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Wednesday, November 13, 2013

WSJ: Gulf States Saudi Arabia, Yemen, Qatar Vulnerable to food supply disruptions

by Ellen Nickmeyer, The Wall Street Journal, November 13, 2013

Oil-rich but water-poor Saudi Arabia is wisely giving up efforts to grow its own grain, but wealthy Gulf Arab states as a whole are failing to pursue all the right strategies in securing food for their 50 million people, who depend on imports for more than 80% of their meals, according to a new study by London-based Chatham House.
Gulf Cooperation Council countries face tiny water supplies and desert heat that make agricultural self-sufficiency flatly unsustainable, the report out this week says. GCC food imports meanwhile remain vulnerable not just to any trade-disrupting regional conflicts and price shocks, but climate change and what will be Gulf countries’ own increasingly uncertain revenues from oil, Chatham House says.
The study does not look at Yemen, which for thousands of years was the green farming spot of the Arab peninsula. Many of the threats warned of in the report – conflict, declining water supply for agriculture, and dwindling revenues – have hit Yemen, so that nearly half that country’s 20 million population is going hungry, and 58% of children under 5 are stunted, according to some U.N. organizations and the Oxfam relief group.
Saudi Arabia, at some 30 million residents the Arab Gulf’s most populous nation, already is phasing out what had been a major, but water-depleting, domestic grain-growing program by 2016. The government aims to build a one-year stockpile of grain instead, and is building silos and flour mills.
Qatar, by contrast, is still pursuing 70% food self-sufficiency by 2023. In general, economics and environmental constraints make such Gulf aspirations of food self-sufficiency both “unachievable” and “unsustainable,” the study said.
On the import side, the study noted, regional instability raises the risks for the two import “chokeholds” for the GCC: the Strait of Hormuz, which Iran has threatened to shut down, and the Suez Canal, in politically and economically unsteady Egypt.
To deal with those and other threats to imports, Chatham House researchers recommended that GCC countries as a whole do more to strengthen both their strategic grain storage and their regional import and transport network, so as to be less vulnerable to problems at any one shipping point.
Overseas investments with key trade partners that are more agriculturally blessed are a good idea, but land-based investments in food-insecure countries with shaky governance and bad infrastructure do little to manage risk, the study said.
And while Gulf governments now are using their oil revenues and subsidies to buffer price shifts, long-term protection against global market fluctuations will come only when countries like Saudi Arabia – dependent on oil for 90% of government budget revenues – diversify their economies, the study indicated.

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