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.”

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.

Good Article about Midroc, Al Amoudi’s Ethiopian Business Coglomerate

Romain Calvary has written a very interesting article about Midroc, Saudi billionaire Al Amoudi’s Ethiopian business conglomerate.

Les investissements saoudiens dans la Corne de l’Afrique : l’exemple de Mohamed Al Amoudi, homme d’affaires saoudien en Ethiopie” has been published in Confluences Méditerranée, 2014/3 (N° 90)

It contains an interesting description of his background as a son of a trader from the Hadramaut who migrated to Jeddah at the end of the 1940s, shortly after Al Amoudi was born in Ethiopia to his Ethiopian mother. Al Amoudi would only join his father in Jeddah in 1965, where he built his fortune in construction and the refining business.

From the 1990s onwards he built his Ethiopian business empire, which he merged in 1996 under the umbrella of Midroc. It is noteworthy that in 1990 he did not yet have Ethiopian citizenship according to the article.

Another interesting take home point is that as part of his participation in Ethiopian politics Al Amoudi takes positions that are rather unusual for a Saudi. He discreetly finances Ethiopian churches in the USA and has lent his support to the construction of the Ethiopian Millennium Dam, which is opposed by Egypt and Saudi Arabia.

In February 2013 the Saudi royal and  deputy defense minister Khalid Bin Sultan even went so far to say, “There are fingers messing with water resources of Sudan and Egypt which are rooted in the mind and body of Ethiopia. They do not forsake an opportunity to harm Arabs without taking advantage of it…”

A Sheikh, Ethiopia and Pitfalls of Journalism

“Last year, Al Amoudi, whom most Ethiopians call the Sheikh, exported a million tons of rice, about seventy pounds for every Saudi citizen.” This is the remarkable claim of Frederick Kaufman in an article in Harper’s Magazine about the agro-investment of the Saudi billionaire in Ethiopia’s Gambela province.

Mr. Kaufman calls it “the great grain robbery” and alludes to the namesake event in 1972 when the Soviet Union appeared as a large buyer of US grains for its livestock program, bidding up prices to the ire of American consumers.

To put it into perspective: one pound of rice gives about five servings, so 70 pounds make 350 servings. Every Saudi eats a bowl of Ethiopian rice each day according to Mr. Kaufman!

Saudi Arabia imported 1.3 million tons of rice in the trade year 2013/14 according to the US Department of Agriculture and does not have domestic production. This would mean that Ethiopia accounted for the large majority of Saudi rice consumption. As rice constitutes 11 per cent of the calorie intake of Saudis according to the FAO it would also mean that Ethiopia has provided almost a tenth of Saudi Arabia’s dietary needs! An astonishing feat for a country that was the largest food aid recipients of the World Food Program (WFP) in 2012. If true, it would be alarming.

Alas, it does not show in the trade statistics. The PSD database of the US Department of Agriculture has no record of Ethiopian rice exports whatsoever. The COMTRADE based Trade Map database of the International Trade Center not really: In 2012 it reports Ethiopian rice sales of $4,000 to Saudi Arabia out of total exports of $5,000. That is virtually nothing.

Mr. Kaufman does not share the source for his 1 million ton claim. Unfortunately for him, almost three quarters of Saudi rice imports come from India and another 10 percent from Pakistan according to the Trade Map statistics. South Asia is where basmati rice is mainly grown, which the Saudis prefer over the sticky white rice that is grown in South-East Asia and the US. This preference is also why Al Amoudi has tried to introduce basmati cultivation in Ethiopia with the help of Pakistani experts and foremen.

Cereal yields in Ethiopia are around 2 tons per hectare according to the World Bank, on the higher end compared with most other African countries, but considerably below Thailand (3.1 tons) the US (5.9 tons) or Vietnam (5.5 tons). As Al Amoudi has just started his project and is introducing a new crop it is unlikely that he can produce very much above the national average. This would mean that the production of 1 million tons of rice in Ethiopia would require 500,000 hectares of land.

Al Amoudi has a lease for 10,000 hectares. Mr. Kaufman does not tell us from where Al Amoudi might have gotten the other 490,000 hectares. Not to mention that Al Amoudi has considerable production problems and it is unclear at this stage whether his project will succeed.

Mr. Kaufman also does not share with us how Al Amoudi managed to get 1 million tons of rice out of Gambela, a remote province with poor infrastructure and far away from any port. The Indian investor Karuturi who launched farming operations in Gambela as well and is now in serious economic trouble mulled exporting cereals with barges via South Sudan, a very unlikely scenario given the current civil war there. Mr. Kaufman himself describes dirt roads that start right after the airport in Gambela; he also speaks of “pilot rice paddies” without suggesting how one would be able to produce 1 million tons of rice with such limited operations.

In case it has not become clear by now: Mr. Kaufman’s central claim of 1 million tons of Ethiopian rice exports to Saudi Arabia is certifiably bogus. Harper’s does not seem to have a fact-checking department, which is rather surprising for a magazine of that size.

Mr. Kaufman says hat “the terms of the deal have never been released.” This is not exactly true as the lease agreement of September 2009 was posted on a website of the Ethiopian government before taken offline in 2012. For convenience I post it here.

For a 50-year lease of 10,000 ha of land Saudi Star pays 300,000 Ethiopian Birr annually. This is currently equivalent to just $15,321 and the contract does not even make stipulations for inflation adjustment. Al Amoudi has announced that he intends to lease an additional 290,000 ha from the Ethiopian government, but so far 10,000 hectares is what he’s got, to the best of my knowledge.

So with $1.53 per hectare the lease terms are even better than the $7 of Mr. Kaufman’s estimate and considerably lower than the $1,250 per year and hectare that he mentions for Zambia. Zambia is a more mature agricultural market with export outlets towards South Africa, so its land prices should be higher, but Mr. Kaufman is right to wonder how such lease terms come about and whether political backroom deals might have something to do with it.

He has apparently been in the country, if only for a few days, he has met with decision makers and he has visited Al Amoudi’s Saudi Star project. There have been indeed problems on the project as the killing of Pakistani foremen has shown and Ethiopia’s strategy of Agricultural Development Led Industrialization (ADLI) has been accompanied by grievances and state led resettlements as I point out in Oil for Food.

Mr. Kaufman had a unique chance to tell us something about such problems at the crossroads of subsistence lifestyles, development ambitions, foreign direct investment, political conflict and influence trading. Unfortunately he didn’t. He chose to make bogus claims and tell us a land grab story that is sexy and sells. After all Saudis are authoritarian, religious fanatics who do not let their women drive. Isn’t it perfectly logical to add a neo-colonial land grab to that list? And isn’t that what the reader wants to hear? Including unverified rumors about Mr. Al Amoudi’s alcohol intake, Al Qaeda financing and predatory attitudes of his men?

When reading the article one cannot escape the impression that this is neither a story about Al Amoudi, nor about disenfranchised Ethiopians, but about the author himself – an intrepid Indiana Jones who takes the reader by the hand on a journalistic hit and run mission to the dark heart of Africa. To beef up his credentials, Orientalisms are dropped and suggestive language is used without serving any obvious analytical purpose.

Based on a second hand account he refers to locals who live “in picturesque villages, undisturbed by modernity”, all the while Gambela is increasingly affected by a rather modern civil war in neighboring South Sudan. Corresponding refugee flows are shortly mentioned in a footnote. At no point one gets an idea about the local population and how it has been affected by the Saudi Star project. Mr. Kaufman has apparently not interacted with them. Meanwhile he suggests that the Saudi Star compound with its white barracks and satellite dishes seems to belong to a “Bond villain.” Our hero has to face down “fat black beetles” that attempt to crawl in his bed while spending the night there, remarkably on the invitation of the men of the very “Bond villain.” (It also would appear to me that the villains in Bond movies usually have more assuming residences than white barracks).

Al Amoudi was born in Ethiopia to an Ethiopian mother and a Saudi father and later migrated to Saudi Arabia where he made his money. To call him a “billionaire from Ethiopia” obscures more than it illuminates and it would have been interesting to learn more about Saudi-Ethiopian relations and what role Al Amoudi plays in them. Instead, we jump from Alexander the Great’s quest for the Nile sources to Ethiopia “the khat capital of the world”, only to end up again with Al Amoudi, who is termed a “whisky drinking marauder”, like all the folks of international organizations who hang out at the bar of the Sheraton in Addis, which he owns.

In short, another piece of sensationalist journalism and a disservice to a more sober and credible discussion about land grabs and associated development challenges.

The Water Energy Food Nexus in Drylands

I have just returned from the conference about the Water Food Energy Nexus in Drylands that CIDOB has organized together with the OCP Policy Center in Rabat, King’s College London and Texas A&M University.

Approximately two billion people live in arid countries. One third of the global population will be most affected by water scarcity and climate change. Efficient management of water resources for food and energy production is a developmental challenge that requires holistic approaches. The water-food-energy nexus highlights that food, water and energy security are inextricably linked and that any decision in one of the three sectors has consequences for the other.

Nowhere else this nexus is as evident as in dry lands and in the MENA region in particular. Energy will be required to pump, treat and desalinate water for domestic and agricultural purposes. Water will be required to produce energy. About 1-2 percent of global energy consumption can be attributed to the production of nitrogen fertilizer alone. Such development challenges call for a nexus approach to broaden the analysis from a mere ‘blue water’ focus to the more efficient use of soil moisture (‘green water’) and sustainable policy options.

Tony Allan of King’s College pointed out that the nexus between water, energy, and food was first conceptualized at World Economic Forum 2011, which was then followed by a high profile conference organized by the German Ministry of Economic Cooperation (BMZ).

Since the 1980s there have been growing sustainability concerns about the various hydraulic missions that have been undertaken since the 1850s. The constant rise in irrigation since the 1960s coincided with declining food prices – until 2008. Further irrigation growth is unsustainable. There has been a peak of World Bank dam financing in 1980.

As a result the focus has shifted from blue water to green water since the 1990s and the latter’s major role in food and virtual water trade. About 70 percent of global crops are rainfed and rely on green water.

Sustainable intensification, protection of farm livelihoods, supply chain management, waste and consumption issues are crucial in Allan’s view. This was echoed by Brian Chatterton, a farmer and a former Minister of Agriculture of South Australia and Lynn Chatterton, an independent consultant. They complained that farmers have not been at the center of attention of the international agro research establishment, which has focused on higher yields instead of lower costs and ecological factors, which are crucial for farmers. They also deplored a relative neglect of pastoralists in extension services, symbolized in the FAO’s closure of its pasture department.

The Chattertons described the green revolution as an abject failure in dry lands because its application of nitrogen fertilizer relies on reliable rainfalls, yet they were optimistic that yields can be improved without more water and irrigation and pointed out that productivity in Australian drylands is 2-4 times higher than in the MENA region without more water and in similar climatic conditions. In the same vein Kris Dodge of ICARDA demonstrated how adapted seeds and plowing techniques, rain harvesting and supplemental irrigation can improve yields in the MENA.

Existing reporting and accounting rules do not account sufficiently for natural resources like water as inputs as Tony Allan, Martin Keulertz of Purdue University and myself pointed out. Rainfall frequency is often reflected in land prices, at least in developed markets, there are also varying pricing schemes for irrigation water in some countries, yet often water remains external to the economy. In case of damage there are only limited sanctions in place to internalize costs, while its provision as a public good is compromised by limited state capacities that have been weakened after decades of neo-liberal reform.

Thus there is a danger that the nexus is conceptualized in apolitical and technocratic terms, as Harry Verhoeven of Oxford University deplored. Often there is a focus on technical fixes, presumably neutral scientific policy choices and “governance”. Yet politics rather than governance matter in water, energy and food allocation and imply control over people. Such politics entail winners and losers as Verhoeven outlined in a depiction of the political economy of the nexus in the Nile Valley.

Other country examples included Jordan, Lebanon, Syria, Egypt, Yemen, Qatar, Darfur, USA, Ethiopia, Senegal, Tunisia and Morocco. Bassel Daher of Qatar Foundation demonstrated his nexus tool that shows trade offs between water, food and energy allocation in the case of Qatar and could be applied to other countries. Samer Talozi of the Jordan technology University in Irbid showed that 14 percent of Jordan’s electricity production is used for water treatment and pumping. Holger Hoff of the Stockholm Environment Institute and Potsdam Institute for Climate Research and Rabi Mohtar of Texas A&M outlined latest trends in nexus research and forthcoming conferences and research initiatives. Musa Mckee of SOAS, London showed interlinkages between culture and water, food and energy allocation.

Caroline King of the Ecosystems and Human Development Association (EHDA) made a case for improved green water management, particularly in Yemen and Talal Darwish of the National Center for Remote Sensing (CNRS) in Beirut  showed that the effects of climate change in Lebanon have been mainly in the form of irregular rainfall patterns. Decline of overall rainfalls was relatively benign in comparison.

Gabriele Cassetti of Milan Politecnic introduced the TriNex cooperation platform for nexus related projects between European and Egyptian universities that is funded by a Tempus grant of the European Union. Ansoumana Bodian of the Université Gaston Berger (UGB) showed a model how to investigate the effects of rainfall run-off on water resources in Senegal. Rachid Doukkali of Institut Agronomique et Vétérinaire Hassan II and Omar Aloui of Agroconcept demonstrated changes in water and land use in Morocco and related food security issues. Francis Ghilès of CIDOB discussed recent developments in the natural gas industry in North Africa.

Saqib Mukhtar of Texas A&M described problems of the Texan Ogallala aquifer that are similar to challenges in the MENA: Agriculture in Texas uses 80 percent of groundwater and 35 percent of surface water. 66 percent of all groundwater comes from the Ogallala aquifer that stretches all the ay up to South Dakota. Its current recharge rate only covers about 15 percent of withdrawals. Given the accumulated over-extraction it would require 300-1000 years of recharge to go back to the level of the 1940s when large scale irrigation took off.

Brendan Bromwich who worked for many years for UNEP in Darfur showed unintended consequences of water provision in refugee camps against the backdrop of a society that still relies on wood as primary fuel. The water supplies prompted a brick stone industry that required wood and considerably contributed to deforestation. Hence alternative building materials are needed to safeguard energy and soil resources.

Guy Jobbins of the Overseas Development Institute pointed out that Moroccan subsidies for drip irrigation rather benefit wealthier and literate farmers as ‘urfi land of the poor cannot be mortgaged. He also showed the limits of technical fixes: Drip irrigation improves efficiency, but it has not reduced water consumption in Morocco as it prompted farmers to increase the irrigated area and switch to more commercial but water intensive crops. Rural electrification in Morocco went up from 18 percent to 97 percent between 1995 and 2011 and caused a massive growth in installed pumps and irrigation.

As for climate change Mark Mulligan of KCL departed from the current consensus and argued that African dry lands will possibly receive more rather than less rainfall in the future, which could compensate for the negative effects of higher temperatures on agricultural productivity. Rabi Mohtar of Texas A&M pointed out another often forgotten nexus between energy and water: About 70 percent of the water that is used for unconventional oil and gas production via fracking remains underground and is withdrawn permanently from the hydrological cycle. This could diminish water availability in the long run.

Daniel Yeo of the Global Green Growth Institute in Addis Ababa outlined Ethiopia’s strategy of agricultural led development and the role of its dam program while pointing out cleavages between academic and political mindsets. The latter was also highlighted in the concluding key-note address by H.E. Miguel Moratinos, the former Spanish Minister of Foreign Affairs.

In sum water, food and energy are inextricably linked via various nexi and should not be regarded separately. However, a purely technocratic approach should be avoided given the importance of political economy issues in allocation procedures.

Saudi Agro-Investors Leave Ethiopia

This article on AL Monitor is very important and highlights some of the issues I have dealt with in Oil for Food (ch. 8): Why there has been such a gap between announced agro-investments that have been reported in the media and their actual implementation.

The Saudi government has been reluctant to divulge funds as it fears another agricultural subsidy binge, this time abroad. Investors complain that they cannot meet conditionalities tied to investments and say that they have decided to leave Ethiopia.

Saudis have also become less popular in Ethiopia. There is a political backlash of the ongoing crackdown on migrant workers in Saudi Arabia that has targeted Ethiopians in particular. Ethiopian maids have been accused of practicing witchcraft, a capital crime in Saudi Arabia, and were asked to provide mental health certificates, a stipulation that Ethiopians have regarded as an insult.

Like on the Philippines or in Indonesia, Saudi Arabia’s labor policies do not buy it goodwill abroad which can affect its investment plans. Other problems include lack of infrastructure and overlapping bureaucratic responsibilities in targeted countries.

I am not sure whether the Saudi Agriculture Investors Association in Ethiopia that is mentioned in the article is a very important organization. It does not have a website and a Google search does not reveal any institutional history. The size of the Saudi agro-investment in Ethiopia that its head Mohammed bin Abdul Rahman Al Shahri mentions — $3.47 billion — is almost certainly too high.

A database of the Ethiopian government about foreign agro-investments in the country only mentioned the Saudi Star investment in Gambela of Saudi billionaire Al-Amoudi before it was taken offline in 2012 (see Oil for Food p. 202).

Even this investment has run into trouble as an Ethiopian farm executive told me recently. He said Carterpillars are sitting idle on the parking lot and Pakistani foremen of the project complained to him in a bar that they had not been paid for months.

Al-Amoudi recently acknowledged the problems of Saudi Star to Bloomberg, but said  that “Now we are getting in deeply and I’m going to follow it up myself.”

Let’s wait and see. In 2011 I argued that announced Gulf agro-investments were a “land grab that wasn’t.” If anything the implementation gap has grown. When Gulf countries have put money on the table it has been rather in developed agro markets with the necessary infrastructure like Australia or Argentina.

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.

Ethiopia pledges to work closely with the Kingdom in manpower sector

Ethiopian Maids and Saudi Agro-Investments

After the ban on hiring of maids from Indonesia and the Philippines has caused an acute shortage of domestic labor, Ethiopia promises relief and reiterates its commitment to Saudi agro-investments:

RIYADH: Ethiopia has pledged to work closely with Saudi Arabia to boost bilateral ties, especially in the manpower and agriculture sectors.

Ethiopian President Girma Wolde-Giorgis, who was released from a Riyadh hospital on Sunday after a routine medical check-up, made the vow to forge closer ties and to support the Kingdom’s ambitious food security initiative in an exclusive interview with Arab News in the capital Sunday night. Girma, while providing an overview of progressively growing relations between Riyadh and Addis Ababa, pointed out that about 10,000 maids out of the 30,000 female workers recruited so far from the second most populous African country have arrived in the Kingdom.

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Ethiopia pledges to work closely with the Kingdom in manpower sector