Al-Dahra Land Deal in Egypt Declared Illegal

An Egyptian court has declared a 100,000 feddan (43,000ha) land acquisition by Abu Dhabi based Al-Dhara illegal.

The transaction happened in 2008 and Al-Dahra anticipated to invest $500 million in the southern Toshka Valley where land has been reclaimed from the desert and is supposed to be irrigated with water from the Nile, which is transported via canals to the project area.

Al-Dhara would lose its acquired land except for a paltry 100 feddans. Something similar happened to Saudi Arabia’s Kingdom Holding in 2011 when it lost most of its land in the Toshka Valley that it had acquired in 1998.

The ruling came after  an anti-corruption case against the former Egyptian Minister of Agriculture Yousef Wali. Wali was also Deputy Prime Minister and General Secretary of the ruling NDP before he was stripped of his official positions in 2004 already under another corruption charge. As a large landowner he used to be a driving force of the Mubarak’s regime drive at economic liberalization.

The Toshka valley project’s diversion of water from the actual Nile bassin is regarded critically by southern riparians like Ethiopia. The Egyptian government hopes to cultivate wheat in the valley as part of its current program for wheat self-sufficiency. However, the  salty soils and the hot climate are hardly suitable for wheat cultivation.

For Gulf countries the examples of Al-Dahra and Kingdom Holding show the risks of legal uncertainties and highlights the importance of fair and transparent deals. Reliance on backdoor deals with corrupt regime representatives can backfire.

The preference of Gulf countries for developed agro-markets like Australia or Argentina will likely be reinforced by these developments.

Gulf Food Inflation and Statistics

The GCC food retail sector is to hit $106 billion over the next five years according to a report by consultancy company AT Kearny.  Three quarters of this market are Saudi Arabia and the UAE alone.

The interesting snippet of information is that they see the food share of total consumer spending of $300 billion at 28 percent.

This would be pretty high. Not as high as in developing countries where this share is mostly between 40 and 60 percent, but higher than in OECD countries where its ranges mostly between 10 and 20 percent.

This was also the range that was mostly given in a survey by YouGov Siraj in 2007 (see on page 34). However, the survey revealed also that about ten percent spent between 30-50 percent and more on food. Additionally it might have had a sample bias as it was conducted over the internet with incentivized participants. As poor migrant workers often do not have internet access or are illiterate they might have been underrepresented due to sample bias.

The really deplorable thing is that we do not really know. Gulf statistics are not reliable and lack detail. The share of food in the general Consumer Price Index (CPI) is 26 percent in Saudi Arabia, 14.3 percent in the UAE, and 18 percent in Qatar and Kuwait.

Saudi Initiatives for more Water Efficiency

Saudi Arabia has seen a number of new initiatives that aim to use  water more efficiently.

Degremont, the water-treatment unit of Suez Environnement (SEV) has won a $52 million contract. It will desalinate brackish groundwater to produce drinking water for 3,000 households in the Riyadh area that have been hitherto supplied by water trucks.

As water tables sink and one has to drill deeper and deeper into aquifers, desalination is not only needed for sea water but also for increasingly brackish groundwater. As far as such water is used for agriculture there is a direct trade-off between water security and the demands of subsidized food production.

In another development, the Precision Agriculture Research Chair (PARC) of King Saud University (KSU) is implementing a  research project funded by King Abdulaziz City for Science and Technology (KACST) under the National Plan for Science and Technology (NPST). The goal is to use water, fertilizer and pesticides more efficiently with the help of drip irrigation and precision farming.

On two pilot farms in Haradh and Al-Kharj water savings for wheat amount to 30 percent and for alfalfa to 20 percent. While this is laudable it has to be kept in mind that even then water consumption of the two crops is prodigious, particularly for alfalfa which can be planted year round and needs about five times more water than wheat.

Water efficiency gains are not an alternative to reduce these crops and focus on more value added crops like vegetables that can be grown in green houses. This is the focus of a third project of PARC on the “Use of saline water for tomato production in hydroponic green houses”.