Arab states must raise intra-trade to buffer against food shocks

Reuters/Francis Kokoroko

In the age of climate change, “another year, another round of commodity spikes” seems to be a fitting slogan.

So far in 2024, the cocoa, orange and rice supply chains have been blighted. Poor weather, plant pests and producer governments’ export bans have led to sky-high prices for oranges and cocoa, as well as basmati rice shortages. 

Orange futures are up by 65 percent compared to summer 2023 due to poor harvests in Brazil’s citrus belt, the world’s largest producer of these fruits.

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There have been steep increases in cocoa prices due to climate change-induced drought in West African producer countries but also black pod disease and ageing trees due to under-investment. Ten tonnes of cocoa now costs around $8,000 – almost four times more than last year. 

Drought can quickly lead to drastic decisions by producer governments, such as shutting down supply chains that were once stable. Alternatively, prices may be rapidly increased. 

For food importers such as the GCC states, this presents significant challenges. Crops such as rice, oranges and cocoa cannot be grown in the Gulf region.

Such interruptions also affect the regional food and restaurant industries. Dubai, Riyadh and Doha have become global culinary centres offering an eclectic mix of cuisines. 

As a high-import region, the Middle East is extremely vulnerable to future food supply chain interruptions.

Global supply chains are still too concentrated. About 60 percent of the world’s cocoa is grown in Africa – in Ghana and Ivory Coast. Brazil is responsible for about one third of orange production and nearly two-thirds of orange juice. Rice is still mainly grown in South and South-East Asia. 

Such concentration levels are useful in times of abundance. But in times of scarcity they lead to potential havoc for businesses, such as food processors and supermarkets. Their purchasing departments will have to either pay higher prices or shut down their operations. 

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Given this fraught supply backdrop, the low level of intra-regional trade across the Gulf remains puzzling. The Arab region is still the least integrated region in the world in terms of trade. Most regional countries have decided to abstain from the World Trade Organisation. 

Trade agreements such as the Greater Arab Free Trade Area looked promising in the early 2000s but never fully took off to match other world regions’ success stories.

In the Arab area, wider geopolitics still determine trade relations, positive outcomes and potential sanctions or even trade boycotts. 

Take Lebanon, for example. Several years ago, its domestic farmers exported 80 percent of their citrus to the GCC to the benefit of both sides. Today, Lebanese farmers, who often have to endure harsh economic conditions, have since lost out on trade with the GCC.

The same is true for Syrian farmers, who also endure precarious livelihoods.

Such farmers cannot export to the GCC due to wider political objectives. Gulf countries often cite phytosanitary reasons like poor farmer pesticide management as barriers for trade, yet this is spurious. 

Despite water shortages, climate change and sometimes inadequate farmer capacity, the region can – and should – trade more with each other.

This is especially the case for fruit and vegetable crops which can largely be grown in the region. Even cocoa can be grown on the Comoros Islands, a member of the League of Arab States. 

Instead of punishing farmers for poor pest management, Gulf leaders should work on a long overdue regional organisation for managing food security risks. Such a body could oversee food quality in the region, determine pathogens in food and enforce rules for farmers in pest management. 

In an age of climate change, markets are likely to be further impacted. Diversifying risk can support food safety in the GCC and the livelihoods of farmers across the Arab world, thereby promoting rural stability.

Martin Keulertz is a lecturer in environmental management at the University of the West of England, Bristol