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Why are KSA, UAE investing in agri-livestock?

July 14, 2023 at 10:19 am | Economic Affairs

Prime Minister thanked the Army Chief for bringing in the green initiative and hoped that this project would change the fate of Pakistan.

By Qamar Bashir

Army chief after taking command has been meeting with businessmen, agriculturists, and economists to bring in some semblance and overcome countries economic and financial woes.

Though it went unnoticed at that time until the formation of Special Investment Facilitation Council (SIFC) with the Army Chief as a member was announced.

Soon after its formation, various sessions were held wherein many important decisions were finalized in a jiffy. The four terminals of Karachi ports were handed over to a Dubai-based company on 30 years lease.

SIFC’s second decision was to auction Pakistan Steel Mills, which is expected to be completed before the next elected government takes office.

Saudi Arabia has been primarily reliant on imported wheat, prompting the Kingdom to turn to Pakistan for the import of the staple food.

Third initiative was the Livestock and Dairy Modernization and Improvement Support (LIMS) Program, aimed at introducing modern agro-farming to increase the profitability and productivity of Pakistan’s livestock and dairy industries.

Two days after the launch of LIMS, the army chief introduced ” Green Pakistan initiative,” on July 10, 2023 in the presence of prime ministers and cabinet ministers.

Addressing the ceremony, the Prime Minister thanked the Army Chief for bringing in the green initiative and hoped that this project would change the fate of Pakistan by bringing in billions of dollars in investment in coming days.

“I believe that, like many other leaders, our Prime Minister is good at convincing people that Pakistan is a prosperous country and that they are the richest people on the planet.  This dream, however, has always been dashed when the new government declares Pakistan on the verge of collapse, and then we wait for another such speech from the new prime minister. “Army Chief Asim Munir noted.

Let us hope and believe in the words of the army chief who said that despair is irreligious and true Muslims should thank Allah for His bounties and show patience and pray for the return of better times during times of trial and retribution. 

Is this initiative new or old? Was it introduced in the past but refreshed and reintroduced?  Why Kingdom of Saudi Arabia (KSA) and United Arab Emirates (UAE) are interested in our agriculture and livestock  sectors? These were a few questions which needed answers.

In reality, Pakistan’s food security is worse than that of Saudi Arabia and the UAE in terms of pricing, availability, quality, and safety.

Some headlines in mainstream print and electronic media piqued my interest while I was looking for answers. Investment in Pakistan’s agriculture and livestock markets appears to be seen as the most viable, cost-effective, and secure way for Saudi Arabia and the UAE to ensure their people’s food security.

According to a study published in the Journal of the Saudi Society of Agriculture Science, Saudi Arabia will import all of its food by 2050. The Kingdom also panicked after its experiments to promote agriculture in the country by using underground fresh water, importing water from other countries, or artificially creating water from sea water initially generated headlines, but later plummeted, compelling the Kingdom to reverse its policy due to compelling reasons such as unjust use of nonrenewable natural resources was not a viable practice and it depleted much of the country’s scarce aquifer water supplies which rendered the program  ineffective.

Saudi Arabia has been primarily reliant on imported wheat, prompting the Kingdom to turn to Pakistan for the import of the staple food.

Another study, “Agrarian Mirage: Gulf Foreign Direct Investment in Pakistan’s Agriculture Sector,” conducted by the Middle East Institute, stated that Gulf interest in Pakistan as a reliable source of food increased significantly during the tenure of General Pervez Musharaf, peaking in 2008. At the time, Gulf Cooperation Council (GCC) governments were highly concerned about global economic changes and their limited capacity to enhance domestic agricultural production to fulfill the requirements of their quickly growing populations. As the dollar price of rice increased to $907 a ton in April 2008, nearly tripling the November 2007 levels and in response, major grain-exporting countries such as India and Vietnam imposed export bans, infuriating the Arab Gulf states. Saudi Arabia and the UAE then decided to take matters into their own hands by avoiding global food markets and instead seeking agricultural land overseas to grow crops such as rice, wheat, sugar, and fodder crops such as alfalfa, maize, barley, and soybeans. All of these crops were ideally suited to the Pakistani environment. Meanwhile, the Pakistani government offered tax exemptions, duty-free equipment imports, and 100 percent land ownership in special free zones in its agriculture, livestock, and dairy sectors. In addition, land investors were also exempted from the country’s existing labor laws and offered to provide a 100,000-strong security force to protect investors. This was what the Gulf states were looking for. In their quest to acquire agricultural land in Pakistan, the Gulf countries relied on several key organizations and firms to facilitate the transactions.

The United Arab Emirates ranks 18th out of 121 nations in the 2022 Global Hunger Index, with a score of 5.3, indicating a low degree of hunger.

In Saudi Arabia, The King Abdullah Initiative (KAI) for Saudi Investment in Agriculture Abroad was established, with the aim of achieving national food security through building integrative partnerships with countries that had a high agricultural potential. The UAE has relied on Abraaj Capital, a Dubai-based private equity investment firm, to facilitate investments in foreign agricultural projects.  Al-Qudra Holding is an Abu Dhabi-based firm involved in agricultural investments through its subsidiary, Al-Qudra Agriculture.

These firms then went on a shopping spree in Pakistan. In 2008, the private equity company Abraaj Capital and other UAE companies acquired 800,000 acres of farmland in Pakistan with the support of the UAE government.

Another UAE firm also acquired as much as 800,000 acres of farmland in Pakistan that year.

The Emirates Investment Group and the Abu Dhabi Group in 2009 acquired about 16,187 hectares of land in Pakistan’s Baluchistan province for an estimated US$40 million for mechanized farming with an additional investment of  $20 million in fertility enhancement to make it commercially viable.

The Qatar Meat and Livestock Company (Mawashi) spent $1 billion into corporate farming in Pakistan by taking on lease around 12,140 hectares in Shikarpur, Larkana, and Sukkur. 

Saudi Arabia took on lease 500,000 acres of land in Pakistan to grow grain and vegetables for the Saudi market.

However, shortly after the government of Asif Ali Zardari as President and Yousaf Raza Gilani as Prime Minister took over, FDI, which had peaked at US$8 billion in 2008, plummeted to US$750 million.

The arguments were straightforward and logical: selling agricultural land to foreign countries had the potential to cause political and societal upheaval, especially given Pakistan’s uncertain food security.

In reality, Pakistan’s food security is worse than that of Saudi Arabia and the UAE in terms of pricing, availability, quality, and safety.

Saudi Arabia took on lease 500,000 acres of land in Pakistan to grow grain and vegetables for the Saudi market.

Pakistan is ranked 99th out of 121 countries in the 2022 Global Hunger Index and has been classified with a serious degree of hunger with a score of 26.1, whereas Saudi Arabia ranks 30th out of 121 countries with a low level of hunger with a score of 6.7.

The United Arab Emirates ranks 18th out of 121 nations in the 2022 Global Hunger Index, with a score of 5.3, indicating a low degree of hunger.

We all know, there is no such thing as a free lunch, perhaps the cost agreed upon by the army chief was a restart of the process of selling agricultural land to Saudi Arabia and the UAE that was started during the Musharaf regime, but was shelved by successive civilian governments.

Let us hope that this time, these schemes would result in a win-win situation for Pakistan, Saudi Arabia and UAE.  – The writer is the Former Press Secretary to the President, former Press Minister to the Embassy of Pakistan to France and former MD, SRBC.

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