a vast patchwork of wetlands, savannahs and mangrove swamps, dotted by grasslands and beaches. Home to hippos, lions and prolific bird life, the fertile soil has for centuries provided fishing and farming grounds for the local Pokomo, Orma and Wardey people. Now, Qatar is turning it into a farm.

In Africa, it is called the new colonialism, or the great land grab. Countries frantic to secure their food supplies are aggressively snapping up huge swathes of farmland in fertile regions such as Africa, Pakistan, Brazil and Thailand. Leading the land dash is Saudi Arabia, the UAE, Qatar, Bahrain, Kuwait and Libya — countries which, between them, control more than 45 percent of the world’s oil. All are wealthy states that are unable to grow their own food, so are choosing to swap oil for soil with countries that need capital, but have farmland to spare.

In exchange for 40,000 hectares of agricultural land, almost half of which lies in the Tana River delta, Qatar handed over a $2.5bn loan last December to Kenya to build a second deep-water port. In March this year Saudi Arabian investors paid $100m for an Ethiopian farm, in addition to the 500,000 hectares of land in Tanzania and the 11,000 hectares of Sudanese soil already on the state portfolio. Last week it was revealed the Kingdom is in talks with Pakistan to lease an area twice the size of Hong Kong.

Sudan already plays host to 400,000 hectares of UAE-leased wheat fields, while the privately-held Emirates Investment Group (EIG) has staked out a number of tracts in Pakistan. Egypt is next on the company’s wish list.

This is just a handful of the tens of deals cut by Gulf states over the last two years. Ask the International Food Policy Research Institute (IFPRI), a Washington-based think-tank, and it will tell you that up to 20 million hectares of cultivable farmland has been signed over or offered for foreign investment since 2006, at a value of up to $30bn. To put it in context, that’s twenty times the size of Qatar and a fifth of all the agricultural land in the European Union.

So who’s selling? Globally, Brazil has dispensed the most land, but Africa has become a particular hotspot of late, says David Hallam, deputy director of trade and markets at the Food and Agricultural Organisation (FAO), part of the UN.

Sudan and Ethiopia seem particularly keen to deal, while Egypt said this year it planned to sell 1.3 million acres of farmland by 2020.

Further east, Thailand and Pakistan are also open for business. In April the federal minister of investment of Pakistan, Waqar Ahmed Khan, said the country was poised to offload 404,700 hectares this year, largely to Gulf investors.

Land in these countries remains “incredibly cheap” Hallam notes. “In places like Ethiopia the leasing can be $3 per year per hectare”.

By contrast, IFPRI figures show farmland prices jumped by 16 percent in Brazil and by 31 percent in East Europe in 2007 alone.

Land deals are nothing new. But, says Hallam, the buying pattern behind the latest trend is. Traditionally, foreign farmland deals were between private investors and private owners. Now, sales are commonly between government and government, or state-backed buyers.

“What’s different this time is that these [deals] are part of government-led policies. This is very much investing to produce food to ship home, rather than as a general investment policy,” he says.

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READERS' COMMENTS

Water Grab
Posted by SR, Dubai, UAE on Wednesday 9 September 2009 at 13:55 UAE time


Its not so much about land as it is about water. Thes ecountries are selling away their water supplies which are getting scarcer by the day. What right has any govement have to sell publically owned land to a foreign goverment?

The next goverment wont have to honour those deals, and I hoep they wont. If they want food, give them food in exchange for investment in local farming activities.

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