Middle East food supply threatened by Ukraine crisis: Report
The GCC is a political and economic union of six Arab states bordering the Persian Gulf, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).
According to Leila Mutaga, an economic expert for the Middle East and North Africa (MENA) at the World Bank, a deepening of the crisis could result in decreasing levels of imported wheat, grain and corn from Russia and Ukraine.
“If the crisis escalates further, it is likely to have repercussions on countries in the Middle East and North Africa, directly through trade and indirectly through prices of commodities,” said Mutaga, who added that the MENA region is the second-most reliant region on imported wheat after Sub-Saharan Africa.
According to a World Bank report, Ukraine produces 16% and 9% of global maize and wheat exports, respectively, and the current crisis has already pushed up the prices of maize and wheat by 20% and 13.5% since the beginning of 2014.
Import nations
This threat coincides with the possibility that the rate of self-sufficiency in the GCC countries is expected to drop in the next few years.
On an average, the GCC imports more than 90% of its food products from South Asia, Australia, New Zealand, South-East Asia, US and Europe.
According to the report, the biggest and most agriculturally advanced country of the GCC, Saudi Arabia, is importing 80% of its food from overseas, while the remaining 20% is being accounted for by domestic production.
However, the fast-growing nation of Qatar is the leader when it comes to food imports –importing nearly 97% of its food and beverage demand. It is followed closely by Bahrain at 92%, Kuwait at 91%, and the UAE and Oman, both at 89%.
The report also pointed out the costs of Saudi Arabia’s ambitious wheat production program that ran from 1984-2000.
Hungry for land
“Due to depletion of ground water by farmers, the Saudi authorities were forced to abandon the policy of increasing domestic production and, accordingly, production began to decline as from 2008 and expected to cease fully by 2016,” the report said.
“Taking into consideration the above facts, development of a sustainable agro sector is highly costly and ineffective, and the GCC countries have to look for other alternatives to increase food security.”
“Among these alternatives are storing food products and acquisition of agro lands outside the region. Africa, notably the Sudan, captured the concern of investors, be they individuals or corporate,” the report said.
According to the report, GCC investors purchased more than 2 million hectares of lands in the Sudan between 2006 and 2012.
