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Author: 
MOHAMED A. RAMADY
Publication Date: 
Tue, 2011-02-08 16:51

Globalization might have brought a lot of benefits, but in large parts of the Arab world the recent turmoil in Tunisia and elsewhere are a reminder that ordinary life revolves around the price of bread and other basic commodities. Ignoring rising prices for food can bring social upheavals, with unknown consequences.
Food security and rising basic commodity prices are becoming a prime concern for governments around the world, and not just in the Arab region.
Old enemies seemingly come together over the issue of food security, as evidenced by the Indian prime minister's authorization of emergency onion imports from Pakistan, after the domestic price of Indian onion trebled in just one month.
Rising Indian onion prices are no joke - as at least two Indian governments have been felled by the rising price of onions.  
Other countries have scrambled to contain rising domestic prices, with South Korea releasing emergency supplies of cabbage, and mackerel, and the Indonesian government encouraging people to grow their own chilies, as price of this commodity has quadrupled in barely a year.
Food inflation, as headline figures from China now illustrate, are making an awkward situation also worse for governments that wish to pursue high economic growth, while controlling domestic inflation at the same time.
The recent massive floods in Australia and Brazil are also putting pressure on food prices, with forecasts of at least a 30% rise in food prices for Australia in the coming months.
This will have a knock on effect on Australian export prices to Asia and the Middle East for products such as wheat, other grains, sugar cane, as well as fruit and vegetables.
Adding to these woes, the recent Russian drought and fire in the wheat heartland has forced Russia to move closer to being a wheat importing nation.
The GCC countries have reacted differently to this looming food security and supply shortfalls being experienced. 
In Saudi Arabia, the government has undertaken a major shift in its agricultural policy by calling for a complete halt to growing water intensive crops such as wheat and other grains by 2016.
The focus now will be on a combination of importing greater amounts of food stockpiles, and, of more importance, buying or leasing of land abroad in more environmentally hospitable areas for Saudi companies to grow crops.
Food imports to Saudi Arabia have been one of the fastest growing items in the balance of payments, worth around SR54 billion in 2009.
It is investing in farming land abroad that is now getting more attention, and Saudi officials and private companies have identified at least 27 countries for possible leasing locations.
The Saudi firm, Hail Agricultural Development Company has already begun developing land in Sudan, and Saudi Star, a private agricultural investment company, plans to export rice products very soon to Saudi Arabia from Ethiopia. Saudi Arabia however, does not intend to cease domestic agricultural production, but to make it "smarter" and ecological and water resource friendly. Agro-industry will focus on poultry, aquaculture, greenhouse agriculture and investment in dairy production, where Saudi products have established an excellent market reputation not only in the Gulf but in the wider region.
Aquaculture, especially shrimp farming, has taken off in Saudi Arabia and takes advantage of the Kingdom's long coastline on both the Red Sea and Arabian Gulf.
Greenhouse technology is now a priority area for practical academic research, and should be encouraged, as it is an effective method to grow crops without exhausting water resources, as previously happened with commercial scale Saudi wheat farming.
Biotechnology is being used to develop crops resistant to drought and salinity, and the new University, KAUST, is involved in this sector, as well as research in a new species of date plants that can be watered with seawater.
The above take time for fruition. In the meantime, securing domestic production, while investing in foreign countries, requires sensitivity on both sides, as it becomes politically impossible for a country to export some of its agricultural products from its leased land to another country, especially in times of domestic shortfall and poverty. Agreements have to be in place that are perceived to be fair to both sides, such as releasing a portion of the products to the local market of the exporting nation, while safeguarding the long term investment of the foreign party. According to reports, the first such "win-win" agreement has been signed by the Kingdom with the Philippines in 2010. 
To add to private investor comfort, the Saudi Fund for Development would also participate in overseas agricultural investment to encourage complementary private sector participation.
While the above efforts are laudable in the long term, the Kingdom can also initiate a short-term program of public awareness on food waste and the problem of obesity.
For those attending Saudi wedding receptions and family dinner parties, one never ceases to be amazed at the fabled Arab generosity and hospitality as well as the amount of food, which is offered, and often going to waste.
No one is suggesting on putting the nation on a strict rationing diet, but a more wholehearted public awareness campaign on food wastage can go some way in easing of global food shortages ...
 
(Mohamed A. Ramady is a former banker and currently a visiting associate professor of finance and economics at King Fahd University of Petroleum and Minerals. Dhahran.)

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