Agriculture and Commerce in the Persian Gulf
Middle Eastern countries import large amounts of agricultural products because the desert climate limits their domestic production. The largest goods importers are the prosperous Persian Gulf monarchies, whose economy keeps moving forward in spite of the recent hardships in the region. This article explores the commercial patterns in the region as well as the social dynamics that inform them.
Agriculture and Commerce in the Persian Gulf
Even though thoughts of the Middle East usually veer towards war and instability, many of the region’s countries and governments have managed to keep growing and attracting economic interest through solid policy measures. Petroleum-rich economies such as the United Arab Emirates (UAE), Saudi Arabia, the Sultanate of Oman, and Qatar, have implemented intelligent development strategies, which aim to position them as regional hubs for business, tourism, and industry, amongst others. Furthermore, in spite of the lower oil prices that have prevailed over the last few years, the economic diversification achieved by the Gulf nations has allowed them to maintain GDP growth. Nevertheless, the region remains highly dependent on food and farm imports given its low agricultural production due to water scarcity.
The case of the United Arab Emirates
The UAE have surged as an international destination for business over the last two decades. In this regard, the country has managed to diversify a formerly oil centred economy to the point that today petroleum only represents 25% of its GDP. A large quantity of world renown hotels, transportation and infrastructure companies, fossil fuel multinationals, and consulting firms have all settled into the warm and wealthy cities of the Persian Gulf. Today, more than 80% of the UAE’s 9.5 million residents are foreigners, originating from Asia, Europe, North America, and other regional nations. This dramatic demographic growth has brought with it an unprecedented increase in the demand for food and agricultural goods. Even though some countries in the Middle East have boosted their agricultural production, these operations are onerous and not sufficient to meet the demand.
The UAE’s economic growth has averaged more than 4.0% over the last few years. However, only 6.5% of the national territory is suitable for farmland production and the agriculture sector only represents 1.0% of the total GDP. Meanwhile, demand for food has been growing at a staggering 12.0% yearly. Furthermore, because of the UAE’s advanced and highly developed transportation infrastructure in terms of ground roads as well as excellent seaports and airports, the country is the largest regional hub for the transit of agricultural goods.
Therefore, the issue of food security is central to the prosperous countries of the Persian Gulf, who expect to maintain their competitiveness as financial, tourist, commercial, and business hubs. Likewise, it is important to mention that animal feed is a highly demanded product in the Persian Gulf because of the important significance that cattle raising has within the region’s society and culture. This has led governments to buy, lease, and invest in overseas farmland as well as agriculture companies in order to secure a food supply. Originally, governments, such as that of the UAE, looked to production nearby in East Africa. However, these ventures did not prove to be as profitable or as safe as originally expected. Thus, the governments have turned to more stable food suppliers and farmland operations in regions like Latin America and Eastern Europe.
For example, in 2013 the Al Dahra Agriculture Company of the UAE signed a preliminary agreement with the Finance and Economy Minister of the Republic of Serbia. This agreement set the basis for investment from the Emirates into Serbian agriculture in return for a steady supply of goods such as wheat, barley, corn, soybeans, sugar beet, citrus fruits, and alfalfa.