Future Food Fiasco:

Interregional for Strategic Analysis recently held a panel discussion entitled "How Can Mideast Nations Deal with Oncoming Food Security Problems?" featuring Dr. Christian Henderson, Lecturer in International Relations and Scholar of Political Economy and Development in the Middle East at Leiden University in the Netherlands. The discussion focused on food security in some Mideast, North African, and Gulf countries, as well as made some recommendations for enhancing food security in the region at large.

Significant Developments

The panel discussion explained how concern over food security in the MENA and Gulf regions has evolved over the past few decades:

1. Mideast’s Great Agricultural Value: The participants discussed the history of Mideast countries in this regard to better understand the reasons for its current dependency on food imports. During the colonial era, the region’s agricultural assets figured as one of the main reasons for the European powers’ invasion of those countries. This fact is often overlooked in consideration of the region’s other strategic advantages, such as hydrocarbon reserves, the Suez Canal, and it key position in terms of international security. Nonetheless, the agricultural aspect was always a key factor for the colonial powers’ ambitions in this region.

2. Transition to Cash Crops: The participants also noted that during the colonial period, some countries switched from growing existing crops to commercial and cash crops. While British rule cannot claim sole responsibility for this change, colonialism did lead to a substantial transition in the region, especially in large agrarian economies. As farmers were coerced to plant cash crops, a process which often requires costly investment, they then had to deal with international market volatility and ended up becoming indebted to their colonial overlords. This situation played out in almost all North African countries. From examining the economies of these countries during that period, one can see how this agricultural shift laid the foundation for the region’s current dependency on food imports.

3. Agricultural Decline After Independence: In the wake of the colonial period, all North African economies became less focused on agriculture, reducing investments in farming and diverting them for industrialization. Due to insufficient investment in the agricultural sector, farmland deteriorated and remained underdeveloped. This was the opposite case in the US and Europe, whose governments provided subsidies to farmers, thereby leading to a huge surplus in agricultural products. Capitalizing on the political and economic situations at that time, the US then started exporting the surplus to some MENA countries, further reinforcing the region’s dependence on imported foods.

4. Lack of Competitiveness for Local Crops: According to the participants, net imports of MENA countries grew rapidly starting from 1960, which made it hard for local farmers to compete with the exceptionally cheap American and European wheat. Rising food imports and manufacturing costs led to a debt crisis in several Arab economies between the late 80s and late 90s, most notably in Algeria, Jordan, Morocco, and Tunisia. International financial institutions (IFIs) then began offering bail-out loans in return for structural reforms to be implemented in these economies. Among the chief conditions for these loans, however, were withdrawing support for small farmers and allocating substantial resources to agricultural exports.

5. Focus on Export Crops: Export crops were the hallmark of many IFI policies at that time, including those of the International Monetary Fund (IMF) in recent decades. The idea was that Arab governments should focus on agricultural products with "comparative advantages." According to these IFIs, wheat production was not considered to have a comparative advantage for Arab economies, so they instead advised switching to high-value export crops, such as fruits and vegetables, and allocating hard currency towards importing wheat. Upon further reflection, the participants noted that while this policy generated profits for the agribusiness sector in these countries, it perhaps did little to help achieve food security. Interestingly enough, the World Bank has just recently advised Tunisia to start cultivating wheat and grain again, reversing their long-held position to the contrary. This move is perhaps a tacit acknowledgement that an agricultural economy based solely on cash crops could spell catastrophe to a nation’s food security.

Situation in the Mideast

The panel discussion had this to say about the status of food security in the MENA region:

1. Economic Volatility on Food Security: The participants stated that increasing economic polarization will have an impact on access to food in the region. In their view, the Arab economies to be most affected by the current food price shock are those that have up until now avoided the severe economic crises that have affected other countries in recent years.

2. Divergent Economic Spillover in the Region: The participants also noted that while much has been said about the economic crisis in Greece, where the GDP contracted by 25%, little attention has been paid to how much Arab economies have contracted recently. In certain MENA countries, such as Syria, the situation is much more dire, as their economies have contracted by more than half of their previous value. These countries will be most affected by the current food price fluctuations, leaving them vulnerable to civil conflicts and unrest. In some cases, these countries also have poor relations with IFIs and donor countries, further exacerbating the woes caused by international food price inflation. Syria and Yemen, for example, do not have access to foreign aid, which makes their food security situation even worse than other countries in the region. On the other hand, nations such as Tunisia, Jordan, and Morocco, with their close ties with international donors, as well as their access to emergency funds for food imports, will not feel the same brunt of the spiraling economic situation as other MENA countries. Food price inflation is also correlated to civil unrest, as was the case during the Arab revolutions of 2011. As such, many governments are anxious to spend money so that inflation does not add more fuel to the fire and incite full-blown riots once again.

3. Varying Levels of Food Insecurity: In terms of food security, the participants categorized Mideast countries as either "stuffed" or "starved." According to one international organization, half of Yemen’s population is on the brink of famine, while some Gulf countries have more than enough food to support their small populace and account for almost half of all Arab food imports.

4. Population as a Factor: Organizations concerned with this issue sometime overlook the impact of population with regards to food security. The participants highlighted the fact that both Yemen and Qatar have similar grain storage capacities (250,000 tons of grain). A representative of the Qatari government stated that these stores would be enough for six months. Based on this estimate, the UN then declared that these stores would also last for the same amount of time in Yemen. However, considering that Yemen has ten times the population of Qatar, it is clear that the people of Yemen would have less access to food than their counterparts in Qatar. Thus, in crafting food security policy, it is important that each nation’s population be taken into account.

5. Negative Repercussions of Ukraine War: Wheat prices internationally have soared due to the conflict in Ukraine. Consequently, the MENA countries with the greatest reliance on Ukraine and Russia, the world’s top wheat producers and suppliers, will be in the gravest danger. Lebanon, for example, relies heavily on Ukrainian and Russian food exports, which account for more than 75% of the nation’s grain imports. As such, the Ukraine War also demonstrates the symbiotic relationship between food insecurity and political instability: either could be the cause or the result of the other.

Status of Gulf Countries

The panel discussion then turned its attention towards the topic of food security in the Gulf countries:

1. Easy Access to Food: The participants mentioned that some Gulf countries, especially the oil-rich states of the GCC, were relatively affected by the current economic crisis, but not to the same extreme extent as other Arab nations. Economic figures show that the Gulf has a very strong access to food as a result of its imports. Arab countries collectively import around $100 billion worth of food, meat, and livestock each year, half of which comes from GCC countries, a striking figure considering that region’s population size. While the combined total population of the Arab world is about 500 million people, the GCC’s population only accounts for 60 million of that number. GCC countries also concentrate on diversifying their imports, another factor in their high level of food security. For example, while the UAE imports grains from Russia, it also has good relations with other grain suppliers, such as Australia and Canada, a testament to the nation’s economic and logistical capacity.

2. The Gulf’s Great Economic Power: The economies of oil rich countries have grown over the last two decades, providing them with enough hard currency to import large amounts of food. In comparison with other economic blocs and emerging economies, such as BRICS (Brazil, Russia, India, China, and South Africa), the GCC is second only to China.

3. UAE’s Leadership in Food Security: The GCC as a whole has developed a beneficial strategy for managing their food security. That being said, the participants all agreed that the UAE was the most successful of the Gulf nations in this regard. Despite not having an agricultural base of its own, the UAE acts as an intermediary within the regional food trade structure. It imports raw commodities such as wheat, sugar, dairy products, etc., processes them in the UAE, then exports them to other countries in the region. As a result of this strategy to move up the value chain, the UAE exports a greater value of food, addressed its food security concerns, and achieved economic diversification. The participants indicated that Sudan imports 25% of its raw sugar from the UAE, while Somalia, Djibouti, Ethiopia, and Eritrea all import 23% of their flour from the UAE. Additionally, Yemen imports 15% of its flour from the UAE. As such, the UAE has successfully developed an agribusiness industry within its domestic economy. Figures show that the UAE exports $12 billion of food annually, while Saudi Arabia exports $1 billion, most of which are dairy products. In light of the GCC’s food security strategy, the UAE and Saudi Arabia stand out as the shining examples among the rest.

4. Large Gulf Investments in Logistics: According to the participants, one of the reasons behind the Gulf’s success is their heavy investments in logistics, a field in which the UAE plays a significant role. In fact, the UAE has the largest logistical capacity in the region. Overall, large investments have been made across the Gulf to expand logistical capabilities. From 2008 to 2019, the GCC invested a great deal to increase port capacity, raising it from 24.2 million TEUs to 35 million TEUs. The same goes for air cargo capacity, another important infrastructural facet that facilitates food security and imports. The benefits of these infrastructural investments are not only limited to the Gulf. Last week, the DAL Group announced that it will invest $6 billion in Sudan to create a new port, toll road, and farmland, as well as make a deposit in the Sudan Central Bank. With this investment, Sudan hopes to improve its water and agricultural resources, which will allow it to grow food products for export back to the UAE via the newly developed infrastructure.

5. Lower Food Prices for GCC Consumers: The Gulf’s successful food security strategy has also helped them reduce the cost of food for their consumers, which is almost on par with other OECD countries in the west. Facilitating access to food is a key factor for diversifying the economy in the UAE, Qatar and Oman, and goes hand-in-hand with their attempts at diversifying their tourism and services sectors. Citing 2016 statistics, the participants also stated that consumers in the region’s poorest countries spend 38% of their income on food. In Morocco, this figure is slightly less, while in Jordan consumers spend 30% of their income on food. These figures must have surely risen this year amid the worldwide inflation phenomenon. On the other hand, however, people in Saudi Arabia and Kuwait spend much less on their food (20% and 12%, respectively). Though it is not as low compared to what consumers pay in the US and Germany (6%), these rates in the Gulf are far better than any of their MENA counterparts.

Policy Recommendations

After considering the situation on the ground, the participants shared some recommendations on enhancing food security in the MENA region:

1. Address "Food Sovereignty:" The participants emphasized the importance of addressing food sovereignty in the region as a whole. The Gulf countries have already started to do so by experimenting with vertical agriculture. But in traditional Arab agrarian economies, such as those in North African countries, Lebanon, and Syria, there is an urgent need to address food sovereignty in tandem with food security. In this vein, these nations must confront and overturn the many policies imposed upon them over the last few decades that have had very detrimental effects on their control over and access to food resources. 

2. Provide Sufficient Support to Small Farmers: According to the participants, small farmers must receive more support from their governments. There is a prevalent myth that only agribusiness can produce food on a large scale, while this is not entirely accurate. Moreover, the productivity and knowledge of small farmers are often underestimated. This is particularly important given the prospects of climate change, as small farmers tend to be more resilient to climatic extremes than agribusiness farming.

3. Fair Food Distribution: The participants also suggested that there should be more focus on access to food rather than quantity of food. In their opinion, the problem is not that there is not enough food being produced, but rather that it is not distributed fairly. This kind of extreme imbalance will lead to more political unrest and economic polarization than what is already being witnessed around the region. Poorer countries in the region should also be supported with soft loans for debt relief to help them deal with the current severe food price inflation.

4. Initiate Agricultural Projects: Participants agreed that agricultural communities and economies in the region, especially in North Africa, have a lot of potential. Although some opportunities for agricultural collaboration exist, the challenge will be to ensure that these projects are mutually beneficial to all parties, and not used as a means of extracting resources from these nations.

5. Resort to Intensive Agriculture: The participants criticized certain agricultural methods that require a lot of initial capital, pesticides, and fertilizers. These methods often lead to a large amount of fertilizer waste and do not usually guarantee agricultural sustainability. They also noted that some countries, like those in the Gulf, look into methods of intensive agriculture as a possible solution. The best part of intensive agriculture is that it allows for the production of massive quantities of food while also preserving environmental resources. The Netherlands, for example, is one of the largest food exporters worldwide because of its intensive agricultural methods. As Arab governments grow more aware of the effects of climate change, they are keen on introducing these methods to help improve their food security and protect their natural resources.

6. Vertical Agriculture in the Gulf: As noted above, the participants highlighted the growing trend of innovative vertical agriculture among GCC countries, with the UAE at the forefront of this movement. However, there are some drawbacks to these practices. First off, this agricultural technique requires sophisticated technology, such as drip irrigation, to preserve water resources. Though these methods are useful, they are often expensive and impractical in terms of profit.

After all was said and done, the participants concluded that global markets play a significant role in the inflation of food prices. The recent food price hike stems from the large influx of money to the agricultural sector to achieve short-term profit (hot money), which only aggravates food security issues in the region. Therefore, to ensure a more stable and balanced approach to food security, Arab policy-makers should focus on sustainable collaboration with the region and world.