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India’s Answer to Arab Food Insecurity

, April 21, 2014, 0 Comments

India & Arab Food Insecurity-MarketExpress
India must aim at integrating GCC’s food security with its infra story. Solving even a part of GCC’s food security rider would boost India’s image immensely.

Solving the Arab Food Security Rider
By 2020 the Gulf Co-operation Council (GCC) countries would have to feed 50 million more stomachs and spend over $53 bn on the food import bill, according to an EIU report published last year. Projections like these look worrisome when one views them through the prism of rising fiscal burden of the GCC countries in a post-Arab Spring and post-Shale energy environment.

While, the region as a whole achieved commendable progress in infrastructure and quality of life the Oil-rich emirates continue to import between 80%-90% of their food. With 95% of landmass subjected to desertification and just under 4% of arable land the GCC countries have been major buyers of arable land in the underdeveloped world.

Saudi Arabia and UAE, for instance, over the years have bought 2.8 million hectares of overseas land in underdeveloped economies of East, North Africa, and South Asia. One of the latest of such developments was the $400 million loan Abu Dhabi Investment Authority approved for the Serbian govt. However, all these investments have been unable to reduce the food import bill from inflating due to the maintainence costs and geographical distance between the investor and investee countries. In 2012 the UAE govt spent $3.3 bn on food subsidies to cap the rising food prices, in addition, to the petrodollars invested in foreign farmlands.

Food-for-Infrastructure
India is one of the largest exporter of rice and wheat to the GCC. Despite of subpar infrastructure the agriculture sector has markedly improved its production. Last year India produced a record 263 million tonnes of grains. However, the rise in production levels has not resulted in simultaneous rise in investments in agri infrastructure and crop yield enhancing technologies. It is thus not a surprise that Indian agri products lack the export competitiveness in the global markets.

India could possibly fund a portion of its infra and agri technology needs by assuring steady food supply to the GCC. While India has vast arable farmland and production potential poor infrastructure like lack of proper roads, ports, and storage hubs has resulted in massive food wastages. Also inadequate funding to agri research institutions has hampered yield enhancement of Indian crops.

Here, India could persuade the GCC countries to fund a portion of India’s infra needs in return of steady food supplies. The Indian govt could open food export parks funded by the GCC Sovereign Wealth Funds. The food export parks would serve as the up-to-the-minute storage and processing facilities for agri products to be exported to the GCC countries. This set up should be supported by a web of agriculture R&D facilities to improve the crop yields and varieties. These initiatives would be driven jointly by a body that would be a fine mix of govt officials, agri scientists and GCC fund representatives. At the beginning of every fiscal year depending on the weather forecast and climatic conditions export targets would be set by the parties.

The main underlying idea here is to integrate the GCC’s food security matter with the India infrastructure story. India is a much more stable country politically than the host of underdeveloped countries where the GCC invests in farmlands. With a set up like this the GCC countries would avoid the farmland purchase deals which often becomes a source of friction between them and the local farmers. As India aims to step up her stature in the Persian Gulf region solving even a part of its food insecurity rider would give India immense strategic weight.