Food be­yond bor­ders

Im­ports make up 90 per cent of the Gulf’s food sup­ply. With prices likely to rise, new sources are needed. Jonathan Gor­nall re­ports

The National - News - The Review - - Front Page - Jonathan Gor­nall is a free­lance jour­nal­ist based in Lon­don.

Brows­ing the well- stocked aisles of your lo­cal Car­refour or Spin­neys, it’s dif­fi­cult to imag­ine the phrase “food cri­sis” hav­ing any res­o­nance here. But in 2007 to 2008 and again in 2010 to 2011, Ara­bian Gulf states, heav­ily de­pen­dent on food im­ports, found them­selves in a dif­fi­cult sit­u­a­tion.

Ear­lier this month, the UN’s Food and Agri­cul­ture Or­gan­i­sa­tion and the Or­gan­i­sa­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment pub­lished their joint global agri­cul­tural out­look for the next decade and, on the whole, they con­cluded the fu­ture looks bright. Prices for the main crops, live­stock and fish prod­ucts all fell last year, “sig­nalling that an era of high prices is ef­fec­tively over”. Meat prices fell from record highs in 2014; dairy prod­uct prices “con­tin­ued de­clines that started in 2013 and 2014; while “crop prices fell fur­ther from their peaks in 2012”.

The main fac­tors be­hind these lower prices, the re­port con­cluded, were “sev­eral years of ro­bust sup­ply growth, weak­en­ing de­mand growth due to the over­all eco­nomic slow­down [and] lower oil prices”.

Great. Ex­cept, any­one re­spon­si­ble for food se­cu­rity in the oil-rich, soil-poor states of the Gulf who re­calls the FAO-OECD’s pre­dic­tions for the pe­riod 2007 to 2016 will doubt­less be tak­ing the op­ti­mism with more than a pinch of salt.

The FAO’s Food Price In­dex, up­dated monthly since 1996, tells the story of the twin food crises of 2007-08 and 2010-11, the re­ces­sions that hit dur­ing these years and the un­war­ranted con­fi­dence that pre­ceded it. The in­dex tracks and av­er­ages the move­ments of in­ter­na­tional prices of a bas­ket of five cor­ner­stone com­mod­ity cat­e­gories – ce­re­als, vegetable oil, dairy, meat and su­gar. Price fluc­tu­a­tions are usu­ally nor­mal.

Un­til 2007. That year the in­dex spiked on the back of eco­nomic growth, ris­ing more than 26 per cent over the pre­vi­ous year to an un­heard-of high of 161.4 points. The fol­low­ing year the in­dex leapt again, this time to 201.4 – a jump of 25 per cent in a year and an in­crease of al­most 60 per cent since 2006.

There was a brief respite in 2009. But then the roller­coaster was off again, shoot­ing up to 188 points in 2010 and soar­ing to an all-time high of 229.3 in 2011 – an in­crease of 80 per cent over the last “nor­mal” year, 2006.

So what did FAO-OECD have to say about the out­look for the next 10 years back in 2007? Their pre­dic­tion was a case study in hubris. The cur­rent “strong world mar­ket prices for many agri­cul­tural com­modi­ties” were “in large mea­sure, due to fac­tors of a tem­po­rary na­ture, such as drought”.

Global eco­nomic growth had “re­mained vig­or­ous through 2006” and “bright­ened prospects pre­vail in the macroe­co­nomic cli­mate”. Even “the re­cent down­turn of ac­tiv­ity in the United States” was “not ex­pected to last be­yond the short-term, and there­after growth is as­sumed to re­main solid”.

Few will need re­mind­ing of the en­su­ing global melt­down, trig­gered by the burst­ing bub­ble of the US hous­ing mar­ket. In the UAE, es­pe­cially in Dubai, some of the con­se­quences were im­me­di­ately ob­vi­ous as many grand de­vel­op­ments ground to a halt overnight. But while to the ca­sual ob­server it may have looked like the UAE had gone into sus­pended an­i­ma­tion, be­neath the still sur­face the coun­try was pad­dling fu­ri­ously.

“For the Gulf states it wasn’t just an is­sue of food prices,” says Jane Har­ri­gan, pro­fes­sor of eco­nom­ics at the Univer­sity of Lon­don’s School of Ori­en­tal and African Stud­ies. In one sense, though they were and re­main de­pen­dent upon food im­ports, they were “lucky be­cause oil prices and food prices his­tor­i­cally tend to move in tan­dem”.

In­deed, high oil prices had been one of the fac­tors that had driven up food prices. The av­er­age an­nual Opec crude price had been climb­ing steadily since the turn of the new mil­len­nium, sur­pass­ing $68 a bar­rel in 2007 and av­er­ag­ing over $94 in 2008. Along with food prices, it dropped briefly in 2009, to an av­er­age of $60, be­fore climb­ing again to an all-time high of $109 in 2012.

In the­ory, then, the oil-rich states were in­su­lated against food price rises. But the prob­lem, says Prof Har­ri­gan, was that many of the tra­di­tional grain ex­porters who were suf­fer­ing do­mes­tic short­ages placed em­bar­goes on their grain and rice ex­ports, and “the Gulf states were faced not just with mas­sive hikes in prices, they were also faced with the threat that they may not be able to ac­cess this food at any price”.

The re­sponse was both imag­i­na­tive and con­tro­ver­sial – to se­cure food sup­plies by ei­ther buy­ing or leas­ing great swathes of land over­seas, mainly in East Africa but also in coun­tries such as Pak­istan. In turn­ing to coun­tries such as Tan­za­nia and Su­dan to counter food em­bar­goes put in place dur­ing the global food cri­sis by tra­di­tional ex­porters such as Rus­sia, In­dia, Viet­nam and Ar­gentina, Arab states were fol­low­ing an ex­am­ple set by coun­tries such as China and South Korea.

But then a funny thing hap­pened. Al­though they were nei­ther alone, nor even the first to go shop­ping for land, the bulk of the crit­i­cism for this pol­icy was aimed squarely at the Gulf na­tions. In 2013 The Wash­ing­ton Post re­ported that “Gulf sheikhs” were “snatch­ing up farm­land world­wide”, echo­ing hys­ter­i­cal fin­ger-point­ing from NGOs and oth­ers.

Back in 2008, at the height of the first global spike in food prices, Grain, an in­ter­na­tional non-profit or­gan­i­sa­tion that cam­paigns on be­half of the world’s small farm­ers, pro­duced the re­port Seized: The 2008 land grab for food and fi­nan­cial se­cu­rity. What it called “the vi­o­lent process” of “snatch­ing ... vast areas” of farm­land from un­der the noses of im­pov­er­ished lo­cals in Africa was on a par with “Colum­bus ‘dis­cov­er­ing’ Amer­ica and the bru­tal ex­pul­sion of in­dige­nous com­mu­ni­ties that this un­leashed”, raged Grain.

West­ern me­dia were quick to pick up the pe­jo­ra­tive buzz­words, such as “land grab”, which con­tinue to frame the con­ver­sa­tion about food se­cu­rity for the Arab world to this day. Yet what­ever the pros and cons of land ac­qui­si­tion deals in in­di­vid­ual host coun­tries – and one can hardly blame Gulf gov­ern­ments for putting their own peo­ple first in seek­ing sources of food – the bulk of the “land rush” can­not be laid at the door of Arab states.

As Prof Har­ri­gan makes clear in her 2014 book, The Po­lit­i­cal Econ­omy of Arab Food Sovereignty, be­tween 2000 and 2010 the na­tions of West Asia – a cat­e­gory that in­cludes most of the Arab coun­tries – were re­spon­si­ble for only 12 and 6 per cent of the hectares ac­quired in Africa and Asia. Coun­tries in Europe, Africa and Asia took far more land, and even North Amer­ica se­questered al­most as much as the West Asian coun­tries.

So why the fo­cus on “Gulf sheikhs ... snatch­ing up farm­land world­wide”? Rami Zu­rayk, an agron­omy pro­fes­sor at the Amer­i­can Univer­sity of Beirut, ar­gued in his 2012 book Food, Farm­ing and Free­dom: Sow­ing the Arab Spring, that such cov­er­age was a man­i­fes­ta­tion of Is­lam­o­pho­bia which, as Prof Har­ri­gan noted in her book, “fails to ac­knowl­edge the equally per­ni­cious ef­fects of west­ern cap­i­tal­ism and its multi­na­tion­als on the food sovereignty of poor coun­tries”.

In any case, was “land grab” a fair char­ac­ter­i­sa­tion of the process? The is­sue has po­larised aca­demics, says Prof Har­ri­gan, into “those who see it as a neo­colo­nial form of ‘land grab’ which has neg­a­tive ef­fects on the host coun­try and those who see it as a win-win sce­nario in which both in­vest­ing and host coun­tries ben­e­fit”.

What­ever the mer­its, the ex­tent or in­deed the truth of the Great Arab Land Grab, it is now more or less his­tory. Gulf states, says Prof Har­ri­gan, were stung by the wave of crit­i­cism, “and in re­sponse to the ad­verse pub­lic­ity … have started to look at al­ter­na­tive mod­els” for food se­cu­rity.

The prin­ci­ple re­mains in­tact – seek­ing land over­seas to en­sure food se­cu­rity – but “they are now turn­ing to coun­tries which are more in line with their tra­di­tional sources of grain im­ports”. Coun­tries such as Pak­istan, Su­dan and Ethiopia are no longer on the shop­ping list and Gulf states “have now started re­fo­cus­ing their at­ten­tion on some of the up­per-in­come tra­di­tional grain ex­porters, like Ukraine, Aus­tralia and even Brazil.”

And even the US. In March this year Al­marai, one of Saudi Ara­bia’s largest dairy com­pa­nies, con­firmed large pur­chases of land in the US south­west, where it plans to grow al­falfa as feed for its cat­tle back home.

Only time will tell whether the new model for land ac­qui­si­tion will prove a sus­tain­able life­line in the event of another global food cri­sis. What is cer­tain, how­ever, is that more than 90 per cent of the Gulf’s food is still im­ported. Ac­cord­ing to the Econ­o­mist In­tel­li­gence Unit, in 2004 the bill for that was US $25.8 bil­lion (Dh94.75 bil­lion). By 2020 – even with­out another food cri­sis – it will be US $53.1 bil­lion.

In the Gulf, where na­tions such as the UAE are work­ing tire­lessly to re­duce their de­pen­dence on in­come from fos­sil fu­els and in­vest­ing in new green­house tech­niques, soil-less farm­ing and hy­dro­pon­ics, there re­mains an am­biva­lent at­ti­tude to the price of oil, to which the cost of food is so closely re­lated.

The Opec bas­ket price cur­rently stands at about US $44, up from a low of US $26.50 in Jan­uary and, while far below the US $109.45 peak in 2012, pos­si­bly creep­ing back up to­wards the US $54.19 of July last year.

FAO-OECD may be cor­rect in their san­guine as­sess­ment about the move­ment of food prices over the com­ing decade. But canny food strate­gists in the Gulf know that food costs will soar in the wake of any price hike for oil – and that they will need some imag­i­na­tive so­lu­tions if those su­per­mar­ket aisles are to re­main well-stocked.

Il­lus­tra­tion: Alex Bel­man / The Na­tional

Sammy Dal­lal / The Na­tional

The fruit and vegetable mar­ket in Mina Zayed, Abu Dhabi, where pro­duce is sold. Most of the UAE’s food sup­ply is de­pen­dent on food im­ports from over­seas.

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