Peter
Schwartzstein

Brit-Yank journalist & consultant roving around the Middle East.
Fellow @ Center for Climate & Security, Reporting @NatGeo, @Newsweek, @bbc etc

@pschwartzstein

published on Bloomberg Businessweek on Apr 2, 2019

read on original website

Sudan’s Bid to Feed the Middle East Left Its Own People Furious

The country could be one of the world’s great breadbaskets. Instead, land disputes and steep food prices have pushed it to the brink.

When the Jordanian army went shopping for land in northern Sudan in late 1999, its scouts came across what appeared to be a food-growing paradise. The terrain was vast, flat, and fat with nutrients. The water it could draw from the nearby Nile was almost embarrassingly bountiful. And local officials were bending over backward to offer favorable financial terms. It all seemed like a can’t-miss opportunity to supplement Jordan’s national food supply while turning a tidy profit. The military pension fund snapped up 9,000 acres of backcountry scrub three hours’ drive north of Khartoum, and the farmhands got to work.

Soon afterward, as news of potential riches spread, the surrounding land began filling up. A Pakistani company leased a large plot to the south. Syrians began farming to the north. Emiratis, Lebanese, Yemenis, and others acquired 100,000-plus acres apiece. The main north-south highway that runs alongside Al-Bashaer, the Jordanian farm, grew clogged with tractor-trailers carrying hay bales that would become fodder across the Red Sea. “There’s good soil, enough water, sunshine, everything you need to grow a lot of crops,” says Abdelazim al-Jak, a Khartoum native who now manages the farm. “It shouldn’t be a surprise that everyone wants it.”

The mad dash has only accelerated in recent years, as Sudanese authorities, desperate for revenue, have resurrected the country’s long-standing dream of becoming an agricultural superpower. Since losing access to most of the country’s oil revenue with the secession of South Sudan in 2011, they’ve been trying to parcel out land to cash-rich, food-poor investors. In 2016 the Saudi government leased 1 million arable acres in the east of the country. Not long after, Bahrain leased 100,000 acres, a plot almost as large as Bahrain itself.

By the time villages across Sudan’s River Nile and Northern states had awoken to the full scale of foreign land acquisitions, even nonfood producers such as Jordan’s Sayegh Group, the Middle East’s biggest paint producer, were muscling in. “You could walk hundreds of kilometers without stepping on Sudanese-owned land,” says Khaled Khairallah, a livestock herder in Wad al-Habashi, a village to the south and across the river from Al-Bashaer. “What is left for us?”

Arab policymakers have been touting Sudan’s ability to feed the populous and water-scarce Middle East since the 1970s. The country features as much as 200 million acres of arable land, a strategic location less than a day’s sail across the Red Sea to the Saudi port of Jeddah, and a roughly 25 percent share of the Nile’s waters under regional agreements, much of it unused. In the Middle East and North Africa, by contrast, World Bank and United Nations statistics show that the number of chronically undernourished people has doubled, to 33 million, since 1990, and that water availability has tumbled on average to a sixth of the global mean. “We have vast resources, and they have vast need,” said Mubarak al-Fadil, Sudan’s former minister of investment and deputy prime minister, when we spoke in August. (He resigned in January.) “We just need their finance and expertise.”

The benefits for both parties would seem obvious. And yet little of the 5 million acres the agriculture ministry estimates are in foreign hands—perhaps less than 1 in 20 acres—has been cultivated. “Nothing’s happened! Really almost nothing’s happened,” says Osama Daoud Abdellatif, chairman of the Dal Group, the country’s largest conglomerate. “Someone got this land, and someone got that land. But few have done much.”

Many of the problems here resemble those of other developing markets: corruption, inconsistent policies, political instability. Others are particular to Sudan. Bouts of chaos during the 1980s, including a debilitating drought and two regime changes, torpedoed many big early ventures. Then, as oil revenue rose in the 1990s, the government’s attention wavered and crucial infrastructure, such as the 2.2 million-acre Gezira Scheme, Africa’s largest irrigation project, was left to crumble.

Since then, the erratic rule of Omar al-Bashir, who’s held power since 1989 and is wanted for war crimes by the International Criminal Court, has slowly killed off other investment. Harboring Osama bin Laden for much of the early 1990s didn’t help. Sudan was slapped with U.S. sanctions in 1997, thrusting it into an isolation so complete that Khartoum made do with the likes of Starbox coffee and Kafory Fried Chicken. A spike in global food prices in 2007 and 2008 brought renewed flurries of Gulf Arab interest, but inquiries rarely went beyond the planning stage.

U.S. sanctions were lifted in 2017, but the African country’s precarious finances nevertheless plumbed new depths, with inflation topping 70 percent the following year. The resulting desperation, coupled with the Middle East’s still-growing population and still-diminishing agricultural capacity, had Sudanese officials feeling confident they could finally make their breadbasket dreams a reality.

he effort may yet pay off, but early signs augur ill. Many Sudanese describe the plan as little more than a naked land grab that’s depriving them of their ancestral fields while enriching the government and a foreign corporate elite. The anger has spread from villages to cities, becoming part of a larger uprising—the so-called Revolution of the Hungry—that constitutes the gravest threat to Bashir since he seized power. Protests triggered in part by soaring bread prices have taken place in more than 30 cities and towns since mid-December, and at least 50 people have been killed. The unrest shows no signs of abating. As one farmer from Gezira state, not far south of Khartoum, told me, “We’ll protest until we’re dead or we get our way.”

At 2 p.m. on a blazingly hot July afternoon, the agriculture ministry in downtown Khartoum was eerily silent. Gun-toting guards sipped tea in the shade. A tabby cat slunk across the neat colonial-era courtyard. Only outside the agricultural investment office, a shuttered suite of ground-floor rooms, could much activity be found. A half-dozen people from as many businesses were pacing back and forth. “They’re meant to be here,” said a man who gave his name as Hassan and his job as a secretary at Amtaar Investment, an Emirati agribusiness. “We all need papers signed.”

Operating in Sudan has never been easy. Coordination between local and federal officials is often negligible. Rules and regulations are subject to sudden change—recently, one state government doubled tolls on its section of the road to Port Sudan overnight, throwing corporate budgets into disarray. Key portfolios such as pastureland, desertification, and forestry are frequently tossed from one ministry to another and back again. “There is no stability in agricultural policy. Experts come and go. Not even the minister knows what budget he’s getting,” said Abdellatif Ujeimi, the third of at least six agriculture ministers since 2014. (His tenure lasted about a year, until May 2018.)

Decision-making has been shaped by decades of corrupt or limited governance. Sudan ranked 170th out of 176 countries in Transparency International’s 2016 Corruption Perceptions Index, and bribes are still often the only way to obtain timely approval of paperwork such as applications to import fertilizer, according to several agribusiness executives. (Like others interviewed for this piece, they wouldn’t agree to be named for fear of imperiling important relationships.) “Put it this way: Gulf investors don’t take out political-risk insurance with us, because they’re already protected at the highest level,” an official at a regional development bank said.

Ongoing conflict in several pockets of the country, along with Sudan’s continued listing by the U.S. as a state sponsor of terrorism despite the lifting of sanctions, means working there carries reputational risk, too. And with next to no official oversight, there’s little to save a business—or the people living near it—from its own foolhardy behavior. Alrawabi for Development, a Saudi-Yemeni company with more than 200,000 acres in River Nile state, pumped water from the aquifer under its property so aggressively that it ran every well in the area dry, including those servicing neighboring villages. Instead of being punished, the business entered into talks with the government to extract water directly from the Nile. In the meantime, the desert has reclaimed much of its land and that of some newly water-deprived neighbors. (Alrawabi didn’t respond to requests for comment.)

Then there are the state’s broken promises to upgrade flimsy infrastructure. The country’s rutted roads and single-track railways are so slow that Abdellatif said his Dal Group spends “much less—much, much less” to ship wheat from Australia to Sudan, over 6,000 miles, than to transport it the 500 miles from Port Sudan to its mills in Khartoum. In 2018, Sudan’s principal refinery, just north of Khartoum, failed, forcing many agribusinesses to spend a small fortune on black-market fuel.

The pressure on companies to make things work is intense—Saudi businesses such as Almarai, Al Safi Danone, and Nadec, for example, are contending with a ban at home on animal-fodder cultivation, forced on them in November in response to depleted groundwater reserves. They need to get their alfalfa, an extremely water-intensive crop, somewhere. But despite the success certain foreign farms have had growing it in Sudan, they’ve been slow to expand their smallish existing operations. “We absolutely look at Sudan as the answer to our problems. It’s 350 kilometers away. It should make economic sense,” said a senior Saudi dairy executive. “But that infrastructure, that government ... a lot still needs to change.”

Head to the fields, and you can still find a case for optimism, or at least for doggedness. The GLB Invest farm, 100 miles north of Khartoum, is the kind of place brochure photographers drool over. Its lush alfalfa fields rise from the desert like great green mirages, their gleaming new irrigation pivots—vast sprinkler systems on wheels—extending for miles along the Nile’s west bank. The farm’s monster pumps inhale enough river water every half-hour to fill an Olympic-size swimming pool, propelling it inland through a subterranean pipe network. When, roughly every 30 days, crops are ready for harvest, they’re packed into neat rectangular bales to be stacked with top-of-the-range equipment, then loaded onto trucks for the seven-hour drive to Port Sudan, midway along the country’s 530-mile-long Red Sea coast between Egypt and Eritrea. Within days, the alfalfa is feeding cows in Dubai. “It’s really quite an operation,” says Khalid Kahin, GLB’s general manager.

Lebanon’s agribusinesses haven’t been shy about chancing tricky markets, compelled to adventure by their country’s small size and sometimes oppressive bureaucracy. GLB Invest has gone all-in on Sudan, with 226,000 acres and ambitions of assembling as many as 1,000 quarter-mile-long pivots. Kahin, a jovial Sudanese businessman who speaks in carefully considered, British-accented clips, has been working in agriculture for more than 20 years, mostly in Saudi Arabia. He sounds almost giddy about Sudan’s potential. The company’s acreage is as fertile as any he’s overseen. The water allocation, too, is stunningly generous: 900 million cubic meters of Nile water a year, roughly half the amount Lebanon and its more than 5 million inhabitants use annually. “We’re testing groundnuts now, we’ll test potatoes in the winter, but we can grow pretty much anything,” Kahin says, his voice rising. “You see why we’re all excited, right?”

Then there are the ever-sweeter financial incentives. Land leases are cheap (often less than 50¢ per acre) and long (generally 99 years), and they come with few strings attached. Water is free. A former manager of a now-defunct Egyptian operation in southern White Nile state says his company was granted about 750 million cubic meters a little more than a decade ago, 4 percent of Sudan’s entire annual Nile share under regional agreements; he calculates that this volume of water would cost more than $1 billion elsewhere. And agribusinesses pay little to no tax—an essential concession, they insist, given the difficulty of doing business. There’s no longer even a requirement that investors employ Sudanese workers, much to local communities’ fury. And GLB and most of its peers are guarded by soldiers seconded from Sudan’s security forces.

The removal of U.S. sanctions has also somewhat eased access to banking and foreign exchange. “It helps the mood, and of course a lot of the tech is coming from America,” Kahin says. Geopolitics, too—notably the Saudi-led blockade of Qatar—have shifted in Sudan’s favor, seemingly reinforcing some countries’ desire for direct control over their food supply, or at least boosting Bashir’s bargaining position as he grapples for regional support. In July the Qatari government signed off on a $500 million agricultural deal in northern Sudan, a supplement to its existing 260,000-acre plot. The questions now dividing Sudan concern who benefits if and when the foreign companies figure out how to make all this work.

From the moment the Emirati company Anhar broke ground on its farm, the elders of Mahas village had a feeling they were losing out. For months in early 2005, they’d watched nervously as the 40,000-acre Zayed Al Khair project took shape along the northern fringe of their village in Gezira. And for months, as infrastructure started going up, they’d sought and received assurances they wouldn’t lose access to any of their land. But one mild spring morning, when they escorted their camels to the usual grazing ground and found the way blocked by coils of razor wire, they knew their worst fears had been realized.

“Everything that we own was taken from us,” says Osman Abbas Mohammed, chairman of the local agricultural association, as his neighbors nod in assent. “Our fathers and our fathers’ fathers used this land. Now we have been left with empty hands.” (Anhar didn’t respond to multiple requests for comment.)

Bashir’s government consistently claimed that foreign agricultural investment would be a boon for all Sudanese after their years in the economic wilderness. The view from the countryside is that it’s been anything but. Villagers point out that the expanses the state sells or leases to foreigners aren’t empty, and that it’s appropriating land without offering much or any compensation. (Under a 1970 law, all undocumented land belongs to the state, a convenient provision for the government, since communities often don’t have paperwork to establish traditional claims.) The injustice has had measurable consequences, locals say, describing soaring fodder and vegetable prices in places such as eastern Gezira after megafarms began producing export crops on key agricultural plots.

The authorities argue that villagers haven’t been using the land to its potential. “It’s not being fully utilized, certainly not in the way that it should be,” Fadil, the deputy prime minister, said when we spoke last August. And for companies, the furor is simply one more hurdle. “The minute that land is assigned, you get visits in your office in Khartoum from people who say that’s the land of my ancestors,” says an executive at a Saudi company. “The government says, ‘Hey, that’s your problem,’ so you just end up getting extorted.” Businesses also point out that they often construct infrastructure, from highways to power lines, that benefits villagers.

But few villages are giving in, and with climate change also shrinking their grazing land, anger at the government and its corporate partners has spilled over into—and in a number of instances fueled—the recent countrywide unrest. Dozens of locals burned down the Nile pump station at Zayed Al Khair, in 2016. That was the first of many demonstrations during which participants honed slogans such as “Freedom, peace, and justice! Revolution is the choice of the people!”—it rhymes in Arabic—that are being chanted across the country.

In East Jerif, just over the Blue Nile from Khartoum, at least five men who were demonstrating against land appropriations were killed by security forces in 2016 and 2017. In North Kordofan, where Nadec operates a 50-pivot plantation, a guard shot a young woman twice in the leg in early 2018 after she pursued her runaway camels into the fields, prompting outrage that spread into neighboring villages and finally into Omdurman, Khartoum’s twin city. (Nadec didn’t respond to requests for comment on the incident.)

“We have martyrs now,” says Abdelmajid Mohammed Ahmed, a farmer and protest organizer. “This has become about more than just the land they’re trying to take.”

Sitting in his office on the top floor of the glass-paneled ministry of investment prior to his resignation, Fadil acknowledged that getting foreign farming on its feet was proving more challenging than expected. “The finance, the infrastructure, this takes time,” he said. “Sudan is a unique economy. It defies all norms.”

Left unsaid was that the fate of its grand food-producing plan wasn’t entirely in the country’s hands. Ultimately, it could rest on the ambitions and fears of neighboring states. Egypt is deeply concerned about the prospect of large-scale agricultural expansion upstream along what’s practically its lone water source; according to Fadil and other Sudanese officials, the country has conspired to kill off projects in the past. They also complain that Egypt has spent decades neutering the Arab Organization for Agricultural Development, a branch of the Arab League, headquartered in Khartoum, that was established to support agriculture in Sudan. “The management of this fund was Egyptian, and they didn’t want it to succeed,” Fadil said. Farm laborers in the Nile valley echo these concerns, muttering darkly, if without evidence, about Egyptian agents sabotaging irrigation and electricity networks.

The implication is that, for as long as Sudan’s breadbasket aspirations last, its northern neighbor will be keeping a watchful eye on any developments—and perhaps doing more than observing. “If I have this room, and it comes to me with fresh air through the door, and then my neighbor next to me says he will close the door because he wants all the air, this will be a big problem,” says Ayman Abou Hadid, a professor of agriculture at Ain Shams University in Cairo and a former Egyptian minister of agriculture. “If this is the situation, I will force open the door and fight you.”

More significant still will be the posture of the Qataris, Saudis, and Emiratis, Sudan’s largest financial benefactors. Although all depend heavily on food imports, some of their agricultural investment to date has seemingly been as influenced by political considerations—such as Sudan’s dispatching of several thousand troops to fight with the Saudi-led coalition in Yemen—as by food security or commerce. “There was a renewed wave of agricultural investment a few years ago, and why do you think that was?” asks the regional development bank official who’d also spoken to me about Sudanese corruption. “Because of Sudan’s involvement in the war in Yemen. That was a carrot. These businessmen, they’re told, ‘Invest in Sudan.’ That’s just how it works.”

Saudi Arabia made a large deposit in the Sudanese central bank in 2015 as a reward for breaking ties with Iran, Riyadh’s great rival. Some experts see Qatar’s recent land investments as bids to keep Sudan on its side in its tussle with the Saudis and Emiratis for influence. Thus far, however, none of the Gulf Arab powers has moved to prop up Bashir—a possible kiss of death for a regime that’s often fallen back on outside help in times of crisis.

Such games are only adding to the public’s anger. Rage over the land appropriations has spread into the cities, where the loss of land has struck a chord among people who are mostly only a generation or two removed from rural living and who are wrestling with catastrophic food prices. Tomato prices have quadrupled, to about $4 per kilogram, since the beginning of 2018, as have prices for many other fruits and vegetables. Sorghum, a staple crop, costs double what it did a year ago. “I think the problem is: Why are these people investing here? Are they coming just to take the land and water? That’s not investment, that’s rape,” says Dal Group’s Abdellatif. “We’ve got to get the formula right.”

In economic terms, the price hikes don’t trace to land-grabbing—they’re more the product of a collapsing currency, fuel shortages, and poorly orchestrated subsidy reforms—but the optics have been dire. “It’s just what the government does. They take people’s possessions, they steal money, and they ruin everything,” says an accountant in Khartoum who declined to be identified for fear of police reprisal. “Now they’ve made us hungry. It can’t last.”