Saudi Arabia is putting $800m into a new public company that will invest in overseas agricultural pro-jects, signalling a large step-up in Riyadh’s efforts to outsource supply for the kingdom’s food needs.
The provision of public money on top of privatesector efforts to secure food supplies follows last year’s food crisis and Riyadh’s decision to phase out production of domestic wheat to conserve water resources.
Abdullah al-Obaid, the deputy agriculture minister, said the new state company would support Saudi private companies investing abroad by forming joint ventures with the aim of reducing the country’s reliance on imports.
“Some say: ‘Why are you doing this when you have been importing for a long time?’ But we would like to secure [food supplies] ourselves, that is it,” he told the Financial Times. The $800m (€601m, £536m) initial capital was a “first stage” and could be increased, Mr Obaid added.
Richard Warburton, head of agribusiness at Bidwells, a UK-based consultancy, said such a fund was “enormous in the current agri-investment arena”. “Getting the operations done effectively will be enormously challenging at this scale,” he said.
The new company will be owned by the state’s Public Investment Fund and called Saudi Company for Agricultural Investment and Animal Production.
The oil-rich kingdom, which imports almost all its food, set out a programme last summer to invest overseas in agriculture after key food exporting countries implemented trade restrictions. Mr Obaid said Riyadh aimed to build up strategic reserves of rice and wheat equal to at least three to six months of consumption.
Saudi Arabia hopes that the private sector will be the main investor in the overseas projects, with the -government facilitating the deals, providing credit, -negotiating bilateral agreements and helping with infrastructure.
Riyadh was working on a “final list” of at least 20 countries that it would recommend to Saudi companies, Mr Obaid said. Officials had been in contact with countries from Africa, Asia and eastern Europe, as well as Australia and, recently, Argentina. The minimum size of a plantation would be about 50,000 hectares, he said.
Riyadh had earlier decided to phase out domestic wheat production by 2016 after realising that its wheat-growing programme – which was set up in the late 1970s – was no longer sustainable given the desert nation’s finite water resources. Saudi Arabia had been producing 2.5m tons of wheat a year but has begun phasing out the crop, and traders expect that this year it will import about 1.5m tonnes of wheat, becoming a significant participant in the world’s cereal market.
Some Saudi companies, which have been growing wheat domestically, have said they are interested in the overseas initiative. However, some observers have questioned the appetite of the private sector to become involved and government money is considered critical to the programme’s success.
The plans have raised concerns about Saudi Arabia and other wealthy Gulf states exporting from poor countries in Africa which suffer from chronic food shortages. Mr Obaid tried to dispel those fears saying that although a “big portion” of the crops would be exported back to Saudi Arabia, the kingdom would leave some of the food it producedfor the local market.
frank
16. Apr, 2009
Thanks Marty for the link. Extremely interesting. Thank you!
Some things I’ve studied about food:
- We need approximately 13 calories of fossil fuels (fertilizer, pesticides, harvest combines, tractors, …) to produce 1 calory of food (in 1930 it was only 3).
- Every 7.67 seconds there is 1 ha of arable farmland disappearing from our planet. (expanding cities, deserts, roads, constructions projects, golf courses, …)
- Every second we need to feed 3 more people.
- We have huge water problems in major farming countries and areas (Texas, California, Australia, New Zealand, China, Venezuela, …) No water = no food.
- We have a huge potassium problem. Most potassium is only available from 3 big mines which all have declining reserves; Potassium is a very important nutrient for all crops. No potassium = no food.
- We have a big shortage of young and dynamic farmers. Most youngsters don’t have a single clue on how to produce food.
- We have the lowest food inventories in more than 50 years. Our present food reserves are close to those during world war II.
- The current deflation wave is bringing every investment in future food production to a halt.
- Governments worldwide are subsidying biofuel production which will make our food problem even worse. They are promoting funny energy (it costs more fossil energy to produce biofuel energy) with funny money (printed confetti currency).
- Global warming puts a huge risk on our future food production capacity worldwide.
- 3.6 billion Asians are jumping to consume western style diets. With the current farmland available that is simply impossible.
- We have more and more diseases like bacteria and fungi that destroy crops. Furthermore, these diseases are becoming more and more agressive. The same thing can be told about herbes. They are adapting way faster than we can destroy them.
Rebecca tells a very interesting story. She focusses mainly on peak oil. We are however also short of water, potassium and farmland. Worldwide foodproduction is at an unprecedented crossroad. Huge price rises are invetable. Only a higher price can create the incentive to look for sustainable growth in food production. Permaculture is unable to feed the present world at it’s present diet because there is not enough farmland to do that. However permaculture holds some very interesting principles that could easily be incorporated in present farming techniques to increase it’s sustainablility. It looks like that is exactly what Rebecca is going to try. We need to pay close attention to how nature regulates itself to thrive and grow so we can adopt the same principles in farming techniques. I’m very intrigued by this story!
PS
1. Is’nt it ironic that we will probably have to return to our great great grandfather’s way of live to survive? Are’nt we all really really stupid when we claim that we made a huge progress the last 100 years?
2. Could’nt we develop a sound money system that regulates itself just like nature does?
koen2
16. Apr, 2009
@Frank: interesting statistics, didn’t know that potassium was in such a short supply, we should realise that it’s not only oil that’s ‘peaking’ (gold reserves f.i. are also dwindling), however, the oceans (bed and sea water) contain massive amounts of minerals and metals
we’ll also discover new reserves of much ‘stuff’ ‘thanks’ to climate change
“Permaculture is unable to feed the present world at it’s present diet because there is not enough farmland to do that.”
that forest garden could, at full capacity, feed 10 persons/acre, which is almost twice as much as traditional farming, but you can’t grow cereal crops that way
so, you’re right: “at it’s present diet”, we’ll have to change our diet (less meat f.i., which will also lower co² output and make us healthier)
I saw a doc. on rtbf, some time ago, about a tribe of hunter/gatherers in Borneo or New Guinea that also lived from the forest that surrounds them.
So, that kind of perma culture isn’t a return to our great great grandfather’s way of life, but a return to his great great great … grandfather’s way of life (as far as food production is concerned), or rather: grandmother (because we won’t become hunters again)
Frederic
17. Apr, 2009
This will indeed be a much bigger shock then the financial shock we are feeling today, it will be a “true” shock for humanity.
I believe many country’s will be able to sustain themselves ,by change in way of farming, new techniques, maybe more food grown by the people themselves in there gardens, etc… but for the regions wich are already faced at drought and poverty it will be the shock wich could turn out to horror.
In case of furtilizers, there is already some change, less on the farmers side but more on the gardeners side.
There are more and more “natural” furtilizers on the market each day wich contain microbes, fungi, …(from example ecostyle) I don’t use other ones, also upcumming is dry manure from cows wich is not realy a furtilizer but it improves the ground structure making it a better enviroment for microbes en plants.
Those fortilizers are offcourse a bit more expensive and the farmers stick to the old products based on pure nitrogen in combination wich lots of pesticides and herbicibes . But we can’t blame them for using those products because they have already a fight to survive financialy, not using pesticides and herbicides would make farming more work intensive wich is also a cost.
However, it could be handled true the gouvernment by taxing the classic furtilizers more and the new more ecologic furtilizers less, this would also be a boost towards the technology in those furtilizers wich may also become some future product , a new growing market.
When reading all this about the article, can we still be against some sort of world wide birthcontrol? meaning stimulate the people to only have one or two children ? We are already overcrowded on this planet and at some point more then half of humanity will suffer extremely.
Personally, a few months ago I (and my partner) have made the decision to stop eating meat for one day a week.
This saves many tons of CO2, saves many resources, is good for your health and we have learned food without meat (or fish) can be very tasty. (please read “one day a week” , I haven’t become a vegetarian and won’t become one).
If everybody would do this, it would mean a lot to the world, many farmlands wich are now growing lands for cattlefood can be used to produce food for human use instead for example.
Using farmland for biofules is indeed stupid, the return is very (extremely low) , one of they only biofuels with a good return is palmoil , those give 4 tons of palmoild an hectare but can’t be grown here. (however there is a belgium company wich is very succesfull on palmoil called sipef) .
About the pottasium, I don’t think this is the problem at this moment, maybe the current mines are depleting but the planet is so rich on this chemical element we will find some other recouces (sea bottom, sea water, recovering it from the land, …) just like oil, if we would use the drilling techniques from 30 years ago we wouldn’t have oil anymore. Now the current mines of pottasium are so easy to explore the investment on those new techniques is on hold , if you would want to counter this and start anticipating on the depleting mine you need the gouvernment wich should support some research, after all, free market principles are always running late because the human beeing is to greedy.
marty
17. Apr, 2009
Although alarming I think “A Farm For the Future” is ultimately a story of hope. We can farm without fossil fuels ! And even better it looks like the garden of Eden.
No need to be negative and pessimistic, science and technology have progressed tremendously and are still doing so at a tremendous pass. What is especially hopeful for me is that this is scalable. It can be done in your back garden or on a national level. Effectivily getting rid of the critical mass problem that other green technologies have.
Another AMAZING and inspiring example of farming for the future:
http://www.ted.com/index.php/talks/willie_smits_restores_a_rainforest.html
Frank
17. Apr, 2009
@Marty
Indeed amazing again. Thanks. Maybe we can farm on low fossil fuel but it won’t be so easy. It will take a reinvention of world food production that will only come when prices go a lot higher. It will also take a lot more people that will have to work in the farm bussiness. Last month I read: “We’re all Keynsians now”. Now I read that most of us will have to become farmer. So can I conclude that we will all become Keynsian farmers?
I’m a farmer allready but I can assure you I will never become a Keynsian. Thanks for the links. They were of great value to me.
blue-coat
17. Apr, 2009
Is’nt it ironic that we will probably have to return to our great great grandfather’s way of live to survive?
What is ironic for me is , that although in Europe …
1. the number of used farmland is historically low ;
2. the number of farmers has never been so low as today;
… that looking at overweight statistics and famines over time, Europeans have never had so much food as they have today.
Frederic
17. Apr, 2009
@blue coat,
I don’t know if the amount of farmlands in Europe is historicly low, many forests have been cut down to transfer them to farmlands.
On worldscale due to desert forming, erosion, water shortage, salinisation due to bad irigation, etc… there is a big loss of furtile grounds. Europe at this moment is one of the better ones.
Why there are less farmers in number, because they have big machines who can do the work of many workers, the return an hactare is bigger then decades ago due to the use of furtilizers , herbicides and pesticides (also the crop itself is diffirent , other breeded species, sometimes even geneticly like in the US) .
This last isue is actualy the problem, in the future those machines may get less powerfull due to expensive energy, furtilizers can get more expensive, also it will become more workintensive to grow crops on a sustainable way.
Theo
17. Apr, 2009
My grandfather in Bulgaria before WWII was a banker whose family came from a village not far from Sofia. The family owned half the village and most of the land around it. The communists took over all industrial properties and farmland. What I remember when very young was that all family members used their gardens to grow fruits and vegetables like in the movie. As young kids, on school holidays in the village, we used to hike in the woods around the village with a cousin who lived there and he would teach us about the plants and the wild fruits from the trees.
Everybody had domestic animals, but cows and goats were taken into the mountains to grass every day by an old man with his dogs.
I remember chasing chickens with my sister and cousins and running away from geese.
There was an oven everybody brought their bread to be baked to and we used to sit around inhaling the smell while waiting to pick up the bread.
People were making cheese, feta, butter, yogurt,… from the milk.
I remember drinking fresh milk in the morning, still warm and fetching the eggs from the chicken for pancakes.
When we moved to Belgium 25 years ago it was the first time I saw lawn gardens… and thought they were such a wast of resources and energy. I also stopped drinking milk… especially after I found out how the cows are being looked after.
I worked and lived in Mauritius for 4 years and used to buy my fruits and veggies from a small grower… after that I can’t eat the rubber mango’s and papayas sold here.
All family land and industrial property has been restituted in 2000. My father died last year and me and my sister inherited his part. I’ve been wondering of what to do with it… this video has given me a few ideas. One of them is also educational.
The past and the future are not mutually exclusive.
So much energy and resources has gone into agri-business under the wrongful assumption that it was going to save us from starvation. Rather it has caused a depletion of natural energy and resources in favor of using fossil as substitute. It has been the cause of most of our food safety crisis in recent years!
Obesity is not the result of calories overconsumption, rather the result of the how and the what of our industrially produced food.
When you travel around the world you see this clearly in the difference between the generations. The US is the worst. The US is also the biggest user of hormones and starch (corn is the biggest crop) in its food-chain today.
I keep hearing/reading the argument that the price of produce is too low for farmers to change… This is the wrong kind of thinking and argument. The truth is that they get subsidies only as long as they are part of the agri-business system.
No one forces farmers to sell their produce to a chain of wholesellers. Grow and sell direct or through coops. I will be a client. And I’m sure I will not be the only one! Farmers have more bargaining power in their own hands than they realise. This is one area where both the past (the way of production) and the future (the way of marketing/distribution/sales) can be used in conjunction.
marty
18. Apr, 2009
@Frank
In the future we should all be farmers at least for a bit; at harvest time or at the end of the day when we get some fresh produce from our own garden. Keynes, Marx or any macro economics from the factory times won’t apply then. They are from an age that we could not monitor a individual tree, crop or even heartbeat and do the number crunching in real time. They are from the assumption age we are entering the fact age.
We have an amazing opportunity to connect and unite like minded people, not necessarily of the same political spectrum but non the less future focused, through the Internet.
Watch this to get beyond your Keynes fixation
:
http://www.ted.com/index.php/talks/jonathan_haidt_on_the_moral_mind.html
@Theo
Wauw ! Great story. How rich and full of potential your live is at this point in time of history. Develop your heritage into a sustainable development like: http://www.sambojalodge.com/
and let the econoshock community know how they could facilitate.
Inflatie zal als verrassing komen
19. Apr, 2009
[...] zet ik zwaar in op voedsel, net zoals Geert Noels. Ook de Saudis nemen posities in op het voedsel-slagveld: de Financial Times schreef dit weekend [...]
Theo
20. Apr, 2009
@Pascal
Every time I go to Bulgaria I’m amazed by the dynamism and the relative lack of standardization in retailing.
The last 8 years have seen the greatest leap forward in all sectors of the economy.
Foreign dept is 15% of GDP… a miracle considering the country was left for broke by the communists
Taxes are very low… this serves both as FDI, real investment, entrepreneurial activity and tax collection incentive
When you look at Hong Kong it’s the same… very low taxes but one of the most dynamic and richest places
Bulgarians are very good (above average) with science and numbers. More than 10 years ago George Soros set up an university which sponsors the best talent in finance. Graduates can be found all over the world.
Higher % of GDP in Bulgaria comes from agriculture (same % or aerial land as Belgium though!) and manufacturing compared to Belgium.
Currently the EBRD is promoting Bulgaria as a world center for software development and calling it the Balkan Tiger.
My mother used to work in Tourism and I remember they had a central reservation system covering the entire country back in the 1980s. My IT friends in Australia don’t believe this.
Apparently today they are working on cutting edge stuff for telco and finance industries among others.
Not all is rosy, but Bulgaria is one of the few countries in Eastern Europe not in need of a bailout and where investment is growing.
Ironic it was the most criticized country before the financial/economic crisis… now the EU is singing its praises. Bulgaria has a long way to go and it has many options in terms of development and economic sectors.
Dutch… I’ve been working on it since coming back to Belgium last year. 15 years of studying/working/living mainly in English has had its toll on my thought process. I read, listen to TV and interact with people outside work a lot, but writing is a bit more tricky still. I speak 6 languages but my business language is still English. It takes me 20% more time just figuring out “c” or “k” spelling in Dutch.
Maar ik werk er aan. Binnenkort zarg ik nog voor een grote verrassing! Econoshock lezen heeft me veel geholpen met de economische termen en uitdrukkingen.
Theo
21. Apr, 2009
The previous minister of finance was only in his 30s and was recruited from London where he was working in the City. Now he is the head of the budgetary commission in parliament. He set up some very sound policies in place, which they are still building up on.
Rakia!? LOL een echte kenner! wie gaat de shopska maken?
OK tot binnen kort op uw blog