A 'perfect storm' driving up Middle East food prices

With global crop shortages coming at a time when global demand is rising, prices for many basic goods including rice, wheat, dairy and cooking oil have been rising dramatically throughout the Middle East.

"In what is being seen as a perfect storm of food scarcity, global warming, the collapsing dollar, population explosion and even alternative fuels are all being blamed for plunging the world into the biggest crisis of the 21st century," said Jim Meltz, Show Director for AGRA Middle East, that takes place at the Dubai International Exhibition Centre from 8 -10 April 2008.

"As global prices rise, the problem is particularly acute for Arab countries as they import at least $10bn worth of food products per year, placing enormous pressure on consumers and regional economies," Meltz added.

The World Bank says international food prices have risen by 75% since 2000, while wheat prices have increased by 200%. The cost of staples such as rice and soya bean has also hit record highs, while corn is at its most expensive in 12 years. The increasing cost of grains is pushing up the price of meat, poultry, eggs and dairy products.

Converting large amounts of land to crops for biofuels is also reducing food production just when the world needs an increase. Last year a quarter of the US maize crop was turned into ethanol to fuel vehicles - and the US supplies more than 60% of the world's maize exports.

"If all that wasn't enough, most Arabian Gulf countries are under additional inflationary pressure because their currencies are pegged to the tumbling US dollar, particularly when sourcing food from economies with stronger currencies," said Meltz.

Food prices in the United Arab Emirates, for example, are estimated to have risen by 30% last year and are expected to increase by as much as 40% this year.

"With local media almost daily reporting sharp increases in basic foods across the region, there is growing concern over the question of food security and the need for a common strategy in the Arab world," Meltz added. Bahrain's Prime Minister Sheikh Khalifa bin Salman Al Khalifa recently spoke of the need for Arab countries to achieve self-sufficiency in food production and reduce dependence.

"The need for the region's agricultural businesses to increase their efforts has never been greater," said Meltz. "While the Middle East has been witnessing significant agricultural development, there is a long way to go. The GCC countries must still rely on the rest of the world for 90% of their food and feed requirements. Annual food imports to the UAE alone amount to a staggering $3.5-4bn."

The region has to overcome a harsh climate, limited water resources and poor soil conditions to build indigenous production by acquiring modern technologies, equipment and expertise and shifting investment trends toward the development of the agricultural sector, Meltz added.

For example, agricultural development in recent years in the UAE has seen more than 723,738 hectares (1,787,633 acres) of once barren land transformed for cultivation. There are now over 6313 greenhouses and 22,797 farms spread throughout the country.

"The growing demands of an ever-increasing population, combined with the need to reduce dependency on imports, are adding to the potential for agribusiness industries in this dramatically developing marketplace," said Meltz.

Platinum sponsors of AGRAme are Cairo Three A, a group of integrated companies in the supply of agricultural commodities across the Middle East North Africa including trading and charging/discharging services, storage facilities, transportation and distribution.