The Gulf Cooperation Council (GCC), which holds 55 per cent of the world's crude oil reserves, are facing a severe problem as the global food crisis, which began with the gradual hike in commodity prices in 2001, gathers pace.

These countries import almost 100 per cent of their staple food requirements and are net importers of commodities and agricultural products. The rise in prices of a whole range of commodities from coffee, cocoa, rice, wheat, cereals and pulses has severely affected the GCC region, a top commodities expert said.

"High oil prices though have provided an important cushion for these countries to balance the higher food bill as the region is a major oil producer," Hardi M Wulf Vieira, development economist, Common Fund for Commodities (CFC), told The Business Weekly.

Speaking on the sidelines of the recent 2008 Regional Round Table Meeting (RTM) on 'Commodity Development in Dubai' organised by the Amsterdam-based CFC, an international financial institution established by the United Nations, Vieira said, "Yes, there is a problem. The food crisis is being reflected not only in higher prices but is also becoming a problem of sustained supply. The GCC is now trying to take some action by building a strategy to invest in foreign countries with good arable land to ensure a sustainable and steady supply of commodities and foodstuffs.

Capping prices
"With money coming in through record oil revenues, countries such as the UAE and Saudi Arabia are trying to buy their way out of a food crisis by capping food prices, storing provisions and buying farmland abroad," he added.

As part of this strategy to ensure steady supply of food products, Vieira cited the recent agreement inked between the UAE Ministry of Environment and Water and Sudan to invest in arable land for cultivation of farm products. Sudan reportedly has 200 million hectares of arable land available for cultivation.

"Unfortunately, the problem with some countries such as Sudan and Egypt with vast tracts of arable land and proximity to GCC states, is that they do not have the capital investment and resources to use these lands productively. Here the GCC countries' importance can be huge if they invest in such developing countries to ensure steady supplies," he said.

It is important for GCC governments to ensure supplies in a sustained manner because they are not agricultural producers and at the same time, face acute shortages of water.

The GCC region has problems in terms of water supply, large expanses of barren desert and soil degradation. "It is wise for them to invest abroad in Sudan and other countries in Africa and Asia where there is suitable cultivable land with the right water content to grow produce and supply food to the region," he added.

Vieira noted that Saudi was also following in the UAE's footsteps and investing and sometimes buying supplies of food because when farm products become expensive in producing countries such as India, Brazil, Argentina and China, they resort to divert their farm exports for local consumption.

By Vinod Kumar PK

© The Business Weekly 2008

 

Community Comments (0) - Comment on this article

The opinions of the authors expressed herein do not necessarily state or reflect Zawya. Read our Comment Policy.

 

 

 

close x

Loading ...

 

close x

Loading ...