Australia, food security, Islamic finance and the Gulf ... The story So Far

Qatar, it seems, is placing renewed emphasis on home-grown agricultural production over foreign farmland buys as it seeks to increase its food security according to Reuters on June 1st.

According to Reuters farming in the GCC is a challenge due because of climatic and soil issues. In spite of all of these barriers Qatar and other GCC states are investing in technology that would help secure food supplies domestically.

"Qatar's priority right now is to put in place the resources to enhance domestic production," Mahendra Shah, director at the Qatar National Food Security Program (QNFSP), told Reuters. Food price rises as commodities ran up to record highs in 2008sent a shock through the Gulf, one of the world's biggest food importing regions, and sent governments on a quest to secure future food supplies and defend against future inflationary rises in the prices of basic foodstuffs. Only a tenth of Qatar's around 65,000 hectares of arable land is being used for agriculture due to lack of fresh water supplies, said Shah in a telephone interview to Reuters.

The Reuters report also stated that Qatar was looking at ways to produce more water for farming in a way that was less detrimental for the environment than standard desalination plants. "We are looking for ways by which we can desalinate water through the use of solar energy to minimize the water used straight from wells," he said. Even relatively high cost domestic development would be justified given the strategic importance of securing food supplies.

"The cost is all relative to what happens in the world market and in the end even if the cost is high we have to start supporting our local production because that's what gives us food security," Shah said. Once the areas with the highest yield potential were earmarked, Qatar hoped to provide itself with 80-90 percent of its vegetable and livestock needs, Shah added. The tiny Gulf Arab state, one of the richest countries in the world, currently imports around 80-90 percent of its needs.

Where Australia comes in

Investing in farmland abroad would still be key to securing water intensive crops such as rice and wheat, said Shah. Qatar imports 98 percent of the rice and wheat it consumes, Shah added. Qatar, unlike its Gulf Arab neighbors, has concentrated on buying farmland in developed rather than developing countries. Still, it may look at buying land in developing countries in the future, Shah said. Hassad Food, owned by Qatar's sovereign wealth fund, formed a Sydney-based subsidiary in December called Hassad Australia to to buy farmland for wheat and livestock production.

The simple economics of supply and demand will doubtless win out in the end - but in the interim there will be a significant amount of political see-sawing to keep entrenched interests happy.