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Answers to Gulf food crisis must be found closer to home

Answers to Gulf food crisis must be found closer to home

Striking deals with farms in Pakistan and Sudan may help alleviate short term problems, but domestic production must be improved.

August 25, 2008 8:23 by

Ian Munroe

Egyptian soldiers baking bread for a tide of hungry citizens, desperate looters storming a UN warehouse for emergency food stocks in Haiti and long, angry queues waiting to buy subsidized rice in Bangladesh – just a few of the images from a global food crisis that was unheard of a year ago.

Here on the Arabian Peninsula, governments have been trying to head off such unrest by sending aid abroad and implementing a range of food policies at home. Saudi Arabia says it will give $500 million to the UN World Food Program. Kuwait’s Emir donated $100 million to a fund that helps the hungry in Islamic countries. And the UAE wants to export 500,000 tons of wheat to Yemen.

Many GCC states are also working to grow their agricultural capacity by buying up farmland abroad. Abu Dhabi plans to cultivate at least 70,000 acres in Sudan, according to The Financial Times. Riyadh says it will invest in Thailand’s rice farms by the end of the year. And Pakistan has been eagerly wooing agricultural investment from rich GCC states, garnering interest from the Abu Dhabi Group.

The problem is, Gulf countries aren’t the only ones doing this. China wants to contract land in Tanzania, Laos, Kazakhstan and Brazil. India is looking to do the same in Uruguay and Paraguay, and South Korea is trying to forge a deal in Siberia. At the same time, many fertile countries are trying to keep their crops from escaping their borders. India, Egypt, Cambodia and Vietnam have all suspended rice shipments, while the Ukraine and Argentina have introduced new tariffs on agricultural exports.

Luckily, investments in foreign agriculture aren’t the only steps GCC governments are taking to fight “agflation.” Saudi Arabia plans to spend $18 billion over the next three years to raise social insurance payments and control the prices of basic foods, among other things. The UAE has coaxed two popular supermarket chains to agree not to raise the price of essential foods in 2008. Kuwait announced it would throw any retailer in jail that jacked up the price of 367 food items. Qatar introduced price controls on wheat products. And many of these countries also gave their public workers a raise.

Unfortunately those are mostly stopgap measures until GCC governments can come up with additional long-term fixes, which they have good reasons to do. Although Gulf states have buckets of money, they’re at the mercy of agricultural prices because they already spend more than $200 billion a year importing 90 percent of their food, and because inflation was causing them headaches before the food crisis started. There have also been rumblings of unrest by the armies of low-paid laborers that power the region’s construction sector. More expensive food prices could easily worsen those tensions.

And even if buying up the agricultural capacity of poorer countries helps combat higher food prices in the Gulf, it’s probably not a great long-term policy – especially if it catches on. The World Bank predicts the food crisis will last at least three years (if not more), and could drag 30 million people deeper into poverty.

For those who are suffering and who live under corrupt and undemocratic governments – as in the case of Sudan – they may find the produce of local farms being shipped increasingly to wealthier countries rather than being sold at the nearby market. In other words, GCC countries that stockpile agricultural capacity abroad could make the food crisis worse, not better.

Gulf states may instead want to take another look at their own soil, arid as it may be. “You need to export what you can produce at home better than the world,” argues Samir Pradhan, a senior researcher at the Gulf Research Center in Dubai. Encouraging local poultry farms and orchards to take root may be two options. UNESCO has even suggested erecting giant camel-milking farms in the desert.

“Governments in the GCC are putting in place measures,” Pradhan adds, “but they need to look at their agriculture sector from a long-term perspective. They need to focus on their core strength.”

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