In one of the largest farmland grabs in history, the United Arab Emirates is close to finishing a multi-billion dollar farmland lease deal with Iraq. Iraq is going to lease farmland to a private sector firm in the UAE, according to a recent Reuters article.

Sami R. Araji, chairman of Iraq’s National Investment Commission explained, “We are in the final stages of signing a multi-billion dollar deal with a UAE company which would invest in our agriculture sector and the produce will be shared.”

The UAE firm is leasing the farmland long-term because foreigners cannot own farmland in Iraq, according to Reuters.

This particular land deal has a unique aspect, a water management system. Araji noted, “Products such as wheat and barley will be grown, but more importantly the investment will include the installation of a water management system.”

Many areas in the once, “Fertile Crescent,” have dimensioned soil quality because of salinity. This agriculture deal reportedly includes cleaning many rivers and restoring the area to be more agriculturally productive.

Outlook

Many gulf countries are very dependent on food imports, and while richer countries typically lease farmland for low prices from developing countries, it looks like this deal may be mutually beneficial. The UAE will help solve their food security issues, while Iraq will be receiving a water management system and monetary benefits while their farmland is being restored.

Iraq requires roughly $18 billion to restore its farmland, according to its government back in June. This land deal could help move along the restoration process for Iraq.

Food security is often a top priority of a country. If people cannot eat, then they cannot live. Food is one of the basic necessities of life and it all comes from some sort of farmland. While the global population has more than doubled since 1950 and will increase to over 9 billion by 2050, according to the United Nations, the demand for farmland will grow because of an increase in demand for food.

Food production will need to rise by 70% by 2050, according to the UN. Obviously, technology will help meet food demands, but feeding 9 billion people on a lot less farmland than what we have now, because of farmland conversion, will be an extremely difficult task.

While underdeveloped countries are growing in population the fastest, they are slowly becoming wealthier. “The average Chinese spends 40 cents of every additional dollar earned on food. In India, it’s about 70 cents of every additional dollar,” Chris Mayor of Penny Slueth noted in a recent article.

The demand for food can only increase, while the supply of farmland is unfortunately decreasing. Farmland will prove to be one of the best investments of this generation while this supply and demand imbalance continues.

-Colvin