Ash cloud highlights Gulf's fragile food security

A mixture of ash, mud and chunks of ice are carried by flash floods from Eyjafjallajokull April 20, 2010. Europe's ash cloud which halted air freight for more than six days exposed how fragile food security is in the Gulf region and food importers should diversify source markets, traders said on Wednesday.

DUBAI (Reuters) - Europe's ash cloud which halted air freight for more than six days exposed how fragile food security is in the Gulf region and food importers should diversify source markets, traders said on Wednesday.

Gulf nations mainly reliant on food imports have intensified efforts over the last year to buy and lease farmland in developing nations to secure food supplies.

"The fact that the most of the Gulf region is so reliant on imports to meet domestic demand means it is more affected by the ash cloud in terms of stocking shelf space at grocery stores," said Shonil Chande, food and drink analyst at Business Monitor International.

Europe mainly exports luxury food products to the Gulf and halted air freight meant fresh produce ran low on supermarket shelves, traders said.

"The situation is really bad, we import the majority of our food from Europe and right now the only option is some charter flights but they are charging double the normal rate," Gapesh Gerash, manager at Dubai-based Barakat Vegetables and Fruits, which imports 2,000 kg in air freight from Europe four times a week.

Gulf food traders were taken by surprise by the scale of the volcanic ash cloud and its impact on air freight, leaving traders scrambling to find alternative source markets for produce.

"We are looking at alternatives now and the options we are going for is flying the produce over from the U.S., Australia and we have even made (an) order from Ethiopia since the quality of the produce there is very high and within close proximity to the UAE," said Gerash.

BUFFER AGAINST CRISES

Last year, the UAE's Ministry of Economy announced plans to build up three month food reserves of essential commodities as a buffer against inflation and crises, but so far Gulf traders said that no tenders had been issued for such a stockpile.

"Like all Gulf countries we are looking to diversify where we import food and we are looking to lease land in all parts of the world," Rashid Ahmed Bin Fahad, UAE minister of environment and water told Reuters on the sidelines of an industry event.

But once foreign land is acquired, operating the farms is no easy task, said Sudhakar Tomar, managing director of Hakan Agro DMCC, one of the leading food commodity trading companies in the Gulf.

"Many of the countries that the Gulf is targeting are unstable socially and politically, that alone is a huge risk," he said.

Those countries include Iran, Pakistan, Sudan and Thailand, which have all seen political upheaval in the past years. Sudan's Darfur remains a conflict zone, so investment to develop farmland there can face serious challenges.

So far foreign investors have acquired some 15-20 million hectares of farmland in developing countries since 2006, according to the International Food Policy Research Institute.