A Hungry Middle East

Desert Farming in Libya by GeoSavvyDevelopment
Desert Farming in Libya by GeoSavvyDevelopment

Mother nature has recently brought us more than just blizzards and sun burns.  The extreme weather conditions have led to the rise of oil and food prices.  With higher oil prices (predicted to reach up to $100 a barrel in 2011) and significant proportions of food crops being diverted towards producing biofuels, food prices are on the rise too.   The unpredictable weather conditions have limited the annual yields produced, preventing farmers to meet their annual quota.

Food Price Indices by FAO
Food Price Indices by FAO

The Food Price Index was estimated at 214.7 in December, the highest level since 1990.  With the prices of sugars, fats and oils rising more than 50% since early 2009  (depicted on graphs), the Gulf states reliant on food imports are feeling the pain.  According to the World Bank, if global food prices continue to rise, a repeat of the Food Crisis of 2008 will occur (see previous blog on Chinese private firms’ investment in Africa).  Riots have already erupted in parts of the middle east.  To resolve the risk of extreme prices and prevent hostility from snowballing, Arab corporations are using oil wealth to purchase significant amounts of land in Africa in hopes to transform them into “agricultural hotbeds”.

According to an Arabian Business article, Arab states have not only experienced extreme prices of staple products, but food exporters have bans on exports in an attempt to keep prices low.  Gulf states in particular have felt the hit.  They are dependent on goods coming from Ethiopia, Kenya, Sudan, and Mozambique.  About 50% of Egyptian produce is exported to the Gulf region alone.  Jenaan, a private firm based in Abu Dhabi, has invested more than $500 million in African farmlands.  These investment projects include: 50,000 acres in Egypt, 100,000 acres in Sudan, and even more in Ethiopia and Tanzania.

Are private Arab firms also following the Chinese investment paradigm? Renée Vellvé, co-founder and researcher with GRAIN, claims that the investments have denied small land farmers their livelihood and land rights.  However,  many believe that as long as the global food market remains open, we should not see any problems.

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