Arab states need to set up strategic stockpiles of cereal and other basic farm products to face any crisis and offset sharp rises in global commodity prices given their heavy reliance on food imports, according to an official group.
A landmark free trade zone signed by most Arab nations a few years ago will support such a project while the private sector could play a vital role in its implementation, said the Khartoum-based Arab Organization for Agricultural Development (AOAD), an affiliate of the 21-nation Arab League.
In a 100-page study on Arab food security, AOAD said such cross-border and local stockpiles should primarily include cereal, oil and other basic food items, adding that an agreement is needed for their geographical distribution.
“The strongest reason for establishing such stockpiles is that the Arab world is a food-deficit zone…it is a known fact that the region is suffering from a big gap in most farm products, mainly cereal, because annual farm production hardly covers half the domestic consumption at present,” it said.
“As a result, the Arab world is heavily dependent on foreign imports of food, especially cereal…the problem is usually aggravated by emergency shortages resulting from economic, political, natural or internal factors…other factors include climatic conditions and a growing global trend to use cereal in producing biofuels, which raise the spectre of fresh prices rises.”
The study said a surge in food prices in 2008 and possible fresh increases constitute another major factor that should prompt Arab nations to set up strategic farm stockpiles, adding that existing stocks are too small.
“The latest global food crisis forced many cereal producing countries to take measures to curb exports of such products…such policies, combined with growing regional and global risks, and the negative effects of the global fiscal distress on investments make the establishment of a strategic pan-Arab food stockpile an inevitable project of paramount importance.”
AOAD said such a project requires the creation of a pan-Arab authority that will coordinate food stockpiling policies and set up a data network for agricultural production and consumption in the Arab countries.
“The private sector can play a vital part in such a project as its participation will lessen the possibility of unjustified political intervention in the establishment, management and distribution of strategic stocks,” it said.
“It will also ensure transparency in managing such stockpiles based on the economic and social interests of both the producers and consumers.…the private sector will also take into account the storage economics, including possible loss and profit and this will contribute to reducing storage costs.”
In an earlier study, AOAD said Arab countries have become the world’s largest single importer of food products compared to their total imports because of flawed policies, low land utilisation, rapid population growth and poor investment.
As a result, their cumulative food gap, the difference between exports and imports, has surpassed $180 billion over the past 10 years.
Except for fish, vegetable and other minor crops, Arab nations are suffering from a persistent shortage in all types of farm products and the gap has steadily worsened over the past two decades, according to AOAD.
Wheat accounted for more than half the shortage and a decision by Saudi Arabia, the largest Arab economy, to stop costly cultivation of wheat and rely solely on imports is expected to further upset that balance.
Its figures showed the combined Arab imports of wheat and other cereals surged to a record high of more than 59 million tonnes in 2009.
While the value edged down last year after hitting an all time high due to high global prices, the volume of the imports gained nearly one million tonnes.
The report showed the total value of cereal imports slumped by around 9.6 per cent to $17.2 billion last year from $19.1 billion in 2008 after surging by around 24 per cent over 2007, when it stood at nearly $15.3 billion.
Wheat imports were valued at about $nine billion in 2008, lower than the 2008 import value of $10.5 billion but far higher than the imports of $7.7 billion in 2007.
“There are several obstacles and challenges facing the development of the Arab farming sector…they include low investments, defective government policies, poor water resources, inefficient use of available land and water resources, and the low level of utilisation of available cultivated areas,” AOAD said.
“The biggest obstacle has been and will remain the relatively small water resources available in the region. This obstacle has blocked investment in the farming sector and will hinder any programme aimed at exploiting those areas.”
In its study, AOAD revealed last month that member states are considering launching a strategy involving investment of $65 billion in the next 20 years to expand their farming sector and ensure food for their fast growing people.
The strategy includes three phases, the first of which is a five-year plan during 2010-2015. The second stage will cover the 2010-2020 period and the third one stretches until 2030, when most farm products will nearly double.