The Gulf blog

Answering the food security colonial conundrum? 7, November 2009

In international relations the security discourse is often monopolised by those with a myopic view of security as focusing disproportionately on military matters. Other factors be they economic, social or environmental, whilst perhaps considered important, have a tendency of being relegated firmly to the second tier of concerns ahead of the simple, brutish realities of the military balance. This kind of position is taken by those known as classical realists. However, even the staunchest realist might pause for thought if they were to hear that by some estimates the State of Qatar imports around 95% of its food from abroad. This is an exceedingly high figure and highlights the critical level of dependence that Qatar has on its food importers. This situation is repeated to varying degrees across the Arabian Peninsula.

In recent years, states such as Qatar, Saudi Arabia and the United Arab Emirates have sought to rectify this situation by buying often huge swathes of land in (usually) developing countries. Billions of dollars and millions of hectares of land have changed hands in countries ranging from Indonesia to Ethiopia and from Pakistan to Cambodia and countless others besides.

Yet it is not just arid, rich Gulf countries that are buying up land abroad. Countries with burgeoning populations such as India, Egypt and China as well as Western private investment banks and institutions are also significantly entering the fray.

Unsurprisingly, there has been a vociferous reaction to these practices. The buying of land to produce foodstuffs primarily (and usually exclusively) for exporting from impoverished countries can be seen as anything from unfair to wrong or even immoral and has been widely dubbed as neo-colonialism. The most egregious example of this occurred when in 2008 Daewoo, a conglomerate from South Korea (GDP per capita $27,000), bought roughly half of the arable land in Madagascar (GDP per capita $1000). This decision contributed to a change in leadership in the African island state and the cancellation of the deal in March this year.

Now it appears that one of the former ‘neo-colonialist’ states, Qatar, has heeded this backlash and is looking to pursue its food security in a different manner. The Qatari Investment Authority has established Hassad Foods with an endowment of $100m to invest in or buy up agricultural companies around the world instead of buying the land. Aside from appearing less ‘neo-colonial’, there are other advantages to this type of programme. By buying up established companies the set-up costs will be less than starting from scratch. Also, from Hassad’s point of view, with the world markets still struggling at the moment, there ought to be some bargains around and, given that food will only ever be needed to a greater degree in the longer term, such investments would appear to be sound.

So far, Hassad has entered into a $68.5m joint venture with an Omani poultry firm and has signed an agreement with Russian grain processing firm PAVA to cultivate land in Sudan. After a modest start, there is potential for the Sudanese joint venture to expand to cultivate up to a quarter of a million acres of land.

Yet one must ask if arrangements such as these are really that much better. Like in the ‘neo-colonial’ arrangement the transport infrastructure and/or the port where the goods will be exported from will be renovated by the importing country. This is, of course, a good thing for the host country. Yet, one must not forget that the foodstuffs produced will still be exported. The international market can and will offer a better price than the domestic one and that is the price at which the food will be sold. It seems unlikely, therefore, that the host country will benefit in terms of food production from this arrangement unless there is some kind of stipulation embedded into the contracts stating that a percentage must be sold domestically.

Indeed, it seems likely that in the newer type of deal (a post-neo-colonial deal?) instead of South Korea or Qatar paying Sudan or Cambodia money directly for their land it will instead go to a private company. Also, could it not be argued that when the deal is at a governmental level there is more scope for provisions for less profitable domestic sales to be included than with two companies both looking to their profit margins as the be all and end all?

Overall, aside from thorny questions to do with territorial rights or sovereignty of the land in question, it appears, therefore, as if there is precious little difference between the neo-colonial and the post-neo-colonial deals.