This article appeared in The National on July 21, 2016, by Jonathan Gornall, a freelance journalist based in London. GulfCarib thought our readers would be very interested in what it has to say about the UAE
Inside the UAE’s quest for food security and why the West is wrong about land acquisitions
Browsing the well-stocked aisles of your local Carrefour or Spinneys, it’s difficult to imagine the phrase “food crisis” having any resonance here. But in 2007 to 2008 and again in 2010 to 2011, Arabian Gulf states, heavily dependent on food imports, found themselves in a difficult situation.
Earlier this month, the UN’s Food and Agriculture Organisation and the Organisation for Economic Cooperation and Development published their joint global agricultural outlook for the next decade and, on the whole, they concluded the future looks bright. Prices for the main crops, livestock and fish products all fell last year, “signalling that an era of high prices is effectively over”. Meat prices fell from record highs in 2014; dairy product prices “continued declines that started in 2013 and 2014; while “crop prices fell further from their peaks in 2012”.
The main factors behind these lower prices, the report concluded, were “several years of robust supply growth, weakening demand growth due to the overall economic slowdown [and] lower oil prices”.
Great. Except, anyone responsible for food security in the oil-rich, soil-poor states of the Gulf who recalls the FAO-OECD’s predictions for the period 2007 to 2016 will doubtless be taking the optimism with more than a pinch of salt.
The FAO’s Food Price Index, updated monthly since 1996, tells the story of the twin food crises of 2007-08 and 2010-11, the recessions that hit during these years and the unwarranted confidence that preceded it. The index tracks and averages the movements of international prices of a basket of five cornerstone commodity categories – cereals, vegetable oil, dairy, meat and sugar. Price fluctuations are usually normal.
Until 2007. That year the index spiked on the back of economic growth, rising more than 26 per cent over the previous year to an unheard-of high of 161.4 points. The following year the index leapt again, this time to 201.4 – a jump of 25 per cent in a year and an increase of almost 60 per cent since 2006.
There was a brief respite in 2009. But then the rollercoaster was off again, shooting up to 188 points in 2010 and soaring to an all-time high of 229.3 in 2011 – an increase of 80 per cent over the last “normal” year, 2006.
So what did FAO-OECD have to say about the outlook for the next 10 years back in 2007? Their prediction was a case study in hubris. The current “strong world market prices for many agricultural commodities” were “in large measure, due to factors of a temporary nature, such as drought”.
Global economic growth had “remained vigorous through 2006” and “brightened prospects prevail in the macroeconomic climate”. Even “the recent downturn of activity in the United States” was “not expected to last beyond the short-term, and thereafter growth is assumed to remain solid”.
Few will need reminding of the ensuing global meltdown, triggered by the bursting bubble of the US housing market. In the UAE, especially in Dubai, some of the consequences were immediately obvious as many grand developments ground to a halt overnight. But while to the casual observer it may have looked like the UAE had gone into suspended animation, beneath the still surface the country was paddling furiously.
“For the Gulf states it wasn’t just an issue of food prices,” says Jane Harrigan, professor of economics at the University of London’s School of Oriental and African Studies. In one sense, though they were and remain dependent upon food imports, they were “lucky because oil prices and food prices historically tend to move in tandem”.
Indeed, high oil prices had been one of the factors that had driven up food prices. The average annual Opec crude price had been climbing steadily since the turn of the new millennium, surpassing $68 a barrel in 2007 and averaging over $94 in 2008. Along with food prices, it dropped briefly in 2009, to an average of $60, before climbing again to an all-time high of $109 in 2012.
In theory, then, the oil-rich states were insulated against food price rises. But the problem, says Prof Harrigan, was that many of the traditional grain exporters who were suffering domestic shortages placed embargoes on their grain and rice exports, and “the Gulf states were faced not just with massive hikes in prices, they were also faced with the threat that they may not be able to access this food at any price”.
The response was both imaginative and controversial – to secure food supplies by either buying or leasing great swathes of land overseas, mainly in East Africa but also in countries such as Pakistan. In turning to countries such as Tanzania and Sudan to counter food embargoes put in place during the global food crisis by traditional exporters such as Russia, India, Vietnam and Argentina, Arab states were following an example set by countries such as China and South Korea.
But then a funny thing happened. Although they were neither alone, nor even the first to go shopping for land, the bulk of the criticism for this policy was aimed squarely at the Gulf nations. In 2013 The Washington Post reported that “Gulf sheikhs” were “snatching up farmland worldwide”, echoing hysterical finger-pointing from NGOs and others.
Back in 2008, at the height of the first global spike in food prices, Grain, an international non-profit organisation that campaigns on behalf of the world’s small farmers, produced the report Seized: The 2008 land grab for food and financial security. What it called “the violent process” of “snatching … vast areas” of farmland from under the noses of impoverished locals in Africa was on a par with “Columbus ‘discovering’ America and the brutal expulsion of indigenous communities that this unleashed”, raged Grain.
Western media were quick to pick up the pejorative buzzwords, such as “land grab”, which continue to frame the conversation about food security for the Arab world to this day. Yet whatever the pros and cons of land acquisition deals in individual host countries – and one can hardly blame Gulf governments for putting their own people first in seeking sources of food – the bulk of the “land rush” cannot be laid at the door of Arab states.
As Prof Harrigan makes clear in her 2014 book, The Political Economy of Arab Food Sovereignty, between 2000 and 2010 the nations of West Asia – a category that includes most of the Arab countries – were responsible for only 12 and 6 per cent of the hectares acquired in Africa and Asia. Countries in Europe, Africa and Asia took far more land, and even North America sequestered almost as much as the West Asian countries.
So why the focus on “Gulf sheikhs … snatching up farmland worldwide”? Rami Zurayk, an agronomy professor at the American University of Beirut, argued in his 2012 book Food, Farming and Freedom: Sowing the Arab Spring, that such coverage was a manifestation of Islamophobia which, as Prof Harrigan noted in her book, “fails to acknowledge the equally pernicious effects of western capitalism and its multinationals on the food sovereignty of poor countries”.
In any case, was “land grab” a fair characterisation of the process? The issue has polarised academics, says Prof Harrigan, into “those who see it as a neocolonial form of ‘land grab’ which has negative effects on the host country and those who see it as a win-win scenario in which both investing and host countries benefit”.
Whatever the merits, the extent or indeed the truth of the Great Arab Land Grab, it is now more or less history. Gulf states, says Prof Harrigan, were stung by the wave of criticism, “and in response to the adverse publicity … have started to look at alternative models” for food security.
The principle remains intact – seeking land overseas to ensure food security – but “they are now turning to countries which are more in line with their traditional sources of grain imports”. Countries such as Pakistan, Sudan and Ethiopia are no longer on the shopping list and Gulf states “have now started refocusing their attention on some of the upper-income traditional grain exporters, like Ukraine, Australia and even Brazil.”
And even the US. In March this year Almarai, one of Saudi Arabia’s largest dairy companies, confirmed large purchases of land in the US southwest, where it plans to grow alfalfa as feed for its cattle back home.
Only time will tell whether the new model for land acquisition will prove a sustainable lifeline in the event of another global food crisis. What is certain, however, is that more than 90 per cent of the Gulf’s food is still imported. According to the Economist Intelligence Unit, in 2004 the bill for that was US $25.8 billion (Dh94.75 billion). By 2020 – even without another food crisis – it will be US $53.1 billion.
In the Gulf, where nations such as the UAE are working tirelessly to reduce their dependence on income from fossil fuels and investing in new greenhouse techniques, soil-less farming and hydroponics, there remains an ambivalent attitude to the price of oil, to which the cost of food is so closely related.
The Opec basket price currently stands at about US $44, up from a low of US $26.50 in January and, while far below the US $109.45 peak in 2012, possibly creeping back up towards the US $54.19 of July last year.
FAO-OECD may be correct in their sanguine assessment about the movement of food prices over the coming decade. But canny food strategists in the Gulf know that food costs will soar in the wake of any price hike for oil – and that they will need some imaginative solutions if those supermarket aisles are to remain well-stocked.
Inside the UAE’s quest for food security and why the West is wrong about land acquisitions by Jonathan Gornall, a freelance journalist based in London.