By Arda Cenk Tokbas
Bringing food production home is the right strategic choice for GCC nations
While many countries around the world experienced shortages in food supplies, the UAE Government took strides early on during the onset of the pandemic to ensure a steady and secure supply of food to residents.
Thanks to the quick decisions made by the esteemed leadership of the country, households were able to enjoy uninterrupted supplies of food, medicines and household goods.
The food sector in Gulf states has witnessed a steady growth, thanks to rising population, and high per capita income. A high dependency on food imports poses a significant challenge to these economies, rendering the discussion around food self-sufficiency particularly relevant.
In its recent GCC Food report, Alpen Capital said that food consumption for the UAE and Saudi Arabia is estimated to reach 10.3 million MT and 39.0m MT by 2023, respectively.
This reliance on overseas sources of food need not be a problem as long as global supply chains continue to function and production is not disrupted in the countries of origin.
The report also showed that GCC countries import around 85 percent of the total food consumed and this has exposed the GCC to global food price fluctuations. Geopolitical risks in the region will also have an adverse impact on the food supply in the region.
In recent months, however, we have been hearing a lot more about ‘self-sufficiency’, the ability of a country to produce its own food. Already in 2020, we have seen countries stockpiling rice and grain, and panic buying by consumers.
Climate change and the prospect of declining crop yields are now an ever-present worry and there are fears that restrictions on the movement of agricultural workers will affect this year’s harvests. Some of these factors are a direct result of the Covid-19 outbreak, while others may have been exacerbated by it.
As a result of the vulnerabilities highlighted by the Covid-19 outbreak, I believe we are now seeing an acceleration of efforts that were already underway to boost food self-sufficiency in the GCC countries. Over the last two months, since Covid-19 lockdowns were put in place, we have seen a flurry of investments by GCC countries in ‘agritech’ companies.
Kuwait’s Wafra International Investment Company announced that it will invest $100m in Pure Harvest, a start-up that wants to grow fruit and vegetables locally in climate-controlled facilities.
In the UAE, Abu Dhabi Investment Office (ADIO) has announced that it will invest $100m in four agritech companies to finance their establishment in Abu Dhabi. This builds on an existing AED1 billion programme to support the establishment of agricultural enterprises in Abu Dhabi, with a rebate of up to 75 percent on qualifying companies’ R&D costs.
Sharjah Research Technology and Innovation Park (SRTIP) recently shared details of its work with Merlin International to develop an aquaponics system, which combines aquaculture and agriculture in one closed-loop food production system. In briefings to local media, SRTIP has called on farm owners and investors to adopt the technology throughout the UAE.
On the strength of investments such as these, the GCC is set to become a major hub for innovations in the areas of indoor and vertical farming, and aquaponics. Given the requirements of these food production methods – more energy yet less water than conventional farming – the UAE could benefit from their widespread adoption, especially if solar panels generate energy onsite.
I believe that the GCC’s drive to achieve greater self-sufficiency has been given new impetus by the Covid-19 outbreak, but it is also a fact that the building blocks of such a policy were already in place.
The UAE’s National Food Security Programme was launched in November 2018, and the vision and strategy was why our company, HDF, invested AED100m to build a greenfield project production facility in the UAE for Pinar products.
Our facility, the very first to produce processed cheese in the UAE, opened in Khalifa Industrial Zone Abu Dhabi (KIZAD) in November 2019. From our current production level of 30,000 tons of cheese per year, we plan to double capacity in the near future.
National security and autonomy alone are sufficient drivers for GCC countries to actively pursue food self-sufficiency programmes, although there is yet another potentially large upside. Localisation of food production can provide a major boost to regional economies, as we are seeing already from the mobilisation of capital described earlier.
In fact, when the UAE’s National Food Security Programme was unveiled in 2018, it envisaged the addition of 16,000 new jobs and a AED22bn economic boost by 2021. By 2051, when the UAE aims to be the world’s most food secure nation, the economic boost will be many times bigger.
There are many who believe that once Covid-19 is under control, humanity will go back to its carbon-intensive ways, and there will be an influx of imported products. I believe, however, that we may witness shifts in behaviour for the better, and the acceleration of programs to increase local food production capacity should be one positive outcome.
Bringing food production home is the right strategic choice for GCC nations and it will deliver a significant boost to their economic diversification strategies.