The silent tsunami has already begun to sweep through the hydrocarbon economies of the Middle East despite 50% increase in oil prices in last six months. Contrary to the popular belief that the oil exporting desert nations could buy anything with their high oil earnings are in fact, reeling under the pressure of food price spiral.
The Food and Agriculture Organization of the United Nations (FAO) estimates the region’s cereals import bill will reach $22.6bn this year, a 40 per cent increase from 2007, and since 2000, it has climbed almost 170 per cent. Since three months, the region is experiencing severe food scarcity owing to ban from several grain exporting nations, as a measure to check the domestic price rise and political unrest arising out of it. But the rising expenditure on food imports is causing Middle East economies, totally clueless about what to do next.
Middle East fears, the food riots in Egypt could even spread to other desert nations that largely depend on food imports, if price rise and export bans persist. A general strike has been called in Lebanon recently to bring down the prices of food staples. A quarter of all the cereals traded across the globe are shipped to the Middle East and North African nations. Abah Ofon, agricultural com¬modities analyst at Stan¬dard Chartered in Dubai, stated, “The region was in a very precarious position.” Analysts opined, besides pay hikes and subsidies as short-term measures, there should be sustained efforts to increase farm output to attain self-sufficiency as a long-term plan.
Warnings such as crude prices hitting $200 per barrel in two years’ time from reliable analysts like Goldman Sachs, inflicts further damage to the situation. That is because non-oil producing nations those who are food exporters are not been able to provide necessary support to their agricultural industry on account of revenues being diverted toward oil imports, and this has triggered drastic cut in farm output globally.
In addition, the climate change was also been blamed for pushing the region to such a crisis. Saudi Arabia’s plan to suspend wheat production by 2016 due to water scarcity indicates what the region has in store on the food front in the coming years.