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November 28, 2010

Egypt eyes Sudan for land to grow wheat

Egypt has turned to its southern neighbor, Sudan, for use of agricultural land as the world's largest wheat importer looks to meet domestic food supply needs and quell a rapidly growing population increasingly irate about chronic price increases.

With a summer drought in Russia that propelled world grain prices higher still fresh in the government's mind, Egyptian officials in September revived a 30-year-old agreement with Sudan that encourages private companies to plant wheat in northern Sudan. The deal brings Egypt into a growing list of Arab nations that have turned to Africa as a new breadbasket.

"We are facing a shortage of agricultural commodities internationally," said Ayman Abou Hadid, chairman of the state-run Agricultural Research Center. Under the deal, the Egyptian government provides investors with incentives for irrigation and infrastructure, but production is left up to the private companies, he said.

"The government is not going to participate," said Abou Hadid.

The deal marks the latest attempt by the government to meet future needs in the Arab world's most populous nation. But the push has clear political overtones. An unusually hot summer in Egypt led to a sharp increase in vegetable prices — though those gains were linked in part to a decision by the government to export tomatoes, leaving the local market short.

Fears about increases in food prices had already taken root even before Russia decided to halt grain exports for the rest of the year after a summer drought killed off a third of its annual harvest. Over the course of the year, meat prices seesawed, more than doubling before retreating slightly. Similar gains were seen in more basic goods, as well, leading to a series of protests that came at a particularly critical time for the government of President Hosni Mubarak, who has ruled the country for the past 30 years. With parliamentary elections set to be held at the end of November and presidential elections slated for next year, Egyptians have increasingly complained about the government's failure to improve living standards, raise salaries or provide basic services.

In 2008, shortages in subsidized bread lead to fights that left eight dead. In 1977, an attempt to end such subsidies led to riots that required army intervention.

While the latest protests are unlikely to seriously threaten Mubarak's, or his ruling National Democratic Party's, hold on power, they highlight a widening schism between rich and poor in the key U.S. ally and increasingly vocal protests about the economic situation in the country. Critics argue that the country's economic growth has largely failed to trickle down to much of the population, with 40 percent of the people living on or near the World Bank poverty line of under $2 per day.

The deal also provides a potential boon for Egypt, which remains at odds with several other nations that share the Nile River, over water quotas. Abu Hadid said water used to irrigate wheat crops in Sudan would come from that nation's allotment, not Egypt's.

The new production would likely be just enough to meet Egypt's rate of population growth, said Abdolreza Abbassian, a senior economist at the United Nations' Food and Agriculture Organization.

It could also provide a sorely needed cash infusion for Sudan's struggling economy, which has been ravaged by the country's a 21-year civil war between Sudan's mostly Muslim north and predominantly animist and Christian south.

"Sudan has a huge potential," he said. "There are so many positive aspects as long as some code of conduct is respected."

Egypt is not alone in tapping Sudan's vast land base for crops. Saudi Arabia, the United Arab Emirates and Qatar have also turned to the country for food.

Some experts argue, however, that the deal will do little for Sudan, which has its own food worries, along with political problems.

Nader Noureddin, a soil and water expert at Cairo University's College of Agriculture, said wheat production in Sudan's northern desert would require tremendous amounts of water and would do little to supplement the country's own domestic need for the grain.

"They need it (wheat) much more than Egypt," he said. "This is their own land."

Additionally, any private Egyptian investment will not help Sudanese farmers because the companies that venture in will be looking at profit, not whether the war-ravaged nation can feed itself, said Noureddin.

The criticism is dismissed by officials, however, who argue that the new wheat production will be traded on the open market and foreign investment will help improve infrastructure.

"Any African country that can afford to grow more food, that is better for everyone," said Abou Hadid.

Associated Press

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