UAE ‘should invest in foreign farms’

The National | June 21. 2008

James Reinl, United Nations Correspondent

UNITED NATIONS // The UAE and its food-importing neighbours are “particularly vulnerable” to spiralling costs and should make significant investments in “contract farming” in Africa and Asia, says the UN’s Gulf food chief.

Dr Kayan Jaff, the head of the Food and Agricultural Organisation’s (FAO) office in Abu Dhabi, warned the Government and regional leaders that it will take a multibillion-dollar investment in agriculture overseas to curb the soaring price of imported food.

For such an intervention to be successful, the GCC would have to invest “several billion dollars in agriculture in neighbouring countries”, said Dr Jaff. “This is one of the top priorities. It is important; it is fundamental and it is very timely.”

The FAO is increasing its regional staff tenfold to oversee farming contracts between Gulf and developing countries in an effort to tackle regional food insecurity.

“People are worried about the price increases they see in the supermarkets, particularly now Ramadan is approaching and the consumption of food is very important,” said Dr Jaff.

“We want to make policymakers aware that there is a problem of increasing food prices and shortages and that it is not going to get any better. To ease this pressure, they need to invest in agriculture in neighbouring countries.”

Poor harvests in some regions, competition for farmland from biofuels along with high oil prices impacting the costs of fertiliser and transportation have fuelled massive global food inflation.

The GCC imports 99 per cent of its food. Last year it spent Dh55 billion (US$15bn), up from about Dh33bn in 2006. The UAE ships in more than 90 per cent of foodstuffs, meaning consumers are suffering disproportionately from the global trend.

Meanwhile, the decline of the US dollar, to which the dirham and other Gulf currencies are pegged, has worsened the situation, with shoppers buying products at inflated prices with a depreciating currency.

Price rises have caused political tension and sparked food riots from West Africa to South Asia, while people in the relatively affluent Gulf have seen their shopping bills rise by as much as 15 per cent.

In an attempt to tackle the problem, the UAE has frozen prices on basic products, while Kuwait has contributed US$100 million (Dh367m) to a fund that provides staples in Muslim countries. Saudi Arabia, meanwhile, has reduced tariffs on wheat, dairy produce, vegetable oil and canned goods.

According to Dr Jaff, however, such stopgap measures will not address the root problem and officials must “invest in neighbouring countries like Pakistan, Egypt, Sudan and Syria”, with the FAO playing the role of “honest broker”.

“These countries have the water, the land, the good soils and the manpower to produce foodstuffs, so we need to encourage investment from the Gulf into these regions, thereby supplying a flow of food back to the Gulf,” said the Iraqi-born American.

Saudi Arabia has begun negotiating farming contracts with Brazil, Ukraine, Thailand and India, while Emirati officials are expected to travel to Pakistan later this year to strike a US$500m deal to purchase farmland.

But Dr Jaff said the Government and other Gulf states must dig deeper into their pockets if they want to tackle soaring supermarket prices.

“The policymakers are well aware that what the FAO is advocating is true,” he said. “They would like to play a role, be a responsible community participant and try to improve the situation.”

Price rises made headlines this month when world leaders met in Rome for an FAO food security summit, which concluded with a declaration calling on wealthy nations to increase overseas assistance.

“There is an urgent need to help developing countries and countries in transition expand agriculture and food production and to increase investment in agriculture, agribusiness and rural development, from both public and private sources,” said the declaration.

On the sidelines of the summit, the FAO and the Government struck a deal to open an office of the UN’s food agency to oversee investment and development projects for the entire GCC and Yemen. The FAO has had a small presence in Abu Dhabi since May 2005, but the deal will see the office expand to 50 technical advisers and support workers over the next five months, before relocating to larger premises in Khalifa City.

The deal, signed on June 4 by Dr Rashid Ahmed bin Fahad, Minister for Environment and Water, and Dr Jacques Diouf, the FAO director general, will see the Government pay the agency’s annual running costs of US$2m.

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