Reply to Thoughtful Review of Oil for Food in the Middle East Journal

Jane Harrigan has given a thoughtful critique of Oil for Food in the Middle East Journal, Vol. 68, Issue 1, 2014. She outlines the historical part with the critical supply situation during World War II, the food weapon, the modernization of agriculture in the postwar years and the political economy of food in the Gulf countries. While she deems these parts and the depiction of the failed Sudan breadbasket strategy “fascinating”, she objects to my  “sanguine” account of current Gulf agro-investments.

As I describe the Sudan breadbasket episode of the 1970s as an unmitigated disaster and use it as a cautionary tale for current Gulf endeavors this is not immediately obvious.

Harrigan acknowledges that I acknowledge important concerns in the land grab debate like the threat of disenfranchisement of customary land rights’ holders and limited employment benefits. However she would have liked to see a more extensive discussion of these aspects.

She objects in particular to my sub-chapter “A land grab that wasn’t“ in which I use field work in the Gulf countries and the Sudan to point out that there is a huge disconnect between media reports about land grabs and actual implementation on the ground. I further argue that such misconceptions have sometimes been amplified by well meaning reports of advocacy groups, among them the first version of the Land Matrix by the International Land Coalition (ILC) and a number of think tanks that has used such media reports as data source (p. 144f).

Harrigan does not discuss this criticism of mine or marshals evidence to the contrary. But she argues unperturbed that “ample evidence is now available, especially from the International Land Coalition’s work,” about the threat of foreign agro-investments.

I do not dispute this threat in qualitative terms and discuss it as far as it has materialized, like in Sudan in the 1970s, on some of the Sudanese projects today (e.g. the Merowe Dam) or on the Saudi Star project of Saudi billionaire Al-Amoudi in Ethiopia.

Yet in quantitative terms the threat has been exaggerated as I outline in said sub-chapter, certainly for the Gulf countries, but also for China as the works of Deborah Brautigam and Rural Modernity have shown.

So in a way Harrigan is blaming me for not parroting media reports. It would be better to either hold those accountable who have used them uncritically or show empirical evidence of Gulf agro-investments with said effects that I have failed to mention.

In fact, the ILC and its partners have revised the Land Matrix considerably in the meantime, have gotten rid of many paper projects and paint a more accurate picture now.

The problem of exaggerated quantitative claims and the need for more qualitative studies has recently also been highlighted  by Marc Edelman in a special issue of the Journal of Peasant Studies about methodological issues of land grab research.

In a way Harrigan seems to be uneasy about the “ample evidence” herself. At the end of her review she suggests that the implementation gap may well exist, but claims that negative effects would still occur in the form of preemptive displacements to empty land for investors.

In Ethiopia and on the earlier rainfed projects in Sudan this seems to have happened indeed as I write in Oil for Food; for the irrigation projects in the north of Sudan the situation is somewhat different. The land along the Nile is in private smallholder ownership and not targeted, while the land on the plateau above the river is formally state owned, barren and only usable for extensive pastoralism as long as no investments in irrigation infrastructure are undertaken.

To suggest a mere announcement or even a formal deal without actual investment would lead to an immediate displacement is rather unrealistic in such cases and tends to overrate coercive capacities and economic incentives on part of local governments. In fact in quite a few cases officials were unable to locate announced project sites and locals were not aware of them. In the cases where nothing is there, what am I supposed to write about?

Harrigan says that the US used the food weapon in retaliation to the formation of OPEC, which is not something that Oil for Food claims, as the height of the food weapon was in the 1970s not in 1960 and it was used or contemplated in retaliation to the Arab oil embargo, the Iranian hostage crisis, to rein in Nasser, to entice moderation in the Arab-Israeli conflict and push an already established OPEC to cooperate on global food issues during the World Food Conference 1974. But this is a minor thing.

To sum up, I fail to see how I portray an “unjustifiably rosy” picture of Gulf agro-investors as I discuss on multiple occasions their misguided belief in large scale project designs and their real estate centered mentality, which leads to an obsessive focus on formal land ownership and disinterest in joint equity projects with local stakeholders.

All I try to do is to give a differentiated picture and point out an implementation gap that has even grown since Oil for Food was written. Being “sanguine” is different. Land grabs in Africa seem to be bad business as the plummeting share price of Indian agro-investor Karuturi, the travails of Amoudi in Ethiopia or the Sudanese failures show.

Instead of claiming the counterfactual opposite, Oil for Food tries to find an explanation why so many projects have failed or have not been implemented in the first place. It also tries to consider the importance of local factors, domestic agro-investors and national development plans that outweigh the importance of foreign agro-investors and act in lockstep with them.

Coming back to Ethiopia, its government is equally frustrated, as it has hoped that foreign agro-investments would help kick off an agriculture led modernization. It now considers withdrawing concessions.

If any land investment were bad and threatened food security, these developments would mean an improvement. In the specific cases this might even be true, but overall there cannot be any doubt that more investments are needed given Africa’s declining food production per capita over the last decades.

Hence maybe the solution is somewhere in the middle. This might neither be in line with overtly romantic views of subsistence agriculture nor with hyperbolic profit expectations of 30 percent and more that are peddled by some investors, but a more realistic and sober approach in the land grab debate is needed.

Ouch! UAE Tests Wheat Production

The UAE tests wheat production in the desert, just as Saudi Arabia is phasing it out.

The project of the Abu Dhabi Food Control Authority has received 90 percent of the seeds from International Maize and Wheat Improvement Centre in Mexico, which is part of the CGIOAR research centers. Together with  the International Centre for Biosaline Agriculture in Dubai they want to test which varieties are most suitable for the UAE climate.

The project comes at a time when the Abu Dhabi Water Master plan has warned in 2009 that water consumption of agriculture in the UAE is utterly unsustainable. The government speaks of water being at a “tipping point.”

It is puzzling why the Abu Dhabi Food Control Authority which is in charge of designing food security policies for the emirate embarks on such a water guzzling project.

Of course it is being sold as a contribution to food security. It is not. It would threaten water security if practiced on a wide scale.  The best that can be hoped for is that it just remains a white elephant pilot project.

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.

To be Expected: Faulty Land Matrix Database Goes Academic…

The well known journal Proceedings of the National Academy of Sciences (PNAS) has published an article about global land grabs and their implications for water usage.

The authors point out important issues around land investments like the potential disenfranchisement of customary land rights holders and excessive (green and blue) water use for export crops that could compromise domestic food security.

The article does not contain primary research, instead  it marches to the usual naive quantitative drumbeat of mainstream academia: first you need to have a “database,” then you build a “model” and then you come up with some life altering findings that common sense would have been unable to achieve. In this case they have found out that water scarce countries tend to look for water resources while investing in land.

The farmlandgrab blog of the NGO GRAIN that they are using is a great source of information if you take it for what it is: a comprehensive collection of media reports about land deals. The problem is that announced agro-projects are not necessarily agro-projects actually happening. There is a huge implementation gap.

The much touted Land Matrix database, which they use to cross check the GRAIN dataset, claimed to verify such media reports. Yet at its launch it included a lot of double entries and projects over millions of hectares that never materialized like those of South Korean Daewoo in Madagascar and Chinese ZTE in the Democratic Republic of Congo.

Chinese investments in particular were misrepresented. In Sudan on the other hand the Land Matrix did not contain a single project of those that have seen some degree of realization in North Sudan, but it had  a flurry of land deals in South Sudan that never made it beyond the announcement stage (e.g. the one by self-stylized Cowboy/ Mafia head investor Phil Heilberg).

Unfortunately the Land Matrix did not publish the reliability codes that it attributed to deals after cross checking. A lot of the supposed “triangulation” seems to have been between various media reports: There is a press release, journalists jump on it, an NGO reports about it as well, and all over sudden one has “triangulation.” Thus, paper deals and mere declarations of intent become projects for real. The clueless academics use it for their studies, which are then taken up again by equally clueless journalists and the news cycle closes.

The Land Matrix team has reacted to criticism. It has taken some of the paper projects off the database and is “currently developing a completely new data management system behind the interface.” Thus the database might improve over time.

Yet at its inception and when the PNAS article was written in May 2012 the Land Matrix gave a highly misleading picture about the extent of land grabs. The PNAS article is evidently unaware of criticism of the LM database. “Failed and unverified deals are not included in the Land Matrix database,” it claims. Then it continues with a nice euphemism, saying that the data might have  a “few biases resulting from the lack of transparency”……

Unsurprisingly the PNAS article dishes out outlandish figures, claiming that over 17 percent of the land area and nearly half of the cultivated area of the Philippines has been grabbed by foreign investors. During a visit of mine to the south of the Philippines in 2010 none of the announced ago-investments had gotten off the ground. Forthcoming field research by Gerben Nooteboom and Rosanne Rutten of the University of Amsterdam deals with land use change and the implementation gap of foreign agro-investments in the Philippines and Indonesia. The numbers for the UAE and Israel in the PNAS article are also out of touch with reality.

This is not to say that land grabs are not happening – especially on a national level between nationals, not necessarily foreigners. They are also problematic, but the continuous hyping of large and unverified figures does a disservice to the important issues that are at stake. A more sober debate is needed that takes stock of different quantities, but also of the need for agricultural investments and how they might be undertaken in a way that could lead to different qualities. The Manichean picture of neo-colonialism on the one hand and romanticized subsistence farming on the other is just too simple.

On a more general plane I grow increasingly bored with the mathematical fetish in social sciences. The economists pretend to practice hard science like physics, even though they are closer to theology with their axiomatic and ahistoric belief in homo economicus.

Yet everybody wants to be like them now: Whether it is political scientists, sociologists or psychologists. They start out with a boring question and a “database”, then follows a lengthy mathematical “proof” in the middle and at the end they come up with silly answers and unsurprising correlations, right at a point where the real questions should begin. It is like those medieval scholastics debating how many angels can sit on the pin of a needle.

It is high time that the social sciences regain their critical faculties and say that the king of economics is naked. After all economists did not have the slightest clue ahead of the global financial crisis as far as their orthodoxy is concerned.  And no, it was not just the databases or the models that were wrong, but the basic assumptions of the profession.

 

Al Dahra in Serbia: Shift from LDCs to developed markets

UAE based Al Dahra has announced an agro-investment on 20, 000ha in Serbia for $380 million where it plans to grow grains and alfalfa as fodder. It already has a similar project for alfalfa in Pakistan.

As reason for the shift towards a more developed market it cited lacking infrastructure in developing countries as a major impediment for investments.

This trend is ongoing: If the Gulf countries actually put money on the table and go beyond mere project announcement it has been rather in developed markets like Australia or Argentina.

UAE: Rhodes Grass Phase-Out Lags Behind

The UAE’s plan to phase-out water intensive production of Rhodes grass lags behind. Rhodes grass dominates field crops with 94 percent. Alfalfa, which is the dominant green fodder in Saudi Arabia contributes another 4 percent.

In Saudi Arabia alfalfa production has actually increased after farmers started to plant it as a substitute for the phase out of subsidized wheat production since 2008.

Without increased water tariffs or rationing a reduction in green fodder production is not be had.