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Arab wheat imports peak at over $10bn

Wheat imports by the Arab countries climbed to their highest level of more than $10 billion in 2008 and the bill is set to surge in the next years following Saudi Arabia's decision to stop local production, official figures have shown.

Despite a slight rise in wheat production in the region, the wheat import bill hit an all time high of nearly $10.5 billion in 2008, showed the figures by the Khartoum-based Arab Organization for Agricultural Development (AOAD).

The Arab League's institution gave no figures for 2009 but said imports could have climbed further because of a relatively high growth in the Arab population, exceeding two per cent annually over the past two decades.

Wheat exports by the League's 21 members remained as low as $279 million in 2008, creating a massive deficit in the trade of this essential commodity.

The figures showed the deficit stood at a record high of around $10.26 billion, which accounted for nearly 33 per cent of the total Arab food gap of about $29.8 billion in 2008. All other food products suffered from a deficit during that year except vegetables, which recorded a surplus of about $876 million.

A breakdown showed the deficit stood at around $3.44 billion in corn, $2.3 billion in barley, $2.16 billion in rice, $3.09 billion in meat, $2.7 billion in sugar, $2.5 billion in cooking oil and fat, and 4.4 billion in dairy.

The report showed Saudi Arabia reeled under the highest deficit in its farming trade given its large food imports and low exports.

Its food export stood at only around $2.49 billion while imports were estimated at nearly $16.6 billion, the highest in the Arab region and nearly a third of the total Arab food imports.

Experts expect Saudi Arabia's food import bill to swell further in the next years as the world's dominant oil power is pushing ahead with plans to halt local wheat production and rely only on imports to save its water wealth.

The desert Gulf Kingdom, which sits atop more than a fifth of the world's proven oil wealth, had produced nearly three million tonnes of wheat per year to meet domestic needs but output is expected to plunge to one million tonnes this year following the government's decision to stop subsidising local production.

In the next two years, output could dip further and the country will become almost totally reliant on imports, mainly from the West.

Officials said early this year said Saudi Arabia, one of the poorest nations in water resources, imported in excess of one million tonnes of wheat in 2009 and imports are projected to surge this year as local output is steadily declining.

Saudi Arabia, with a population of around 27.1 million, has announced that it would begin importing wheat from global markets at the start of 2009 and gradually eliminate a 25-year grain programme that has allowed it to be self sufficient but drained its scarce desert water wealth.

The decision involved a gradual increase in wheat imports and a reduction in the government's purchases from local farmers by 12.5 per cent a year to conserve water following reports about an alarming decline in underground resources.

The figures showed Egypt, the most populous Arab nation, was the second largest food importer despite its massive farm potential. Its food imports stood at around $7.4 billion in 2008 while exports were put at $2.3 billion.

Algeria came third in terms of food imports, which were estimated at nearly $7.1 billion, far higher than its food exports of around $124 million.

The UAE recorded the fourth largest food import bill in the region despite its relatively small population. Its food exports were valued at around $3.6 billion while exports stood at $952 million, leaving a deficit of $2.6 billion.

Analysts attributed the high value of the UAE's food imports to the fact that a large part of them are re-exported to neighbouring markets, mainly through Dubai.

In an earlier study, AOAD said heavy reliance on imports along with poor investments and low land utilisation have boosted the cumulative Arab food imports bill to more than $180 billion over the past decade.

According to the report, the Arab population was estimated at nearly 351 million at the end of 2009 and it has been growing faster than most other nations, at around 2.34 per cent annually since 1990 against a global rate of 1.16 per cent.

"The high population growth in the region is one of the major factors for the persistent deficit in the Arab food balance....other factors include low investments by the public and private sectors, defective government policies, poor water resources, inefficient use of available land and water resources, and the low level of utilisation of available cultivated areas," it said.

"The biggest obstacle has been and will remain the relatively small water resources available in the region. This obstacle has blocked investment in the farming sector and will hinder any programme aimed at exploiting those areas."

AOAD reported last month that Arab countries are mulling an ambitious $65 billion strategy for the next 20 years to boost farm production and cut imports.

The strategy includes three phases, the first of which is a five-year plan during 2010-2015. The second stage will cover the 2010-2020 period and the third one stretches until 2030, when most farm products will nearly double.

AOAD said investments by the public and private sector would have three main targets, including improvement of productivity, expansion of cultivated land by developing water resources, and establishment of joint farming ventures.

"The arable land is expected to be expanded by around 2.9 million hectares by 2030....the main aim is to increase wheat production by 81.3 per cent, rice by 56.5 per cent, barley by 81.2 per cent and sugar crops by 69.3 per cent.....this will largely boost the rate of self sufficiency in these products and at the same time create nearly 8.7 million new jobs," AOAD said.

By Nadim Kawach

© Emirates 24|7 2010