EGYPT – Al Dahra, an Emirati agribusiness is discussing purchasing additional agricultural land in Egypt in a deal that could reduce Cairo’s dependence on imports of staple crops but also reignite water use concerns.

According to close sources, negotiations are taking place between the group’s local subsidiary, Al Dahra Egypt, and the Egyptian Army’s National Service Projects Organization (NSPO).

The sources did not specify how close a deal would be. Still, the investment may encompass hundreds of millions of dollars in much-needed funds for desert reclamation and cultivating important commodities like wheat and corn.

According to the agreement prospects, the arrangement might call for the gradual purchase of 500,000 feddans (210,000 hectares) through a purchase or a long-term lease in Toshka in the governorate of New Valley.

For the Emirati company, this approach is part of a strategy to expand its activities in the country. 

The group already operates nearly 28,000 hectares of agricultural land across the governorates of New Valley and Ach-Charqiya mainly for the production of wheat and irrigated corn, but also citrus fruits, onions, sorghum, and sesame. The company sells nearly 80% of its harvests on the local market. 

Egypt, a top importer of basic commodities, has been trying to reduce its import bill as it grapples with a foreign currency shortage that caused it to defer wheat payments.

Wheat imports are used to make heavily subsidized bread, a politically sensitive benefit available to tens of millions of people.

Egypt has been able to reclaim some desert as it seeks to feed a growing population but still only cultivates about 4% of its total land area, according to data issued by the U.N. Food and Agriculture Organization.

Al Dahra told Reuters in a statement that it works closely with stakeholders to look for opportunities to expand in a sustainable way.

“Should new agreements or partnerships be established in Egypt, Al Dahra will announce (them) at an appropriate time,” the company said.

Wheat cultivation in the desert, according to Gamal Seyam, a professor of agricultural economics at Cairo University who collaborated with the government on studies on Toshka, is not a wise use of water.

It was preferable to import grain from locations where it can be cultivated more simply and inexpensively through agreements like the one Egypt inked with Al Dahra earlier this year, even if wheat grown in irrigation-required regions is not exported.