MENA Food Trade Relations and Tropical Countries

The academic journal Food Security has just published a special section about MENA Food Trade Relations with Tropical Countries. It contains papers from a conference in Barcelona that was organized in January 2015 by CIDOB and the OCP Policy Center.

The introduction with a short description of all papers is open access and can be accessed here.

“The Middle East and North Africa (MENA) region is not only the largest oil exporter of the world, it is also its largest food importer. This import dependence will grow, given limited water and land resources on the supply side and population growth and more diversified diets on the demand side. In contrast to earlier food regimes, an increasing share of the MENA’s staple food imports such as corn, soybeans, palm oil, poultry, rice and sugar comes from tropical countries such as Brazil and Indonesia, where dramatic agricultural expansion has taken place. Other tropical regions such as Sub-Saharan Africa have looked to emulate such agricultural experiences, which are often based on large-scale and input intensive farming models. While such expansion processes have increased trade options of major importers such as the MENA, China and Japan, they have also had questionable ecological and socio-economic implications in the respective tropical countries.

Against this backdrop Eckart Woertz and Martin Keulertz set the scene in the opening article by analyzing food trade patterns of the MENA and the relative importance that tropical countries play in MENA food supplies. Their trade contribution has changed over different food regimes and now encompasses staple foods such as corn, rice and soybeans beside classical tropical export commodities. Woertz and Keulertz also discuss agricultural investment flows from the MENA to the tropics, associated political and socio-economic issues, a pronounced implementation gap of such investments and how they relate to MENA food security strategies. One of their conclusions is that food trading houses, storage strategies and brownfield investments in developed agro markets are more important as a trend than the widely publicized intention to acquire land in greenfield projects in developing countries.”

Special Issue on Land Acquisitions in SE Asia

The journal International Development Policy which is edited at the Graduate Institute in Geneva and is open access has just published a special issue on land acquisitions.

Beside theoretical articles it has a special focus on South-East Asia and the cultivation of industrial crops like rubber.

Martin Keulertz and I have contributed an article about States as Actors in International Argo-Investments where we compare the Gulf States with China and governments in agro exporter nations such as Brazil, Russia and Thailand.

New Book about Chinese Agro-Investments in Africa

Deborah Brautigam of SAIS at Johns Hopkins University has published a new book about Chinese Agro-Investments in Africa that is already available as e-book (as hardcover in November).

Like Oil for Food she points to misleading media perceptions and states a widespread implementation gap of Chinese agro-investments. She challenges four conventional wisdoms in particular:

a) Chinese land acquisitions in Africa have been limited.

b) Private actors have played a major role in Chinese agro-investments, the role of the state is less pronounced than commonly assumed.

c) There have been no grain exports from Africa to China. Chinese investments mainly target local markets. As far as food trade occurs it is rather the other way around, i.e. China exports food to Africa.

d) There has not been a large scale influx of Chinese peasant framers to Africa.

Chinese Agro-Investments in Africa

Last month I was at a conference about Chinese agro investments in Africa at SAIS/ Johns Hopkins University in Washington.

Deborah Brautigam differentiated five types of such investments: 1) media myths and false reports; 2) former aid projects that have now been privatized; 3) construction contracts; 4) government projects that were launched more than a decade ago; and 5) real, current projects.

There are only a few current projects in the category 5) and they target food production for the domestic African market, not for export to China, which would not make commercial sense for logistical reasons.

Like in the case of the Gulf countries there is a certain disconnect with media reports and their inflated numbers about land grabs.

That having said China has recently shown strong interest in food related investments, but they have focused on the trading and food processing sectors with a view of improving food safety and catering to the increasingly diverse diets of the Chinese population.

Among such investments have been Tnuva, the Israeli cheese and consumer foods supplier, US pork producer Smithfield Foods, the UK breakfast brand Weetabix and Australian winemaker Hollick. Chinese grain trader COFCO has recently spent $1.5bn on a stake in a sugar, soyabean and wheat joint venture with Hing Kong based Noble Group.

It seems that China prepares to compete with the Cargills and Nestlés of this world rather than directly gobbling up farmland in the upstream sector. There are some large food processing companies in the Gulf that operate internationally like Kuwait based Americana. Gulf countries have also shown a similar, if more subdued interest in trading companies as I describe in Oil for Food, but compared with China they have arguably less capacities to realize such strategies.

Kenana Sugar Company plans Hong Kong IPO

Kenana Sugar Company wants to  launch a $200 mn IPO in Hong Kong.

Sudanese regard the company as a shinning example, while the Kuwaiti and Saudi shareholders  (31% and 11%) are less happy about their investment that dates back to the 1970s when the Gulf countries wanted to develop Sudan as an Arab bread-basket.

Why Hong Kong? Getting access to Chinese capital, even though China has recently backed out of an agro project in the country as Sudan could not deliver the oil collateral for loans anymore?

Sudan has a sugar plan in place that wants to increase sugar production in the country tenfold by 2020, but Gulf countries have shown no interest so far to increase their investment beyond Kenana.


Chinese Pulling Out of Sudanese Agro-Project, Qatar to the Rescue….

After the oil in South Sudan has been lost, Chinese funding for a large agri-project in Nile state has been withdrawn and Sudan now hopes for Qatar money:

March 10, 2012 (KHARTOUM) – An agricultural project in Sudan’s Nile River state has been put on hold because China cancelled a loan that was needed to extend electricity in the area, president Omer Hassan al-Bashir revealed.

…..

“And so China stopped the financing [the project]” he added.

Bashir said the Qataris decided to step in and provide the loan after Beijing backtracked.

“The ball is now in the court of our Qatari brothers”.

The comment section to the article reveals a lot about the prejudices and bitterness between the North and the South. It also contains some inflated hopes about the Gulf countries as white knights with deep pockets. My personal favorite is this one:

1 March 06:10, by Jalaby

“Not a problem at all, Chinese are making billions of dollars as profit from investing in Sudan, China will loss,our Arabs brothers will take over as all the infrastructures projects in Sudan are financed by Arabs and implemented by China,our Arabs brothers are making excellent profit from their successufull investments in Sudan,Kenana Sugar Factory will always stay solid example”

Well the Kuwaitis are the largest shareholder of Kenana and would beg to differ. According to a WikiLeaks cable a Kuwaiti official opined that Kuwait did not get its money out of Kenana for 30 years…