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Why is the region heavily investing in farmland across Asia and Africa?
August 19, 2008 11:31 by kippreport
Recent reports say that Kuwait is currently having discussions about securing food supplies and investing in agriculture in Asia. A delegation including some government agencies and the Kuwait Investment Authority, will visit Cambodia, Laos and Myanmar later this month to look at investments in agriculture and industry.
The Saudi government is already negotiating on behalf of Saudi investors to set up projects in Sudan, Egypt, Ukraine and Turkey for wheat, barley, soy bean, rice and animal fodder.
The UAE, which imports 85 percent of its food, has apparently purchased 70,000 acres of agricultural land in Sudan. Reports suggest that the country plans to buy more than 100,000 acres of farmland in Pakistan, worth $500m, and is also exploring the option of investing in farmlands in Kazakhstan. Kuna, the Kuwait News Agency reports that agriculture has become part of the UAE’s investment policy.
Pakistan has reportedly offered Saudi Arabia a large amount of agricultural land in return for oil. Egypt is also said to have offered both Saudi Arabia and the UAE the opportunity to purchase farmland.
But why is the region pouring money into farmland across the world?
According to Kuna, the GCC states import more than $12bn worth of food every year. Food prices have surged by 75 percent since 2000.
Inflation in the region has been rising unrelentingly; it is currently more than 11 percent in the UAE and Kuwait, around 10 percent in Saudi Arabia, and nearly 15 percent in Qatar.
The recent ban on the export of non-Basmati rice by India, to control the spiraling costs in the country, further led to problems in the UAE. According to reports, UAE imports of Thai rice reached around $19m in the first three months of the year, compared with around $8m in the same period last year. And the price of Thai rice has risen 135 percent.
As the GCC’s currency is pegged to the dollar, the US currency’s decline has also adversely affected the region.
Along with all that, the population in the region has been steadily growing. With developing waterfront properties in Abu Dhabi and Dubai alone promising space for more than 1.6 million people, the region is hoping that these investments will ensure a smooth and continuous supply of food for the region’s population.