From late 2007 through 2008, the global price of food saw an unprecedented upwards spike in prices, measured by the UN’s food price index, a broad measure of food prices. That spike was followed by another one in 2010 through early 2011 (see chart).
Here in the United States, we hardly felt the pinch at all. Food prices for the average American in the grocery store have almost no link to world food prices – as marketing, transportation, and processing can account for up to 80% of the total cost of food in the grocery store. However, major grain importing countries are sorely affected by these price spikes. For instance, as the Egyptian government continues to negotiate a new IMF loan, a sticking point is that over 9% of its total budget outlay is devoted to subsidizing food.
The countries of the Middle East are particularly vulnerable to price spikes. They are arid countries with rapidly growing populations. Some, like Egypt, Syria, or Iraq are historical breadbaskets – the Fertile Crescent and the Nile Valley are where agriculture was first exploited thousands of years ago. However, today their agricultural sectors have suffered from years of government mismanagement, price ceilings, and underinvestment. As the 2nd chart shows, all of the Arab countries are net importers of grains, with small Gulf States like Bahrain, Qatar, the UAE, Kuwait, and Oman dependent on imports for over 90% of their grain.
Even so, these Gulf States had thought they were insulated from food price increases before 2008 because of their wealth. However, in the food price spikes of 2008, there was a time in which countries were unable to buy grain on the world markets at any price. Unlike the global market for oil, food markets are neither deep, nor liquid, nor transparent. Only about 18% of world wheat production is globally traded, and state-owned monopolies dominate export markets. For countries that are dependent for up to 90% of their food on imports, the fear of unavailable imports was a shock.
Food Prices and the Arab Spring
The next price spike, in late 2010 and early 2011, caused largely by drought, heat, and fires in European Russia and the Ukraine (compounded by a Russian government directive to halt wheat exports) drove home the threats posed by high food prices. As we all remember, in December 2010, Tunisia erupted in revolts, followed by Egypt, Libya, and the rest of the Arab world. Although the protestors in Tahrir Square would have been unlikely to say they were protesting the price of food, there is a clear line between food prices and the likelihood of urban riots (for more on this, see my paper, “Climate Change, The Arab Spring and Food Prices”). The Gulf Monarchies took careful note of the link between food prices and realized they were vulnerable to a restive population, should food become more expensive, or – worse – unavailable.
The Qatari government, like on many areas (al Jazeera, the Syrian civil war, the 2020 FIFA World Cup), has been the most proactive in the region in addressing its food security challenges. In 2008 Qatar begin the Qatar National Food Security Program (QNFSP) in order to address the problems of food insecurity through increasing domestic production.
The fact that Qatar has the second highest per capita income in the world (thanks to export revenue from its vast natural gas resources) has certainly helped to bring capital into this project. However, by being a pioneer, Qatar can prove to be a constructive, sustainable model for the rest of the region.
Water Desalination Using Renewable Energy
The Qatari program aims to utilize seawater in order to make the arid desert bloom. The problem is that desalinating water is very energy intensive – and that has been a limiting factor in utilizing it for the relatively low-value irrigation (as opposed to high-value drinking water). The QNFSP aims to meet this energy challenge by utilizing renewable energy to desalinate the water. Logically, this makes sense; while there’s little water in the desert, there is more than enough wind and sun. Qatar aims to use these techniques to move from its over 90% dependence on imports to being able to produce 70% of its food at home. If successful, this model promises to be exportable across the region.
However, it will be important that this is a sustainable model, unlike neighboring Saudi Arabia. For decades, the Saudi government had made the desert bloom. In the 1970s, in the face of an earlier spike in food prices, the Saudis were determined to become self-sufficient in wheat production. That they succeeded in becoming self-sufficient in wheat production was a testament to their ability to subsidize farmers and drill deep into underground aquifers. However, by 2008 it became apparent that utilizing what’s called ‘fossil water’ was unsustainable because the water was running out. The government reduced agricultural subsidies in 2008 and has quickly phased out wheat production.
The Qataris have begun to help promote their model of food security by forming the Global Dry Land Alliance within the United Nations. This alliance, composed mostly of Arab countries, will set up an early-warning system for vulnerable countries facing droughts and food price spikes so that they can build up their food reserves. It will also seek to improve agricultural productivity over the long term by promoting the development of solar-powered desalinization in producing water.
Economically, it may not make sense to desalinate water in order to grow it in the desert, when food can be imported much cheaper. However, the security that assured access to domestic food production provides is worth more to these countries than the pure dollar value. In an era in which climate change will make food prices more unstable and production in drylands more unpredictable, using sustainable technology to boost much-needed food supplies could prove to be a more important Qatari export than the huge volumes of natural gas sent abroad every day.