Call to forge common farm investment policy in region

Arab states need to forge a common farm investment policy to exploit massive arable land and slash heavy reliance on food imports which threaten security, according to an official report.

Such a policy should be implemented by both public and private sectors but regional governments must first end political rifts, push ahead with economic reforms and create the right climate for farm investment across borders, said the Arab Organisation for Agricultural Development (AOAD).

Despite efforts to cut imports, a recent surge in global food prices has widened the value of the Arab farm import bill and this should prompt countries in the Middle East to start measures to ensure self-sufficiency.

AOAD's figures showed Arab states are heavily reliant on imports in most farm products and the problem is underscored by their growing dependence on products that provide staple food, mainly wheat, rice and other cereals. The plight is set to worsen following Saudi Arabia's decision to stop growing more than two million tonnes of wheat per year and rely on imports because local cultivation has drained the desert Kingdom's precious water resources.

"It has become clear that the share of the farming sector in the total Arab investment has remained minimal despite the significance of this sector… there are indications that even in most arable areas, the size of both public and private investments have remained negligible," the Khartoum-based AOAD said.

"It is time Arab governments consider pumping more funds into the agricultural sector. There should be co-ordination between public and private investments in this regard but the most important thing at this stage is that there is a growing need for forging a joint Arab farm investment strategy that will cover all sectors, including the infrastructure, crops, farm industries, services and production. This strategy has become more pressing because of soaring global food prices and increasing Arab reliance on farm imports."

According to AOAD, an Arab League affiliate grouping most regional states, only 12 per cent of the estimated 550 million hectare of arable land is utilised because of lack of investment from governments and the private sector. "Even in that 12 per cent part, the farming efficiency does not exceed 60 per cent of the world efficiency level. This means the Arab World is facing a real problem not only because of its low exploitation of available arable areas but of low efficiency in the cultivated land and its productivity."

Farm supply shortages have sharply boosted the Arab farm import bill and turned the region into the world's largest food importer. Official statistics showed the incremental Arab food gap, the difference between farm imports and exports, has exceeded $200 billion (Dh734bn) over the past 15 years and is set to grow in the coming years due to rising prices and in the absence of effective measures.

Between 1999 and 2003, the Arab World's annual farm import bill totalled around $29bn, more than 17 per cent of the total imports of nearly $166bn. The value of the food imports jumped to nearly $39.7bn in 2006 but it declined to nearly 12 per cent of the total imports of $336bn due to a surge in the overall imports, mainly by the UAE and other Gulf oil producers.

A breakdown showed the Arab World's farm import bill is highlighted by heavy reliance on cereal imports, which stood at around $7.2bn annually during 1999-2003 before swelling to nearly $9.4bn in 2004.

It continued its climb to reach around $10.5bn each in 2005 and 2006.

In volume, the Arab World's cereal imports slipped from around 47 million tonnes annually during 1999-2003 to 46.4 million tonnes in 2004 before surging to 55.7 million tonnes in 2005. It declined to 51.5 million tonnes in 2006.

The figures highlighted the heavy reliance problem on all types of cereal. Wheat imports jumped from an annual average of $2.8bn during 1999-2003 to $3.9 billion in 2004 before sliding to $3.6bn in 2005. But it climbed again to a record $4.1bn in 2006, according to AOAD.

In volume, wheat imports by the Arab states increased from 19.9 million tonnes to 22.1 million tonnes in 2004 and slipped back to around 22 million tonnes in 2005. It then climbed to 23.4 million tonnes in 2006. Barley imports peaked at around $1.3bn in value and 9.3 million tonnes in volume in 2006, while corn stood at around $1.89bn in value and 12.6 million tonnes in volume. Rice imports leaped from $1.17bn annually during 1999-2003 to $1.65bn in 2006. In volume, rice jumped from about 2.85 million tonnes to 3.47 million tonnes in the same period.

In its annual report issued last month, AOAD warned of political and social consequences arising out of the Arab World's growing reliance on food imports.

"High food prices directly affect the ability of Arab citizens to obtain enough foodstuffs given the limited income in most member states," it said.

"Prices have steadily risen between 2002 and 2006 and are still recording sharp increases because of the rise in global food prices. Given the Arab region's heavy reliance on imports, this will have serious repercussions on food security in member states and will negatively affect regional stability."

In a recent report on the Gulf farming sector, the Dammam-based Federation of the GCC Chambers of Commerce, Industry and Agriculture proposed joint Gulf investments in agricultural projects in fertile Arab states because of the limited farming potential of the Gulf desert. "The issue of food security has become a priority for the GCC countries in the current circumstances," the Federation said.

"The steady increase in farm gap has been due to lack of co-ordination and cooperation among member states in the agricultural sector and in the establishment of joint farm projects. It is time GCC countries take measures to cover that gap by setting up farm projects in fertile Arab countries as Sudan, Egypt and Yemen."

The study proposed the signing of agreements between the GCC and those countries for the allocation of land to Gulf investors to set up farm projects.

"These projects could be run as joint ventures under the management of GCC companies, which could also market the products in the region," it said.

GCC states of the UAE, Bahrain, Kuwait, Oman, Qatar and Saudi Arabia, which control nearly 45 per cent of the world's proven oil wealth, are the largest farm importers in the Middle East given their poor agricultural sector and high per capita income. Their food imports accounted for more than 70 per cent of the total Arab farm imports of around $16bn in 2006.



The Numbers

$30.7bn: Was the value of the Arab World's food imports in 2006

$29bn: Was the value of the Arab World's annual farm import bill between 1999 and 2003

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