BUDGETS ARE BEING INCREASED DRAMATICALLY in the wake of the protests sweeping the region, but it is hoped subsidies can be replaced with more local production, or with less costly imports. Private and foreign investors, as well as entrepreneurs, are seeking new opportunities in a sector whose full potential is yet to be realised, at the same time that some countries in the GCC are helping to develop new projects in Egypt, the Sudan and North Africa, as well as further afield.
In recent months, the global shortage of wheat--one of the world's most vital foodstuffs--and grain, has resulted in price rises of up to 75%. Prices have also soared for rice and barley. The Gulf states, which spend more than $20 billion a year on imports, as well as the more populous Arab countries, have been severely affected.
In the US, the world's number-one producer, the conversion of almost a third of the grain crop to ethanol production for fuel in 2010, has, in the eyes of some analysts, effectively tied the price of wheat to the price of oil.
In North Africa, wheat imports are forecast to climb from 22.3 million tonnes in 2010 to 51.4 million tonnes by 2050, more than double the current level. This is due to the expected rise in the population over that period, from 170 million to 245 million. The figure could be even larger if the average consumption per capita starts to climb.
A similar trend exists in the Middle East, where the population is expected to reach 437 million by 2050, an increase from 284 million in 2010. Water shortages and a lack of investment in the region have already led to decreased output in countries like Syria, Iraq and Yemen. Egyptian farmers are also facing a decline in the amount of water available from the Nile River as countries like Sudan and Ethiopia take a greater share.
Although Saudi Arabia, with its substantial surplus oil revenues, can afford to pay for increased food and textile imports and higher government subsidies on these items, it is looking to increase its long-term food security by developing as much production at home as possible, as well as by investing in agricultural land in the Sudan, Iraq and Pakistan.
The country's dairy industry in particular has been transformed over the past decade, and Saudi Arabia is now looking for more foreign investment in dairy companies such as Almarai and the Saudi Dairy and Foodstuff Company, as well as in other major food producers such as Savola, the Saudi...