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High food prices threaten stability in the Arab world
April 19, 2008
Arab states reeled under a massive farm import bill of more than $200 billion (Dh734bn) between 1990 and 2006 – and a recent surge in food prices could block sufficient supplies to the poor and threaten stability in the region.
Most Arab countries are already suffering from high inflation rates and a sustained increase in food prices means more inflation, a costlier import bill, lower food self-sufficiency and higher poverty and unemployment rates.
Although their available arable land is large enough, Arab states have remained heavily reliant on food imports, mainly from the West, India and other countries.
Officials have repeatedly voiced concern about such reliance and said this could threaten stability in member states and affect their
“High food prices directly affect the ability of Arab citizens to obtain enough foodstuffs given the limited income in most member states,” said the Arab Organisation for Agricultural Development (AOAD), an affiliate of the Arab League.
“Prices have steadily risen between 2002 and 2006 and continue to increase sharply 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.”
Between 2000 and 2006, Arab states suffered from a cumulative food deficit of more than $110bn, while the gap was around $100bn between 1990 and 2000.
This means the cumulative farm gap – the difference between food imports and exports – has exceeded $200bn in nearly 15 years.
The gap affected most types of farm products, mainly cereal, rice, sugar, wheat, cooking oil, chicken, meat and dairy.
AOAD’s figures showed the gap in most products has worsened over the past years, with the gap in grain and flour rising from $8.5bn in 2004 to $9.1bn in 2005 and $9.58bn in 2006.
The wheat gap widened from $4.4bn in 2004 to $4.6bn in 2006, while the corn gap rose from around $1.5bn to $2.02bn.
The gap in rice also increased from around $1.24bn to $1.32bn and that of barley jumped from $868m to $1.9bn during the same period.
In 2006, the gap stood at $1.27bn in sugar, $2.4bn in cooking oil, $1.3bn in meat, $1.19bn in chicken and $2.8bn in dairy products.
Only fish recorded a surplus of around $914m in the year 2006.
As a result, the self-sufficiency level in most farm products declined in many Arab nations. From 55.2 per cent in 2004, self-sufficiency in cereal declined to around 51.1 per cent in 2006, while wheat dropped from 53.7 per cent to 50.7 per cent and corn from around 44.3 per cent to 36.8 per cent, said AOAD.
Other essential products also recorded a decline in self-sufficiency, with barley falling from 51.6 to 43.3 per cent and dairy from 71 to 69 per cent.
Self-sufficiency in rice improved from 73.2 per cent in 2004 to 76 per cent in 2005 before receding to around 75 per cent in 2006.
“The decline in self-sufficiency in many products affects the efforts by the Arab countries to achieve food security, which means that every Arab citizen should get enough food in both quality and quantity,” AOAD said.
“This is affecting the life of the citizen as high food prices could lead to an increase in the prices of other products. There is a need for efforts by the governments in member states to adopt effective policies to tackle this problem.”
AOAD gave no figures for 2007 but experts expect the deficit to have increased because of less rainfall in some arable countries, lower investments and persistent conflicts in such countries as Iraq, Somalia and Sudan.
Officials have repeatedly voiced concern about the agricultural gap and growing Arab reliance on food imports, mainly from the United States and other Western countries.
Some officials considered such reliance as a risk to their security.
According to AOADI and the Arab Fund for Economic and Social Development, most Arab nations are suffering from declining farm exports and rapid growth in the population, leading to a steady increase in their imports of food products.
The figures showed that between 2002 and 2006, demand for food in the Arab world grew by around four per cent, while production rose by 2.6 per cent, leading to an increase in imports to meet domestic consumption. The shortage persisted despite an expansion in the cultivated areas in some Arab countries as a result of reforms aimed at increasing crop.
From around 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 around 75 million hectares in 2006.
But it remained far below the area of the existing arable land of around 197 million hectares, which itself accounts for less than 15 per cent of the Arab world’s total area of nearly 1.4 billion hectares.
AOADI blamed lack of irrigation water, poor inter-Arab investment and other social, economic and political factors for the long-standing problem.
“Lack of water needed for the agricultural sector to ensure the food needs of the people constitutes the main challenge facing the farming sector. This shows the strong relationship between Arab food security and water security as they have become two sides of one coin,” it said.
“This means it is extremely difficult for Arab countries to largely expand their production without tackling the water problem.”
Experts said lack of funds to finance farm projects in some fertile Arab countries, mainly Sudan, is another major obstacle for the low Arab food output.
They cited other factors such as the harsh weather in the Gulf, internal strife in some members and the reluctance of Arab nations to invest in other members because of political differences and security risks.
During a recent farming conference, AOADI acknowledged that defective agricultural policies in the region were to blame along with other factors for the plight, which, it said, has become more a security than a food problem. “The Arab food security situation has steadily worsened because of drought, flawed agricultural policies, spread of farm diseases, lack of investments and other factor,” said AOADI.
“The widening goods gap and its serious implications on Arab security should prompt us to pool our efforts to restore balance to the farming sector, we should not ignore the vital role of the private sector and other non-governmental bodies in the agricultural development.”
In a statement last week, the International Monetary Fund (IMF) warned that the surge in global food prices could have terrible consequences, including the risk of war.
“Food prices, if they go on like they are doing today… the consequences will be terrible,” IMF Managing Director Dominque Strauss-Kahn said.
“Hundreds of thousands of people will be starving… [leading] to disruption of the economic environment,” Strauss-Kahn told a news conference in Washington.
High oil prices have been cited as one of the main factors in soaring inflation in the Gulf and other Arab states.
Although some GCC countries are recording higher rates than other Arab nations, the problem is more underscored outside the Gulf where the per capita income is far lower, according to experts.
“For example, inflation in Qatar was around 14 per cent last year but don’t forget this country has one of the highest per capita incomes in the world, exceeding $70,000 in 2007. The same applies to the UAE,” an Abu Dhabi-based economist said.
“The real problem is in such poor countries as Sudan, Yemen, Mauritania, Iraq and other members, which have low income and high inflation rates. There is a danger of instability if the high food price problem persists.”
197m: The total arable land in the Arab world, in hectares
4%: The increase in food demand in the Arab world 2002-2006
Source: Emirates Business 24/7