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Gulf food security needs delicate diplomacy

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the article :
By Eckart Woertz
Published: The Financial Times, March 4 2009 16:54 | Last updated: March 4 2009 16:54
If you use Google Earth to focus on the area north of Riyadh and in the Dawasir valley south-west of the Saudi capital, you will find green circles in the desert. They look a bit like flying saucers that have landed. In fact they are farms, and their peculiar shapes stem from irrigation machines that circle around a hub.
Subsidised agricultural schemes such as these made Saudi Arabia a net wheat exporter early in the 1990s – and added a new dimension to the notion of inefficient allocation of resources.
Those days will soon be over. Reserves of non-renewable fossil water in Saudi Arabia are depleting and the kingdom has decided to phase out water-intensive wheat production by 2016. Agriculture will be re-oriented towards more value-added crops such as fruits and vegetables, using water-saving technologies such as greenhouses and drip irrigation.
While cereal agriculture in the Gulf countries is in irreversible decline, the population of the region will double from 30m in 2000 to nearly 60m by 2030. Dependence on food imports, now at 60 per cent of total demand, will grow further. So the food price leaps experienced across the region in 2007 and 2008 have sent an important message to the Gulf countries: that food security lies overseas.
From Brazil to Ukraine, to Vietnam and Ethiopia, Gulf Co-operation Council countries have held talks about agro investments and future food supplies. Even long-term oil supply contracts in exchange for food have been discussed. The most advanced talks and first deals have been with nearby nations, such as Sudan and Pakistan.
For the GCC countries, managing agro-industrial projects abroad will be a challenge as they lack experience. They have approached organisations such as the World Bank and the Food and Agriculture Organisation (FAO) for help.
The focus on Africa, central Asia and Pakistan also has a drawback: all these countries are net food importers themselves and are experiencing strong population growth. Yet there is a crucial difference: in central Asia and Pakistan, there is a water shortage – use of renewable water is much higher than replenishment rates and the full potential of irrigation has largely been achieved.
In contrast, many countries in east Africa have only a so-called economic water shortage – their vast untapped water resources can be used for agriculture provided there is significant infrastructure investment.
Economists have been quick to see a win-win partnership, with the Gulf providing the capital and Africa or Asia the land. That perception, though, is too optimistic. The land being targeted is not unused. Small-scale farmers and pastoralists live there and their socio-economic fabric is likely to be affected by agro-industrial projects. Only if these people obtain a fair deal out of such projects in the form of business, payments and job opportunities can conflicts of interest be avoided.
In addition, local food security needs must be considered. Politically, it is hardly feasible to export large quantities of food from countries with food shortages. More than 5m Sudanese are dependent on food aid, for example. Increased production, therefore, needs to satisfy local demand.
The first writing on the wall has appeared. When the United Arab Emirates negotiated agricultural projects in Pakistan it wanted a blanket exemption from food export restrictions implemented to guarantee local food security. Pakistan was willing only to grant exemptions for specific agricultural free zones.
Qatar’s announcement that it is leasing 40,000 hectares in Kenya for food production has equally met resistance from the Eastern Africa Farmers Federation Union and pastoralists. Jacques Diouf, the FAO president, warned of a “neo-colonialist” system that bypasses large parts of the population while preventing them from pursuing subsistence agricultural production.
The Gulf countries will therefore need to weigh local interests carefully while pursuing their food security strategies. Besides investing in developing countries, they must not forget food exporters such as Australia, Thailand or Europe from which they procure much of their food.
Finally, the drive for food security can also be supported by policies to lower population growth.
Eckart Woertz is programme manager economics, Gulf Research Centre, Dubai
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