World Grain - June 2009 - 30

FEATURE: FOREIGN CROPLAND DEALS

the countries seeking control over foreign farmland. But many other countries seem to want to get into the game,
ranging from India to Egypt to South
Africa. Even northern European countries are making investments, but mainly for biofuels production and portfolio
investments.
The spike in food prices during 2007

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and 2008 triggered the current trend.
But the anxiety of governments over
food security is not just due to sharply higher commodity prices. Wealthy
food deficit countries were scared even
more by the cutoff or reduction of grain
supply to international markets when
traditional supplier countries like Russia, Ukraine, Kazakhstan, India and

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Argentina imposed heavy export duties
or outright bans on wheat exportation
for a time. In the U.S., the diversion of
maize to ethanol production and reduction in wheat acreage in favor of maize
has also worried feed grain importers
around the world.
Many of the foreign farmland acquisitions are being done by private companies, but it is sometimes government
policy that is driving their activity.
Saudi Arabia, for example, has created
an $800 million fund called the King

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Parton

NEWPORT'
SCIENTIFIC

The Arab Gulf States and the
three East Asian import powerhouses - China, South Korea
and Japan - are most often
the countries seeking control
over foreign farmland.

Abdullah Initiative for Saudi Agricultural Investment Abroad to finance
overseas expansion by the kingdom's
agribusiness companies. Saudi companies have inked agreements to introduce
large- scale mechanized grain production to both Sudan and Ethiopia on tracts
of land provided by the governments of
the host countries.
These projects are to take place while
Saudi Arabia rapidly phases out its 30year effort to grow 100% of its wheat
requirement by tapping the country's
aquifers. The Saudis propose to introduce their modern wheat growing
technology to the host countries where
water is relatively abundant thanks to
new dams. But they still require investment in irrigation systems. In this way,
through a kind of global outsourcing,
Saudi companies can control production of some of the kingdom's 4 million
tonnes of annual wheat consumption.
Most of the other Arab Gulf States are
financing outward agricultural investment in the same manner.

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GLOBAL DEBATE
Understandably, a global debate led

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World Grain - June 2009

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