Oil for Food: The Global Food Crisis and the Middle East

The Middle East is well known for being a pivotal actor in global oil production. It is less known that it also imports a third of the globally traded cereals. Middle Eastern states consider dependency on food imports a strategic liability, similar to the West’s perception of its dependence on oil imports, and this geopolitical stance shapes the global food markets.

The global food crisis in 2008 sent shock waves through the Middle East. Rising food prices were a strain on scarce foreign exchange in the poorer countries like Egypt or Yemen, even the rich Gulf States were concerned. They faced the threat of not being able to purchase food at any price, even with their pockets full of petrodollars, when agro-exporters like Russia, Argentina and Vietnam announced temporary export restrictions out of concern for their own food security. As a reaction, Gulf countries tried to curb food inflation with subsidies and price controls, increased strategic storage and most importantly, announced agro-investments abroad. Gulf countries have also started to phase-out water-intensive crops, trying to make domestic agriculture more water-efficient. Food security issues will be part of strategic equations, hydropolitics and international relations in the Middle East for decades to come. It will also be big business.

The high level of food-import dependency is set to increase in the Middle East, and especially in the Gulf at a time when world markets have become less reliable. Food prices have witnessed a structural upward shift. Globally there has been an increase in demand because of population growth, dietary change, biofuel production and increased financialization of food markets. At the same time, productivity growth in developed agro-markets has diminished. Climate change is taking its toll, and agricultural production faces an ecological backlash that is partly of its own making.

Saudi Arabia imports 40 percent of globally traded barley for its livestock industry. Very water intensive green fodder, like alfalfa, is also increasingly imported. Rice is an important staple crop, not only for locals but also for the large foreign labour force. Expatriates are about 30 percent of the population in Saudi Arabia, and more than 80 percent in the UAE. Finally, the US Department of Agriculture (USDA) expects that the Middle East and Africa to absorb half of the global poultry trade by 2021, with Saudi Arabia as one of the largest importers.

Iraq and Kurdistan Region are in a similar, albeit less comfortable situation as the Gulf countries, as its oil production and GDP per capita are lower. Like the Gulf countries, it has a high dependence on oil export revenues, food imports and considerable population growth. Iraq is equally tied into world food markets. An increasing share of food imports in the region is not only coming from the traditional exporters in North America, Europe and Australia, but also from tropical countries like Brazil. With the Public Distribution System in Iraq, the universal household food subsidy, entertains the most extensive public food program in the world. A considerable part of its requirements is imported. Even in regions like Kurdistan that are more self-sufficient, foreign high protein wheat needs to be imported to produce bread-quality flour.

The most salient food security challenges in the Middle East, is not the lack of calories but micronutritional deficiencies that cause malnutrition, especially among young children. In Iraq about 27 percent of children below the age of five, suffer from stunting according to the International Food Policy Research Institute (IFPRI). This is quite high in regional comparison, and calls for nutrition interventions by the concerned governmental authorities and international organizations.

It also puts into question the widespread equation of food security with self-sufficiency. Countries can be perfectly food secure without being self-sufficient; this is shown by large food net importers like the UK, Italy, Japan, Singapore and Kuwait. Food security means access to nutritious food by everybody at all times. Whether this food is domestically produced or not is not so important, although food imports can constitute a strategic liability in the case of conflict and boycotts. Therefore we can conclude that any food security policy needs to take broader economic and human development into account. This must address poverty and allow vulnerable people to be in a position to access available food via income generation, as well as access to land or transfer mechanisms if needed.

Eckart Woertz is a Senior Research Fellow at CIDOB, the Barcelona Centre for International Affairs. Formerly he was a visiting fellow at Princeton University, director of economic studies at the Gulf Research Center (GRC) in Dubai and worked for banks in Germany and the United Arab Emirates. He teaches at the Barcelona Institute of International Studies (IBEI) and was KSP visiting professor at the Paris School of International Affairs (PSIA) at SciencesPo. He is author of Oil for Food (Oxford University Press 2013) and numerous journal articles and holds a PhD in Economics from Friedrich-Alexander University, Erlangen-Nuremberg.

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