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September 06, 2008

Saudis go overseas shopping for farmlands

FT has an interesting article on how, alarmed by restrictions placed by food exporters (such as India’s curbs on exports of rice), oil-and hence, cash-rich countries like Saudi Arabia are shopping for agricultural land across Asia and Africa to secure their food supplies. And analyzes the impact this is likely to have.

Their plan is to set up large-scale projects overseas that will later involve the private sector in growing crops such as corn, wheat and rice. Once a country has been selected, each project could be in excess of 100,000 hectares – about 10 times the size of Manhattan island – and the majority of the crop would be exported back, officials say.

While Saudi Arabia’s plans are among the grandest, they reflect growing interest in such projects among capital-rich countries that import most of their food. The United Arab Emirates is looking into Kazakhstan and Sudan, Libya is hoping to lease farms in Ukraine and South Korea has hinted at plans in Mongolia. Even China – with plenty of cultivable land but not a lot of water – is exploring investments in south-east Asia. Sudan – one country targeted by almost all Gulf investors – the World Food Programme, the UN agency that deals with food emergencies, is feeding 5.6m people. If the investment plans go ahead, Sudan, perversely, could be exporting to rich nations while its own population suffers.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.