Carbohydrates > Hydocarbons ?
Posted by Big Gav in agriculture, food prices, inflation
The FT reports that middle eastern countries are struggling to afford rising food prices, even with soaring oil export revenues.
For years, food policy in the Middle East and North Africa was very simple: hydrocarbon exports paid for carbohydrate imports.
Rising agricultural commodities prices and a large population increase mean that the traditional policy is now untenable even if crude oil trades at about $120 a barrel, forcing countries in the region, including Saudi Arabia, to reconsider how it feeds its population.
“The region has woken up to the new food market reality,” says Abdolreza Abbassian, an expert at the Food and Agriculture Organisation in Rome.
The FAO estimates the region’s cereals import bill will hit $22.6bn this year (£11.4bn, €14.5bn), a 40 per cent increase on 2007. Since 2000, it has jumped almost 170 per cent. The rising bill is the latest signal of the looming food crisis hanging over the Middle East and north Africa, the region of the world most dependent on imports of food staples.
Jonathan Calland, of Tilda, India’s largest exporter of basmati rice, says: “Security of food supplies is for the first time since the 1970s back on the agenda in the Middle East.”
In the past few months, food riots have hit Egypt, the United Arab Emirates and Yemen as prices jumped almost 60 per cent in a year. A general strike, demanding action on rising prices, has been called in Lebanon on Wednesday. The discomfort over food price hikes is aggravated by a huge dependence on the international food market. Middle East and north African countries buy almost a quarter of all the cereals traded globally.
Abah Ofon, agricultural commodities analyst at Standard Chartered in Dubai, says: “The region is in a very precarious position.”
Two countries in the region, Morocco and Jordan, have an even more acute problem because not only are they facing higher food prices rises, they are also net importers of fuel.
The dependence on imports is a consequence of the meagre agricultural supply – a result of paltry land and water resources – and booming demand – the upshot of fast rising populations and strong economic growth courtesy of high oil prices.
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