Poor regional logistics will cause food supply problems
With problems in every part of the region’s supply chain infrastructure, Middle Eastern states will face unnecessary losses, spoilage and delays, according to Farid Masood, director of advisory services and asset management at ICT-Islamic Development Bank Group, a speaker at last month’s Global AgInvesting forum in Dubai.
Losses and delays
“What we see [in the Middle East] is a lack of quality logistics, strategic warehousing, and other important infrastructure,” said Masood.
“Because of the lack of quality logistics, we see problems in the food supply chain. For example, a country like Saudi Arabia does not have mechanised grain terminals today. As a result, you will have a 7-8% loss of grains,” he added.
Continuing political instability is also putting increased strain on the region’s food supply chains, according to Global AgInvesting. Even in countries not immediately affected, ports and shipments are under increased scrutiny and tighter security, increasing transit times.
“We have seen flare ups in the region. Because of that, it affects the supply chain, and you are faced with the challenges of whether you can get the food supply to where it needs to be,” said Masood.
Import and funding struggles
Looking at longer-term food security issues, Masood suggests the region’s 80-90% food import rate is likely to be sustainable, provided importing countries remain able to maintain high export incomes. But even with the vast majority of food being imported, the region will still need to maintain some production itself.
“When you look at the region as a whole, I don't think there will be a serious strain, but we need to have indigenous supply. When you look at the situation country by country, there will be challenges. If countries are unable to produce food, they’ll be able to get it so long as they have other tradable commodities,” said Masood.
He also predicted the region will struggle to attract significant investment for agricultural projects: “Finding good deals is hard today. One challenge that is making it harder to attract investors is the lack of scale in the region. The scale is not there. It’s smaller companies hoping that they can grow significantly.
“The goal of starting a fund is to show that it can be done with a profitable track record. It's going to take time for people to start making,” he added.