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The Arab world needs to ease global food trade barriers

The region must embrace food imports

Egypt lower commodity prices Reuters/Amr Abdallah Dalsh
A bakery in Cairo. The Egyptian government says it will lower the prices of seven essential commodities by 15 to 25 percent

One of the greatest conundrums facing the Arab region is its suspicion of the trade in food.

Since the days of Gamal Abdul Nasser in Egypt, governments have aspired to food self-sufficiency – on paper. But this has distracted them from other opportunities in the form of easing barriers to trade. 

The Arab world is among the most food-import dependent regions in the world. Countries import more than 50% of their food.

The reason is simple: a lack of arable land and water. Governments and societies across the region recognise this. 

However, the region is hardly plugged into global trade. Only a handful of Arab countries – Jordan, Oman, Saudi Arabia and Yemen – are members of the World Trade Organisation (WTO).

To be sure, some countries enjoy bilateral trade agreements with the US and the EU but multilateral trade agreements with other parts of the world are near absent. 

The Greater Arab Free Trade Area (Gafta), launched in 2005, was supposed to address this. However the practicalities have intruded.

In the past, phytosanitary concerns have caused bottlenecks because governments know that local farmers sometimes mismanage pesticides and herbicides.

As a result, crops have been deemed to be a health hazard and trade has been severely constrained because would-be importers refuse to import fresh produce. 

To address these bottlenecks one needs to recognise that not all food imports are the same.

Many Arab countries are either self-sufficient or nearly self-sufficient in fruits and vegetables. This applies especially to countries with semi-arid agricultural production areas such as those in North Africa and the Levant.

Arab food tradeReuters/Ahmed Yosri
Fruit and vegetables in Riyadh: Technologies allow production in arid conditions
Fruit and vegetables

Fruits and vegetables are also relatively easy to ship within the region. Moreover, technologies such as greenhouses and hydroponics allow production even in arid conditions.

Meat and dairy

Meat and dairy production is more complex. Although chicken, dairy and to a lesser extent beef can be produced regionally in feedlots under cooler conditions powered with renewable energy, these commodities require vast amounts of animal feed.

This feed cannot be grown within the region. So, a lot of fresh meat is imported from producers such as Brazil, Australia and the US. 

Cereals and other field crops

The major challenge lies in field crops such as cereals, sugar and vegetable oils. These have to be grown on large land areas to be economically viable.

Rice is grown in Egypt’s coastal areas under flood irrigation but not in sufficient quantities to meet demand. The region is forced therefore to import large amounts of cereals. 

The field crop business is in the hands of major trading houses. These large businesses are generally low profile but provide infrastructure and credit to farmers in areas where land and water are readily available.

These houses are often dubbed the ABCD companies of the international grain trade. Archers Daniels Midlands, Bunge, Cargill and Louis Dreyfus ship around two thirds of internationally traded grains.

There is hardly a loaf of bread consumed by Arab consumers which has not gone through their grain trading facilities. 

Owning or creating such a trader would be a considerable geopolitical asset. Previous attempts to set up an Arab trading house such as through the Arab Authority for Agricultural Investment and Development (AAAID) date back to the 1970s but have disappointed.

Similarly, efforts to invest in Africa and Central Asia since the 2010s have not yielded hoped-for results. These initiatives failed because they lacked capacity in agricultural development. Farming is not an easy business.

Understanding the agricultural business

First, one needs experienced farm managers who are in short supply globally. Second, agriculture is highly politicised, distorted by subsidies, economic nationalism and export restrictions imposed during times of crisis.

Creating an Arab trading house would go a long way to addressing these problems.     

Richer Arab economies especially could use windfall earnings from energy to buy majority shares in those big trading houses which are public US companies. 

Owning or building a trading house does not equal food security. However, the staff of these businesses are specialists who understand farming better than anyone else in the world because they understand the pricing of food.

World-class trading facilities such as Jebel Ali already exist to support such traders. 

In tandem, delegating more powers to the Gafta administration could allow the Arab region to join multilateral trade agreements such as the Trans-Pacific Trade Partnership, the European Customs Union or new arrangements with the African Union.

However, the region must first embrace trade not as a necessity but rather as an opportunity for future growth.

More than any other policy, being open for trade and investing in soft and hard trade infrastructure would benefit the young populations of the region. 

Martin Keulertz is adjunct assistant professor at the American University of Beirut and lectures in environmental management at the University of the West of England

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