GCC states plan new agricultural fund

 

GCC states announced plans for a new US $2 billion agricultural fund in coming months to secure food supplies by buying stakes in existing agricultural firms. Gulf countries mainly reliant on food imports, have ramped up efforts to secure food supplies through buying farmland in developing nations or buying stakes in agriculture companies.

 

The new Arab agricultural holding company will be part of the broader Arab Authority for Agriculture Investment and Development (AAAID), an organization made up of 20 Arab and African states all keen to lock in food supplies.

 

Unlike other Gulf investments in agriculture which have primarily focused on buying or leasing farmland, the new company will acquire stakes in existing food companies in Africa and the Middle East. It already holds stakes in 25 Middle East and African food companies, including a 30 percent stakes in UAE food producers Al Rawabi Dairy Company, Rowadh Poultry and Fujairah Poultry.

 

Analysis and forecast: decreasing risk


Gulf states face a long-term food shortage crisis, due to a rapid increase in demand with a limited scope for the increase in supply. Various Gulf states have bought land in various countries to use as farmland to produce food supplies exclusively for those states.

 

However, the new initiative is not a completely new one as the fund has been operating for several decades.  Nonetheless, it signifies another approach in the Gulf states’ attitude towards meeting their impending food shortage crisis, by diversifying investments and locations.