Global agriculture market experiencing a steady 5 per cent annual growth

Global agriculture is a broad and large market (the 3rd largest after currency and energy markets) and experiencing a steady 4 – 5 per cent annual growth.


Image for illustration purpose only

The Global AgInvesting (GAI) Middle East conference hosted by HighQuest Partners surveyed the agriculture investment opportunities, risks, and return profiles across all major global production regions. This second annual GAI conference featured discussions on strategies for diversified agricultural portfolios including regional variation, private equity, liquid investments, water, and nutrition. Global AgInvesting Middle East 2014 highlighted policies and opportunities for ensuring food security, including outsourcing and technological advances, and panel discussions provided attendees with a picture of the agriculture investing landscape and a clear idea of where the smart money is moving.

According to HighQuest Partners the market value of global agriculture (including drink as well as food) exceeds USD 6.4 trillion, representing over 8.5 per cent of the world’s economic activity. The trade in agricultural commodities is forecast to surpass 520 million metric tons within the next ten years owing to rising demand in China, India, Southeast Asia and the Middle East.

Population growth and increasing urbanization are among the key issues driving farmland values. With the world population expected to reach 9 billion in 2050 and a commodity boom driven by changing poverty landscapes, with a noticeable shift of poor into the middle class in India and China, farmland is expected to undergo significant changes in value.

Agriculture will come into increasing competition with other demands on water. The challenge of reconciling these various needs can be expected to become even sharper in the Middle East region, where most water supplies are already either heavily exploited or overexploited.

Dr. Saad A. Khalil Esa, Director, Office of King Abdullah Initiative for Agricultural Investment Abroad stated: “We realize we have a water problem and constantly develop initiatives to deal with it.”

The Ministry of Agriculture of Saudi Arabia has launched plans to outsource high-water consuming agricultural activity abroad. “Saudi Arabia used to produce 4 million of wheat inside the Kingdom. Since 2008, the government started reducing wheat purchases from local producers and by 2016 the Kingdom is likely to import all its wheat from overseas,” Dr. Saad said.

The Ministry of Agriculture of Saudi Arabia inaugurated the King Abdullah Initiative for Agricultural Investment Abroad to encourage the private sector in the Kingdom to invest abroad in the case of agricultural activities that demand particularly large quantities of water. While the production of dates, vegetable and fruits is expected to increase in the Kingdom, the production of wheat, barley, corn, sorghum, soybeans, rice, sugar, oil seeds, green fodder, live stock and fisheries will be partly outsourced outside the Kingdom.

The SALIK fund of SAR 3 billion is 100 per cent government owned initiative. Sudan, Ethiopia, Ukraine and Australia are among the countries that have already received some of this agricultural investment.

water map

Image: Groundwater resources of the World, UNESCO

John Lawton, General Manager of the Agricultural Development Company in Saudi Arabia, stated that water resources in the Kingdom are not clearly understood. John Lawton observed, “We have water resources which are overexploited. The political decision about ownership and extraction is a major consideration…Proper management on a regional level is required,” he said.

Copyright: ORYX Business Intelligence 2013. You may share using our article tools. 
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