Gulf Arab governments tackle higher food prices
Food price rises are less risky in the oil wealthy Gulf, but Saudi Arabia may see some public anger.
February 3, 2011 11:34 by Reuters
BUYING UP FARMS
Growing more food locally is not a viable option for countries in the world’s top oil exporting region, with extreme summer temperatures that can top 50 degrees Celsius (122 degrees Fahrenheit) and limited access to water.
Investing for the longer term, they are leasing and buying farmland in developing nations to cut the swelling food import bill.
“Subsidies is one way over the short term but they all have to think how they can be effective in investing abroad in various agricultural producing countries,” said John Sfakianakis, chief economist at Banque Saudi Fransi.
Hassad Food, owned by Qatar’s sovereign wealth fund — a top global investor — has been in talks with governments in Argentina and Ukraine to buy farmland for cereals production.
But investing in farmland abroad is not without its critics who accuse buyers of perpetrating a “land grab” that could reduce access to food for some of the world’s poorest people.
In Saudi Arabia, where food accounts for a quarter of household costs — more than anywhere else in the region, the government is boosting wheat reserves to cover its needs for a year instead of six months.
“The inflation is burning a bigger hole in my pocket as my salary has not increased for the last two years,” said Kassim al-Falahi, an Omani government employee. “With three kids and parents to look after, it is tough to keep up with rising prices of food.” ($1=.2794 Kuwaiti Dinars) ($1=3.750 Saudi Arabian Riyals)
(By Asma Al Sharif and Martin Dokoupil. Additional reporting by Cynthia Johnston, Erika Solomon and Martina Fuchs in Dubai; Eman Goma in Kuwait and Saleh Al Shaibany in Muscat; Writing by Martin Dokoupil; editing by Keiron Henderson)