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23 April 2024

Arab states' food gap soars above $155bn in nine years

Difference between imports and exports of food products peaked at $23bn in 2008. The gap is most visible in cereal, wheat, barley and cooking oil. Wealthy nations still reluctant to invest in farming projects. (AFP)

By Nadim Kawach

Arab nations have reeled under a cumulative farm gap of more than $155 billion (Dh569bn) over the past nine years to emerge as the largest single food importer despite their massive land potential, according to official figures.

Except for fish and vegetables, Arabs are suffering from a shortage in all types of farm products and the gap has steadily worsened over the past two decades, showed the figures by the Arab Monetary Fund (AMF) in Abu Dhabi and the Khartoum-based Arab Organisation for Agricultural Development (AOAD).

The gap is underscored in cereal, wheat, barley and cooking oil as the Arab World's self-sufficiency in such products range between 30 and 53 per cent.

The farm gap, the difference between imports and exports of food products, peaked at about $23bn in 2008 to bring the cumulative Arab food shortage to $155.5bn during 2000-2008, the report showed.

The level is more than double the cumulative gap of about $45bn during the preceding nine years, when the region's population did not exceed 240 million in early 1990s compared with about 334 million at the end of 2008.

The report showed total Arab food exports stood at only $10.5bn in 2008 while imports were as high as $33bn, their highest level.

It blamed poor water resources in the region, low land utilisation and investments, and what it described as defective Arab farm policies.

Nearly three years after they approved a 15-year common farm strategy in 2005, the Arab countries have become more reliant on farm imports as such a strategy remains inefficient in the absence of right policies and sufficient funds, it said.

What complicates the problem is that most wealthy Arab nations are still reluctant to invest heavily in farming projects in fertile member states for political and security reasons while only about 12 per cent of the total available arable land in the region is exploited, said AOAD, a key Arab League organisation.

Water resources

"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," it 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."

The report said the Arab World is one of the poorest areas in the world in terms of water wealth, with the quantities of available renewable water resources standing at only about 1.3 per cent of the world's total renewable water wealth although the Arab region accounts for more than 10 per cent of the total world land area.

The low water resources have sharply depressed the per capita share of water in the Arab world because of a steady population growth of more than two per cent.

"The Arab region is considered one of the most arid areas in the world and the per capita share of the water wealth is among the lowest as it has remained much below the global water poverty level of 1,000 cubic metres per year. In some countries, this level is even below 500 cubic metres," the report said.

"As for arable land, it is estimated at nearly 550 million hectares but only about 12 per cent is exploited. Even in that 12 per cent part, the farming efficiency does not exceed 60 per cent of the world level. This means the Arab World is facing a real problem of not only low exploitation of arable areas but low efficiency in the cultivated land and its productivity."

Worsening gap

AOAD's figures showed the gap in most products has worsened over the past years, with that in grain and flour rising from about $8.5bn in 2004 to $9.1bn in 2005 and a record $9.5bn in 2008.

The wheat gap widened from $4.4bn in 2004 to $4.6bn in 2005 and about $4.8bn in 2008 while that in corn surged from about $1.5bn to $2.02bn and $2.4bn respectively.

The gap looks worse when it is taken from the volume perspective, with that in cereal standing at a staggering 51.5 million tonnes in 2008. The shortage in wheat alone was as high as 24 million tonnes while that in corn stood at more than 13 million tonnes and in rice at more than 2,300 tonnes.

As a result, the self-sufficiency level in most farm products retreated in many Arab nations. From 54.9 per cent in 2006, self-sufficiency in cereal shrank to about 52.3 per cent in 2008 while wheat dropped from 57.3 to 52 per cent.

Corn self-sufficiency declined from 38.4 to 37.6 per cent while it tumbled from 39.4 to 31.9 per cent in barley and from 85.4 to 83.2 per cent in meat.

Experts expect the food import bill to widen in the coming years because of higher food prices and a rapid population growth in most regional nations.

"In the absence of large investments in the farming sector and the enforcement of right farm policies, I don't see any let up in this problem," an analyst said.

The surge in food prices last year prompted plans by the UAE, Saudi Arabia and other arid Gulf countries to fund agricultural projects in Sudan and other fertile areas in the region. But such projects are expected to take time and they are not large enough to slash the Arab farm import bill.

UAE stockpile

In statements last month, Minister of Economy Sultan bin Saeed Al Mansouri spoke of plans to build a three-month commodity stockpile within an ongoing strategy to tackle the country's food shortages.

"The strategy will establish an early warning system for crises and disasters that may affect national food security in the country, and build a stock of 15 commodities that covers three months in the first phase," he said.

Mansouri noted that projections indicated prices of many essential commodities would rise during the next two year, adding that the UAE plans to invest in agriculture overseas, including in Sudan and planting rice in Cambodia.

The surge in food prices in 2008 was one of the main reasons for a sharp rise in inflation rates in the UAE and other members of the Gulf Cooperation Council (GCC) given their heavy reliance on farm products.

GCC states, which control nearly 45 per cent of the world's proven oil deposits, are among the largest food importers in the world given their poor farm potential due to their desert nature. The bulk of their food imports come from outside the Arab region, including the United States and other Western countries.

Official figures showed the GCC's combined farm imports exceeded $60bn during 2005-2008. They accounted for about 45 per cent of the total Arab food import value of $120bn although the population of the six members of about 35 million do not exceed 11 per cent of the total Arab population.

A breakdown showed Saudi Arabia was the largest Arab food importer, with a value of about $35bn during 2005-2008. Farm imports by the UAE totalled nearly $12bn while they stood at $5bn in Oman, $4.8bn in Kuwait, $2bn in Bahrain and about 1.3 million in Qatar.

Arab officials have repeatedly voiced concern about the agricultural gap and growing reliance on food imports, mainly from the US and other Western countries. Some officials considered such reliance as a risk to their security.

Slow exports

According to AOAD and the Arab Fund for Economic and Social Development, most Arab nations are suffering from slackening farm exports and rapid growth in the population, leading to a steady increase in their imports of food products.

The shortage persisted despite an expansion in the cultivated areas in some Arab countries as a result of reforms aimed at increasing crop.

From about 67 million hectares in 1999, the combined Arab cultivated area widened by nearly 4.3 per cent to 70 million hectares in 2002 and continued to expand to reach about 75 million hectares in 2008. "Arab nations have sought to improve farming policies and such moves have resulted in some positive developments," AOAD said.

"But they have also produced negative results, including the private sector's malpractices, which have hurt the interests of the farmers. New policies are needed to regulate these activities and encourage farmers."

The report urged Arab government to take "urgent" measures to encounter the food price increase in the future, cut food imports from foreign countries, and achieve self sufficiency in most farm products.

Farm fund

"These measures should include improvement of farm policies, better utilisation of the available arable land, development of existing national agricultural institutions, supporting the joint Arab agricultural ventures and establishments, investment in fertile Arab nations, adoption of necessary policies and national programmes to curb price increases, creation of a pan-Arab fund to finance Arab food security projects, and setting up a joint strategic food stockpile."

The study said creation of farm funds is crucial for the success of Arab agricultural projects aimed at achieving self-sufficiency on the grounds most fertile countries in the region lack sufficient investments in this sector.

"This should prompt Arab nations to seriously consider the creation of a large joint fund to invest in farming projects in the region," it said.

"At the same time, Arab governments should take the proposal of setting up a strategic cereal stockpile into consideration given its significance in ensuring the food needs of citizens and curbing sharp price increases. It could be a pan-Arab stockpile or regional silos. This stockpile should be sufficient for at least one year and should help Arab countries in finalising collective purchasing agreements that will give them a better bargaining position."

In its annual report issued recently, AOAD warned of political and social consequences of the Arab countries' 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."

What Arabs should do?

- Develop joint farming institutions and related investment organisations

- Support AOAD and other agricultural establishments by increasing their budgets and financing their projects

- Encourage national funds to give more attention to farming projects and support farmers and landlords

- Encourage plans to achieve food self-sufficiency

- Implement joint Arab projects focusing on production of strategic food items 

- Consider the creation of a pan-Arab fund to finance food security ventures

- Improve and coordinate Arab farm policies

- Adopt effective national policies and strategies to curb food price rises

- Set up a strategic food stockpile


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