Food Security or Bank Security?
Since the evolution of humans and animals there has always been the issue of hunger, the struggle to feed one’s self and family and the devastating fact of famine. Although there are many starving people in this world there are also those who are not. Americans throw away 40% of food produced in America, amounting to 1,400 calories per person per day, $400 per person per year, which adds up to 31 million tons of food, entering landfills each year. Meanwhile about 842 million people in the world do not eat enough to be healthy. That means that one in every eight people on Earth goes to bed hungry each night. By 2050, the world will need 60% more food to feed a population that will exceed nine billion by that time, according to the Food and Agriculture Organization of the United Nations. Countries will continue to compete for land, water and food, which may result in greater poverty and hunger.
The Middle East and North Africa (MENA) is an economically diverse region that includes both the oil-rich economies which are usually Gulf and countries that are resource-scarce, such as Egypt, Morocco, and Yemen. The MENA countries spend as high as 0.15 to 0.62 per cent of their GDP on food subsidies. Algeria, Libya, Egypt, Morocco, and Tunisia are already facing food security challenges. The Middle East is, therefore, now looking at investing in food production in countries from where food is imported, to secure its food supplies.
Saudi Arabia jumped the gun and is already providing funds, credit, and logistics to Saudi investors to invest abroad in agriculture. It is also establishing a strategic reserve for basic food commodities, to meet local needs for food and avoid future food crisis. This is soon likely to be a key trend for all oil exporting countries in the Middle East. King Abdullah’s Initiative for Saudi Agricultural Investment Abroad intends to obtain food from local production, imports and Saudi agricultural investments abroad.
“King Abdullah believes that many countries have the natural resources to produce food, but lack other resources such as capital, experience and technology production,” says Dr. Khaleel. “Such resources are available in Saudi Arabia. So, we can complement each other and produce sustainable food for all.”
By encouraging the private sector to invest abroad using their financial surpluses, will ultimately lead to supporting communities by contributing to their food security, job creation and improving the infrastructures serving the projects. Any investment abroad faces challenges, like political instability, corruption, customs, registration and license problems, as well as social and cultural problems. The government is said to facilitate the private sector by providing strategic partners, represented by the Saudi Agricultural Investment and Animal Production Company, they will provide financial support through interest-free loans via the Saudi Development Fund. Saudi Arabia is not the only one who sees this as a good investment but sum thirty-one countries have been identified thus far. These countries have natural resources and are willing to support these investments.
My question is what kind of return are these investors getting and what make this such an attractive deal that already thirty one countries are jumping aboard? And once these needy countries receive the capital and start producing their own food and resources who receives the profit from those goods and natural resource. Are these wealthy countries going to ultimately gain control of these needy countries agricultural sector? I hate to be cynical because this is a great idea that is going to help so many people but, it all just seems a little too good to be true.I will be interested to see what happens in the long run.