Bahrain: Investing in Food Security

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Oxford Business Group | 24 August 2008

In a bid to ensure its long-term food security, Bahrain is negotiating a series of import agreements and investing in farmland in South East Asia.

In response to sharp rises in basic commodities, especially rice, Prime Minister Sheikh Khalifa bin Salman Al Khalifa said in March that Bahrain and other countries in the region had to turn their attention to maintaining adequate supplies for their populations as a matter of urgency.

"We need to draw lessons from the current spiralling inflation hitting the world and start seriously to think about ensuring food security in the Arab world," he said during a meeting with local officials.

With less than 3% of its 665 sq km landmass being rated as arable, Bahrain has limited agricultural lands that do not exceed 6000 ha, thus making the country heavily dependent on food imports. The Kingdom's growing population has exacerbated this situation, with a sharp rise in the number of foreign workers over the past decade. Today, some 1.2m people live in one of the most densely populated countries in the world.

Of prime concern is ensuring a steady supply of Basmati rice, one of the daily staples of the Bahraini diet. Bahrain imports an average of 44,000 tonnes of rice annually, mainly from Pakistan, India and Thailand. Though import levels have remained constant over the past five years, costs have not, with prices surging 20% last year, according to data from the Bahrain Centre for Study and Research (BCSR). The once affordable 40kg bag of Basmati rice that used to sell for $45, has doubled in price in the past 12 months, though the steep climb in prices is easing off as countries such as Thailand have been reporting strong harvests.

Sheikh Khalifa call has prompted Bahraini officials to take action. Following a visit to the Far East in late May, Hassan Abdulla Fakhro, the Minister of Industry and Commerce, announced an agreement with officials in the Philippines to allocate large plots of land to grow basmati rice in a bid to secure the Kingdom's needs at reasonable prices.

While the Philippines, like Bahrain, is a net importer of rice, it does have large tracts of arable land that could be developed if funding was made available. If the project goes ahead, it has the potential to not only improve the Kingdom's food security but also maintain rice supplies to the local population, and create employment.

This is a significant factor considering the protests that occurred in some South East Asian countries over rice shortages, at a time when exporters have been reaping windfall profits through taking advantage of high international prices.

Bahrain has also held talks with Thailand, the world's largest rice exporter, about investing in its agriculture sector, as well as inking a long-term agreement to buy up to 40,000 tonnes of rice over a certain period of time, as yet undetermined.

Bahrain has also been moving on the domestic front to make sure its rice needs are met and price rises do not hit locals too hard. The government has given 15% salary increases to public sector employees, as well as including other important products in its subsidy programme and granting families around $120 in monthly assistance. Additionally, it has recently beefed up price support on a number of basic commodities, including rice and flour, and has also cut import tariffs on many food products to help keep prices down.

While rising prices, high fuel and freighting charges, a weakening dollar and poor harvests experienced by some of Bahrain's main trading partners have combined to make food security a serious cause for concern, some argue that poor policies have also played a part.

According to researcher Abdullah Al Hadad, one of the prime causes for Bahrain's food shortages is the rapid urbanisation of the country. A lack of planning has contributed to the reduction of agricultural land in Bahrain as high-rise buildings have been constructed in all parts of the Kingdom - sparing nothing in their way, even farms, he was quoted as saying by local media on June 21.

There are additional concerns prompting Bahrain to consider offshore investments in agriculture. Primary amongst these is water.

Jaffar Habib, the assistant undersecretary of agricultural production at Bahrain's Ministry of Municipalities and Agriculture Affairs, said there were limits on how far the Kingdom's agricultural resources could be stretched.

"Our biggest challenges are the limited agricultural lands in Bahrain and shortage of water resources, so we are forced to use treated water for irrigation, despite conflicts we are facing from the public who fear the hygiene and purity of the water," he was reported as saying on July 18.

An additional concern identified by Habib is the reluctance of Bahrainis to work in the agriculture sector, with long hours and relatively low pay discouraging many from taking up a job on the land.

Bahrain is not the only Gulf state looking offshore to guarantee its food requirements. The United Arab Emirates government has been looking at investing in the agriculture sectors of Kazakhstan, Pakistan and Sudan, while Saudi Arabia is looking at plans to invest in farms in Thailand and reportedly holding talks with Pakistan over a land for oil deal.

Original source: Oxford Business Group
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