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Food for thought

Food for thought

As Gulfood is underway, big questions are being asked about the UAE’s exposure to global food price fluctuations. What can be done?

February 28, 2011 2:56 by

One potential solution to the problem could see local companies investing in land abroad where they can grow product for the UAE (obviously the UAE’s extreme temperatures making growing many foodstuffs here inefficient). The idea was mooted in the National earlier this month; speakers at the Arab Food Industries and Franchising Forum in Jordan argued that if land in Sudan, Iraq, Libya, Algeria and Morocco were fully used it could support the rest of the region.

However, in Gulf News today, local companies are quoted as saying they lack the financial resources to make that plan a reality. Speaking on the sidelines of Gulfood (where else?), Mohammad Al Ghurair, Managing Director of Masafi, which produces fruit juice and potato chips as well as water, said, “It cannot happen. Upward integration requires major resources. We need the financial and political back-up to do this and preserve competition. Major companies can do this, but the market will not absorb this supply.”

In other words, the local market is not big enough and the export market is not large enough to sustain such an endeavor. This has prompted some to call for a public-private partnership to secure agricultural output abroad, thus sharing the cost. After all, the government has a vested interest in securing food supplies too.

But there are also concerns over the risks of investing in countries that may become politically unstable, or investing in a physical area that is vulnerable to nature (eg flooding). So for now there are more immediate calls for extra storage of raw materials that can be used in the event of a supply crisis.

“If you invest in farmlands in Australia and then floods hit, what do you do?” said Eisa Abdullah Al Ghurair at Al Ghurair Foods. “Why not hire warehouses and store foodstuffs abroad? If something happens, you have that security.”

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