Virus, Expats and Ramadan Stress Test Food Security in Gulf
Pandemic, Expats and Ramadan Stress Test Food Security in Gulf
(Bloomberg) -- Around the world the coronavirus pandemic has brutally exposed economic vulnerabilities. For wealthy but parched states in the Gulf, it’s resurrecting deep concerns over food.
Supermarket shelves are still well stocked, if missing some fresh cheeses or imported seafood. But as the virus disrupts global supply chains, desert nations like the United Arab Emirates that import as much as 90% of the food their largely expatriate populations consume are treating the issue as a matter of national security.
U.A.E. officials have eased import regulations, including requirements for Arabic labeling and extended best-before periods, lowered duties and crammed extra cargoes onto flights intended to repatriate citizens. Measures companies had requested for years were pushed through quickly. The nation’s Food Security Council, formed in February, found itself in crisis mode and the government announced it would bolster strategic stocks.
The potential for supply disruptions has stirred memories of the global food crisis that began in 2007, when the Gulf found that vast financial reserves built from oil sales didn’t always guarantee access to food supplies as producing nations imposed export restrictions to protect their own people from surging prices. Some of the supplies now are coming from investments made by the U.A.E. in Eastern Europe and East Africa farmland after the last crisis.
“Countries in the Gulf learned a lot from that experience,” said Eckart Woertz, director of the Giga Institute of Middle East Studies in Hamburg, who specializes in energy and food security. “It spooked them, and rightly so.”
Even with the measures, Gulf states are more exposed to the whims of markets at a time of massive dislocation. The U.S. imports 15% of its total food, according to the website of the Food and Drug Administration, while the U.K. brings in nearly half.
While all Gulf countries are heavily reliant on food imports, some have boosted local production. Qatar responded to a boycott by four leading Arab nations that began in 2017 by ramping up its small domestic output, and says it’s self-sufficient in dairy and fresh chicken. Saudi Arabia produces enough milk and eggs to meet demand, according to the Saudi Embassy in the U.S., and exports to the Middle East. Riyadh has allocated $532 million to finance agricultural imports through loans to support food security during the pandemic, state news agency SPA reported Wednesday.
The U.A.E., which has reported 5,365 Covid-19 cases and 33 deaths, has imposed stringent restrictions on movement to stop the virus from spreading as it, along with the rest of the Muslim world, prepares for the holy month of Ramadan that begins next week. Mosques are expected to remain off limits for prayers as authorities try to stem transmission; but food consumption typically rises in Ramadan as people prepare big family meals and desserts to break the daily fast.
Migrant blue-collar workers mostly from Southeast Asia who toil in the U.A.E.’s construction and service sectors would be the most vulnerable to price swings or shortages, with many having lost their jobs or been placed on unpaid leave as the virus savages the economy. The local administration in Abu Dhabi, one of the country’s seven sheikhdoms, has pledged to expand a safety-net fund for the hardest hit.
Authorities also have to appease legions of affluent expatriates who could head home if denied the high standard of living they expect, said an Abu Dhabi-based diplomat who’s been tracking the government response. Officials are worried that the prospect of dimmed job opportunities and the sweltering summer coinciding with the expected virus peak could help spur an exodus.
The Dubai office of BRF Global, Brazil’s largest poultry exporter, said it decided a month ago to increase its stocks in the region, predicting more people would stay in the Gulf after Ramadan because of travel restrictions and virus outbreaks back home. To help with a reported storage crunch, four major food retailers including French retail giant Carrefour agreed to provide suppliers with free space for two months to help keep prices down, the government said.
Potatoes, tomatoes, cucumbers and herbs are already grown in the U.A.E. and there’s some meat, egg and dairy production, and even local oysters. But there’s likely to be a renewed focus on expanding cultivation once the virus crisis has passed.
The Abu Dhabi Investment Office said this month it had invested $100 million to encourage four agricultural technology firms to build research and development facilities in the emirate. U.S-based AeroFarms said it wants to construct the biggest vertical farm of its kind in the world -- in which crops are grown in layers -- with the first harvest by mid-2021.
Policy makers are “likely to double-down on tech-based solutions following the end of the crisis,” said Daniel Moshashai, geopolitics and infrastructure analyst for the Middle East at Castlereagh Associates, a London-based consultancy. “Technology will help in the much-needed localization, including for food production.”
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