Bloomberg | August 24, 2008
UAE's $4b food bill set to climb
Dubai: The United Arab Emirates, which is investing in farms in Asia and Africa to ensure food supplies, will see its $4 billion a year food import bill rise on population growth, the minister of environment and water said.
"We are investing in land in Sudan, Pakistan and Egypt to secure food supplies without being at the mercy of market fluctuations," Dr Rashid Ahmad Bin Fahd, Minister of Environment and Water, said at a conference in Dubai yesterday. "Food import costs will rise in line with population increases."
Gulf countries, which hold 55 per cent of the world's crude oil reserves, import all their staple food needs, according to the Amsterdam-based Common Fund for Commodities. With money from record oil revenues, countries such as the UAE and Saudi Arabia are trying to buy their way out of a food crisis by capping food prices, storing provisions and buying farmland abroad. Saudi Arabia, the world's largest oil exporter, spends $6 billion a year on food imports.
"Up to 10 per cent of the Gulf's total import bill is for food," Ali Mchumo, Common Fund's managing director, said at the conference. "But high oil prices have provided an important cushion for these countries to manage higher food prices."
The UAE population is expected to reach five million by 2010 from 4.6 million this year, according to the US Census Bureau, as the country serves as a base for global companies seeking access to the Gulf region.
The Ministry of Economy will complete a study in the next quarter to establish a food reserve and at least 70 dams will be built in the northern emirates in the next five years to improve water retention, Bin Fahd told Bloomberg News in an interview.
"Our defect in the UAE is water," he said.
As long as countries such as the UAE lack water resources, food imports will increase, and plans to fund agricultural development are bringing unused fields back into production, Mchumo said in an interview.