Arab cereal imports peak in 2009
Posted by Zawya
Emirates Business 24-7, 01 August 2010


Low land utilisation allied with rapid population growth and poor investment bolstered the Arab world's imports of wheat and other cereals to a record high of more than 59 million tonnes in 2009, official figures have shown.

The value of the imports edged down last year after hitting an all-time high because of a surge in global food prices but the volume of the imports gained nearly one million tonnes, showed the figures by the Khartoum-based Arab Organization for Agricultural Development.

The volume of imports surged despite a sharp rise in Arab cereal production, which jumped by nearly 17.8 per cent to peak at 54.9 million tonnes.

But AOAD noted that the rise in output was offset by a steady growth in the Arab population, standing at around 2.5 per cent to reach 352 million at the end of 2009, one of the highest growth rates in the world.

The figures by AOAD, a key Arab League establishment, showed the combined cereal imports by the 21 Arab countries swelled to a record high of 59.7 million tonnes in 2009 from 58.7 million tonnes in 2008 and 57.1 million tonnes in 2007.

The imports last year included around 29.4 million tonnes of wheat, slightly higher than the 2008 wheat imports of 29.3 million tonnes.

Corn imports surged by nearly 1.5 million tonnes to 15.5 million tonnes from 14 million tonnes while barely imports edged down to about 10.8 million tonnes from 10.9 million tonnes. Rice imports remained unchanged at 3.9 million tonnes.

The report showed the value of cereal imports slumped by around 9.6 per cent to $17.2 billion last year from $19.1 billion in 2008 after surging by around 24 per cent over 2007, when it stood at nearly $15.3 billion.

Wheat imports were valued at about $nine billion in 2008, lower than the 2008 import value of $10.5 billion but far higher than the imports of $7.7 billion in 2007.

The figures showed the value of corn imports slipped to around $3.2 billion from $3.4 billion while that of rice and barley slumped to $24.7 billion from $26.2 billion and to $22.7 billion from $23.7 billion respectively.

Exports of cereal were a fraction of imports, valuing at around $916 million in 2009. Their volume was also as low as 3.3 million tonnes in 2009, higher than the 2.6 million tonnes produced in 2008 but equivalent to that in 2007.

"The Arab cereal production accounted for only around 1.3 per cent of the world's total cereal output of nearly 2,230 million tonnes last year," AOAD said.

Given their high food imports and low exports, Arab states have reeled under a massive farm gap over the past two decades. AOAD's figures showed the cumulative gap exceeded $180 billion in the past 10 years.

The report attributed the worsening gap to several factors, including high population growth, low farming investment, flawed agricultural policies in some regional nations, and poor exploitation of available arable land.

Although the Arab countries have a vast farm potential as their arable land exceeds 550 million hectares, only around 12 per cent of it is utilised.

Despite the enforcement of a 2005-2020 farm strategy, which involves more investment and exploitation of arable land, Arab nations have become more reliant on foreign food imports and the bill is expected to surge in the coming years because of higher food prices and the absence of major farm projects.

"According to recent estimates in the Arab world, spending on food accounts for the lion's share of the total spending by Arab families, especially in rural areas, where more than two thirds is spent on food...this level has sharply risen over the past period because of the surge in food prices," AOAD said.

"As a result, most medium income families have joined the low income category and many of them have become unable to meet other family obligations...the problem is complicated by the fact that many families are now unable to fund such services as education, health and social development...this will only threaten social stability and lead to more diseases among the poor."

The report said it expected further complications in less developed Arab nations, including an increase in poverty and unemployment rates, which are already high because of a rapid population growth and poor economic performance.

"The food price surge will also adversely affect the ability of Arab families to save and this will depress their living standards...this in turn will prevent many of them from carrying out any projects in rural areas, leading to further drop in growth."

The report said it had noticed a substantial decline in the consumption of some essential food products, including meat, dairy and egg because of the price rise.

"This means many Arab families are now having less proteins.....this has already led to an increase in diseases resulting from malnutrition in some areas...increasing reliance on hydrocarbon-rich food items have also triggered sharp supply shortages in flour and bread.....in some less developed Arab nations, there have been reports that citizens have started to have less meals."

The absence of proper policies has allied with other factors to sharply boost the Arabs' reliance on imported food, leading to a steady rise in their farm gap.

Analysts expect the Arab wheat import bill to surge in the coming few years following Saudi Arabia's decision to halt local wheat production and rely on foreign markets to preserve its dwindling water wealth.

The desert Gulf Kingdom, which sits atop more than a fifth of the world's proven oil wealth, had produced nearly three million tonnes of wheat per year to meet domestic needs but output is expected to plunge to one million tonnes this year following the government's decision to stop subsidising local production. In the next two years, output could dip further and the country will become almost totally reliant on imports, mainly from the West.

The decision to rely on imported wheat follows a surge in Saudi Arabia's food imports over the past few years, with the bill peaking at over $12 billion in 2009 compared with $9.6 billion in 2006 and $8.75 billion in 2005.

The figures showed Saudi Arabia is recording one of the fastest growth rates in food imports in the Arab world, averaging around 8.3 per cent during 1995-2005.

In 2008, Saudi Arabia alone accounted for more than 40 per cent of the total Arab food gap, the difference between farm exports and imports.

"The Arab population was estimated at nearly 351 million at the end of 2009...since 1990, it has grown by nearly 2.34 per cent annually compared with global growth of about 1.16 per cent," AOAD said.

"The high population growth in the region is one of the major factors for the persistent deficit in the Arab food balance...another result of the high growth is that it boosts demand for food, which in turn pushes up prices...this means a large number of people will find it difficult to get their food needs."

By Nadim Kawach

© Emirates Business 24/7 2010

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