OBG talks to Khadim Abdulla Al Darei, Managing Director, Al Dahra

 Interview: Khadim Abdulla Al Darei

What can be done to increase food security for the UAE? To what extent will investing in agriculture abroad help fulfil this objective?

KHADIM AL DAREI: The biggest challenge facing the UAE and its future generations is the scarcity of water. We are living in a desert area and most of our water comes through desalination. Previously, the government was fully subsidising the production of crops and animal feed. However, this process turned out to be highly inefficient when it came to cost.

The government has come up with a new initiative to make the agriculture sector both profitable and sustainable. The Abu Dhabi Food Control Authority was formed to create a sustainable structure for privatising the agriculture sector. The opportunity costs of subsidising the agriculture industry are very high, particularly because of the water scarcity issue.

Therefore, it has been decided that, when possible, outsourcing agriculture is the most cost efficient way of creating a sustainable agriculture industry.

To what extent is Abu Dhabi building its strategic food reserves? How will this act as a buffer to prevent food price inflation?

AL DAREI: The best strategy is to have 30-50% of required food in reserve. Whether it is produced domestically or abroad, it is essential to have food readily available at all times. For example, recently the price of rice rose considerably in Pakistan. If there had been no safety stock of rice in the emirates it would have been devastating but because of our food security programme we are safe and have not been disturbed by the market in Pakistan.

It is not just a matter of having the reserves available. It is also a matter of planning ahead and saving money for whenever inflation drives up food prices. It is also important to note that food commodity prices are based on speculation, not on supply and demand. Therefore, the political climate will often lead to price fluctuations, meaning that long-term planning for sustainable farming and pricing is a necessary tool for ensuring continued food security.

What strategy have officials been adopting to help ensure a cost-efficient and sustainable agricultural outsourcing programme?

AL DAREI: There are numerous aspects to creating an effective system of agricultural sustainability and it starts with the process of diversification. Al Dahra has invested in farmlands in both the northern and southern hemispheres. This is to make sure we can cultivate crops all year round and avoid any shortages that are caused by year-to-year climatic changes. Seasonal diversity is a key component to our plan.

Another aspect that is taken into consideration is the ever-changing global climate. Water supply and the sun are very important factors. We have analysed each country that we have outsourced to, which will allow us to match our choices in import crops with the countries that we are developing them in. Ultimately, the success of agricultural outsourcing lies in the proper and diverse exposure to host countries. We have classified the countries based on their development and infrastructure, as well as their stability.

What steps are being taken to ensure that the agriculture investments being made abroad will benefit the host country first?

AL DAREI: The plots that have been purchased on foreign land actually create a mutually beneficial situation for both entities involved. Over 50% of the production is sold to the host country at market value. Abu Dhabi’s presence also presents the locals with job opportunities. The UAE benefits by diversifying its agricultural production. It gains from not only securing future food supplies but also from boosted export activity. Sometimes dual investment protection treaties and dual commodity treaties must be negotiated to create a free bilateral trade relationship in the event that a host country puts a ban on a specific export.