The Gulf and Asia: Cooperation or Competition for Food Security?

Eckart Woertz

After decades of declining food prices in real terms, the years 2007 and 2008 saw food inflation that sent shock waves around the world. Rising food prices were a strain on scarce foreign exchange reserves of the poorer among food importing nations, and compromised the accessibility to healthy and nutritious food for vulnerable segments of the population. Even rich food importers like Singapore, Japan, South Korea, and the Gulf states were affected as food exporters like Argentina, Vietnam, India, and Russia implemented export restrictions out of concern for their own food security.

Causes of the food crisis vary. On the demand side, dietary change in emerging markets like China to more meat and dairy-based diets, biofuel demand in the developed world, and slowing but continuous population growth in many developing countries weighed in the balance. On the supply side, productivity growth in developed agro-markets has petered out since the 1990s and waste along the logistic chain continues to be high. The switch of farm policies in the US and the EU from price support to direct handouts to farmers since the 1990s also played a role as stocks declined. The discovery of commodities as an asset class by yield starved financial investors contributed to increased volatility and overshooting of prices. As far as pension funds chose to take long only positions this led even to additional demand and increased prices.

The debate about causes and possible remedies is heated and cannot be solved or even outlined in extensive detail here. Instead, I want to compare some of the reactions by Asian and Gulf countries to the global food crisis and explore where they might cooperate or compete in their efforts to achieve food security. Four strategies are of particular importance: a) Planned agro-investments overseas, often in developing countries that are food insecure like Sudan, Pakistan, the Philippines or Ethiopia; b) increased strategic storage of staple foods on a national level without international coordination; c) cooperation with international organizations and the launching of initiatives on an inter-state level; and d) inclusive growth policies that ensure entitlements and access of poor people to food.

The Gulf's Strategic Interest

The Gulf countries import most of their food, especially cereals and oilseeds. Saudi Arabia was self-sufficient in wheat until 2007, but then it decided to phase out subsidized production by 2016, as its reliance on exploitation of non-renewable fossil groundwater resources is unsustainable. In other food items like fruits, vegetables, fish, or poultry, self-sufficiency ratios are higher and can reach 70 percent and more in some cases. Yet food import dependence is substantial and is set to rise as the population will continue to grow until 2050 at least, while agricultural production will stay flat at best given limited water resources and likely exposure to climate change in an already arid region.

In contrast to wheat, Saudi Arabia continues to expand its dairy and poultry production. It also imports large quantities of sheep for fattening ahead of the Aid al-Adha and the pilgrimage season. As in other emerging markets, there is a trend towards protein rich diets. For its livestock sector, Saudi Arabia has large feedstock needs. It imports over 40 percent of globally traded barley. Green fodder like alfalfa is also increasingly imported either in hay or pellet form.

The relative import dependence of smaller Gulf countries is still greater than in Saudi Arabia. Their arable land and water resources are more limited and their agricultural sectors are comparably small. Contrary to the trend of agricultural downsizing, Qatar has propagated a renewed version of the self-sufficiency vision via its Qatar National Food Security Programme (QNFSP). With futuristic means like greenhouses that run on solar based desalination, the country hopes to produce 70 percent of its food by 2023, up from currently only 10 percent. The Gulf countries already use desalinated water extensively for residential supplies with potable water. However, for agriculture mainly non-renewable fossil water is used because desalination is too expensive and uneconomical. A small city-state like Qatar might achieve its self-sufficiency vision at great costs with such technical inputs, but for more populous countries this is not an option.

The problem of food import dependency is not confined to the Gulf countries but also shared by neighboring countries in the Middle East. They face even greater challenges as they do not have the ample oil revenues to foot the growing food import bill. Egypt is the world's largest wheat importer and the Middle East as a whole imports almost a third of globally traded grain.

Naturally, the food export restrictions in 2008 rang alarm bells in the Middle East and triggered memories of fragile food supplies in the past. During World War II, only supplies from the Allied Middle East Supply Center in Cairo averted famines and in the 1970s, the US threatened a food embargo in retaliation to the Arab oil boycott. Gulf countries have reacted by raising subsidies and public sector salaries or giving direct handouts to the local population in order to ensure food affordability. All of them have increased strategic storage of food items like cereals, sugar and dry milk. Oman has the most advanced system of strategic storage; all GCC countries now envisage storage of at least 6 months and up to 12 months and more. A highly publicized reaction has been planned agro-investments abroad. The focus has been on countries that are nearby and where some political and cultural ties exist like Sudan or Pakistan. Yet these countries and other developing countries like Ethiopia, Tanzania, the Philippines or Cambodia are food insecure. Hence, these investments are controversial.

On the other hand, there is a huge implementation gap. Contrary to widespread media hype, only a few of these projects have seen some degree of realization. Apart from political resistance, impediments have ranged from corruption to lacking infrastructure and financing problems in the wake of the...