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Dec 30, 2009

Arab Countries Outsourcing Foreign Farm Land.

In a previous post it was noted that the Arab world is not food self-sufficient and relied on food imports at a cost of $20 billion during 2008. More than 100 million people in the Arab states do not get enough food to eat. The problem will get even worse in light of continuous population growth, which is expected to reach 650 million during the next 25-30 years. The global weather changes have already created serious environmental problems in the region.

In 2006, the gulf Arab states began to look for farmland beyond the boundaries of their states to buy or lease for the purpose of agricultural cultivation. This is outsourcing farm production that is basically in several African and Asian countries, and that needs the flow of cash. Saudi Arabia, Qatar, the Emirates, Kuwait and recently Egypt have already bought or leased farm lands in Ethiopia, Malawi, Sudan, Turkey and Cambodia. Saudi Arabia has already signed an agreement with Ethiopia to lease farmland at a cost of $100 million for the cultivation of wheat, barley, and rice. This year (2009), Saudia Arabia has received part of the first crop of rice, wheat, and barley. What the gulf oil-producing state did is part of an international land grab policy that includes other countries such as China, India, and South Korea. These countries have targeted Ethiopia, Sudan, Turkey, the Philippines, and Indonesia. The International Food Policy Research Institute in the United States (IFPRI) noted that between 15 million and 20 million hectares of farm land in poor countries have been subject to transactions or talks involving foreigners since 2006. This is equal to one-fifth of the farmland of the European Union. These deals are worth $20 billion-$30 billion. The "IFPRI" reported that between 2006-2009, China has obtained 2.8 million hectares, South Korea has obtained nearly 800,000 hectares, the UAE around 100,000 hectares, Saudi Arabia around 500,000 hectares, Qatar around 475,000 hectares, Libya around 100,000 hectares. Land acquisition by investors targeting Australia, Brazil, Ukraine and Vietnam are in process (The Economist, May 23,2009).

There are a number of factors which are fueling the land grab trends. These are: population growth, the shortage of food, the increase in food prices, the potential use of agricultural products as a biofuel source due to fossil fuel price increase and the decline of progress in discovering new sources.

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