New Report Highlights Food Security Challenges for Gulf States

6 July 2011 FDI Team

Background

A report by Alphen Capital into the food industries of the countries of the Gulf Co-operation Council (GCC), was published in late June. It estimates that, due to population growth and increased per capita income, food consumption will reach 51.5 million tonnes by 2015, up from 40 million tonnes currently.

Comment

Food imports into the region were $25 billion in 2010 but are expected to double by 2020. The countries will then be importing around 90 per cent of their food requirements due to domestic water shortages and a lack of arable land. The per capita income is forecast to increase to US$38,100 ($35,490) from US$26,700 ($24,870). The GCC comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

The region is susceptible to food price shocks because of its lack of self-sufficiency. The inflationary pressures pose a challenge to the ruling elite. The opportunities for countries exporting to the region lie in the areas of health food and halal food.

Food consumption in Saudi Arabia is projected to grow at 4.2 per cent per year during 2011-15, while in the United Arab Emirates it will grow at 5.4 per cent. Saudi Arabia is the only country in the region that is not totally dependent on cereal imports. This also will change as Saudi Arabia plans to phase out its wheat production by 2016 in a bid to conserve water.

The GCC countries have also been snapping up land around the globe to provide greater food security.

 

                 A Selection of Acquisitions made by GCC Countries

Country:

Recent Farmland Acquisition Details:

Saudi Arabia:

Established an US$800 million public company to manage its “food security initiative”

Saudi Arabia:

Jannat announced plans to buy between 100,000 to 215,000 hectares of land, including a US$100 million investment in agricultural production in Africa, particularly in Egypt and Sudan

Saudi Arabia:

Planet World Food planned to invest US$3 billion in various partnerships with Turkish farmers

Saudi Arabia:

Pakistan sought US$6 billion in financial and oil aid from Saudi Arabia in return for agricultural land, which could be tilled by Saudis

Saudi Arabia:

Menafea Holdings Ltd plans to invest US$125 million to develop a 5,000-hectare farm and build a fruit-processing plant in Zambia

UAE:

Purchased 400,000 hectares of land in Sudan

UAE:

Equity firm Abraaj Capital acquired 324,000 hectares in Pakistan

UAE:

A private sector investment firm signed a contract to lease around 700,000 hectares of farmland in Morocco

UAE:

A private sector agriculture fund worth US$350 million was launched to acquire farmland in Africa and East European countries such as Romania

Qatar:

Acquired 40,000 hectares of farm land in Kenya

Kuwait:

Planned investment in land projects in Sudan and Cambodia

Source: Alphen Capital

Further Reading:

https://farmlandgrab.org/uploads/attachment/GCC_Food_Industry_Report_June_2011.pdf

 

Gary Kleyn

Manager

FDI Global Food and Water Crises Research Programme

[email protected]

 

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