Middle East still keen to snap up foreign farmland

Reuters | Wednesday April 28, 2010

* Saudi Arabia eyeing investment in Algerian agriculture

* Libya says has acquired land in Mali

* Libya's Ukraine lease deal on hold

* Sudan expects to lease more land to foreign investors

By Hamid Ould Ahmed and Lamine Chikhi

ALGIERS, April 28 (Reuters) - Middle Eastern countries, undeterred by low world wheat prices, plan a fresh wave of deals to lease farmland abroad, Arab agriculture officials said on Wednesday.

Driven by high world cereals prices that peaked in 2008, farmland in developing countries has become a target, especially for Middle Eastern energy producers with large cash reserves but small areas of land suitable for cultivation.

International grain prices have turned onto a downward trend because of a glut of supply -- a change that makes it cheaper to import cereals and is likely reduce returns on investment from leasing farmland.

But officials at a meeting of the Arab Organization for Agricultural Development (AOAD) in the Algerian capital said their countries were still seeking new opportunities.

"Some of our farmers from the private sector have started investing in countries including Egypt and Sudan. We hope to do the same thing in Algeria," Saudi Arabian Agriculture Minister Fahad Abdul-Rahman Balghunaim told Reuters.

Algeria had not been on investors' radar screens, but an agriculture official told Reuters this month the government would for the first time invite bids from foreign investors to lease farmland.

Oil exporter Libya last year joined the farmland-leasing trend when it announced a deal to lease 100,000 hectares of land in ex-Soviet Ukraine.

"Libya wants to invest in the agricultural sector abroad, mainly in Arab countries and eastern Europe," said Ali Ahmed Al-Rahouma, an advisor to Libya's Agriculture Ministry.

"We have started investments in African countries including 100,000 hectares in Mali ... There are other deals with Sudan," he told Reuters.

He said low prices would not be a factor in the long-term. "Regarding cereals we have seen a decline but all indicators show that the prices will go back up," he said.

UKRAINIAN HITCH

He said the lease agreement with Ukraine had been signed but its implementation has not started yet because "things are not appropriate for the moment."

He gave no details about reasons for the delay. The deal was brokered on a visit to Libya by then Ukrainian Prime Minister Yulia Tymoshenko, who has been voted out of office by parliament.

Outside the Middle East, South Korea and China have also invested in foreign farmland in Africa and Asia.

Aid agencies and the United Nations have warned that a "land grab" by rich countries in fragile regions like sub-Saharan Africa could feed resentment and conflict.

Sudan, Africa's biggest country by area, has been a major recipient of farmland investment.

It is keen to attract more, Tahar Sadik Ali, deputy head of Sudan's Agricultural Research Establishment, told Reuters.

"We have signed farmland leasing deals with countries including Kuwait, Saudi Arabia and Jordan to grow mainly wheat and maize," he said.

"We expect similar deals with other countries including Egypt to invest in farmland in the eastern and southern areas."
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