Gulf countries are food-secure, but they do not seem like it. They have some of the highest obesity rates in the world, yet are afraid that not enough calories will reach their shores.
The fears are grounded in historical concerns, but when addressing them, governments have barked up the wrong tree.
The global food crisis of 2007-08 sent shock waves through the Middle East when agro exporters such as Russia, Argentina and Vietnam announced temporary export restrictions out of concern for their own food security. Gulf countries faced the spectre of not being able to purchase food at any price, even with pockets full of petrodollars.
The crisis raised memories of the 1970s, when food trade was highly politicised and the US tried to influence the foreign policy of other countries by selectively granting or withdrawing food aid. A food embargo was implemented against the Soviet Union in the wake of its Afghanistan invasion, but was unsuccessful as competitors such as Argentina, Australia and France picked up the slack. American farmers, meanwhile, were up in arms over list export revenues.
During the following decade, the US was anxious to re-establish its reputation as a reliable supplier of food. Since then, commercial priorities have prevailed in global food trade and allocation of aid is now mainly done via multilateral institutions such as the World Food Programme (WFP).
Yet the psychological damage was done. The concerns of the 1970s still loom large. As a reaction to the 2007-08 food crisis, Gulf countries tried to curb food inflation with subsidies, price controls and increased strategic storage.
Domestic agriculture has depleted aquifers. There is an ongoing shift from water-intensive production of cereals and green fodder to more value-added crops such as fruits and vegetables and water-saving technologies such as greenhouses, drip irrigation and hydroponics. In the early 1990s, Saudi Arabia was the worlds sixth-largest wheat exporter before phasing out its subsidised wheat programme in 2008. All wheat has been imported since 2016. There is no doubt Gulf food imports will continue to grow as the population increases and agricultural production does not.
Governments in the region are reluctant to trust global food markets. Instead they have sought privileged bilateral access to food production by announcing large-scale agro investments abroad, similar to the 1970s, when they unsuccessfully tried to develop Sudan as an Arab breadbasket. Most target countries have been food-insecure nations in Africa and Asia, such as Sudan, Ethiopia and Pakistan. They offer logistical advantages, yet are food net-importers themselves; some are the largest recipients of WFP aid.
Many of the announced agro investments lacked commercial viability and never got off the ground, or were implemented on a much smaller scale. Quite a few have not been successful.
Lack of funding
None of them provides meaningful contributions to the large food imports of the Gulf region. Nor are they likely to do so given the rapidly rising populations of these countries and the difficulties faced by their farming sectors, including poor infrastructure, governance issues and climate change. In the current low oil price environment, the chances of these projects being funded have declined further.
Where Gulf countries have put money on the table is in developed agro markets. The investments of Qatari Hassad Food in Australia or of Saudi Almarai in Argentina and the US are examples. But even these investments are not crucial for Gulf food imports, which continue to come from large agro exporters in the Americas, Eurasia, Australia and South Asia.
Much of the focus has shifted from politically controversial land acquisitions to investments in global supply chains. State-owned Saudi Agricultural & Livestock Investment Company teamed up with international grain trader Bunge to acquire a majority stake in the former Canadian wheat board, which was privatised.
The trend towards supply chain investments and food trading houses can also be seen in the case of Asian investors, such as Hong Kong-based Noble or Singapore-based Olam & Wilmar. Much of the international discussion in the wake of the global food crisis has focused on making international markets more transparent and reliable. Japan is importing more than half of its calorie requirements and has taken a lead in this discussion.
Gulf countries may think about increasing cooperation with such like-minded peers, but also with their main supplier countries. Agricultural investments in developing nations can still play a role, but should be undertaken with a developmental view of increasing food security in the respective countries. As a tool to safeguard food imports in the GCC, they failed in the 1970s and are doing so again today.
About the author:
Eckart Woertz is senior research fellow at the Barcelona Centre for International Affairs and author of Oil for Food (Oxford University Press)