Overthrowing the food-for-oil nonsense

Opinion

Hey there, time traveller!
This article was published 10/03/2011 (5293 days ago), so information in it may no longer be current.

Tunisians, Egyptians, and, to a lesser extent, Libyans can attest to the fact that food insecurity can be a powerful engine for change. The social awakenings in these regions, fuelled by scarcity of food supplies, continue to spread at a spectacular rate, by grassroots political channels as well as the interlinked and global nature of food markets. The instability of that part of the world also reverberates in the oil-based economies of the Middle East, especially Saudi Arabia, where changes may overhaul global food trade relations, and Canada’s role in them.

Recent political and economic circumstances in the Middle East have returned oil to the limelight. There is, indeed, a delicate equilibrium among the Middle East, oil, and food systems that Canadians greatly rely on. With dictators fleeing the region like wild goats from over-cropped hillsides, that equilibrium will likely be compromised.

For many years, the agricultural policies of the Middle East, and some neighbouring countries, have been of the simplest nature: oil exports pay for food imports. Egypt, Tunisia, and Algeria are among the biggest importers of wheat in the world. As for barley, another commodity Canada exports profusely, Saudi Arabia is one of the world’s biggest buyers. With its plentiful oil reserves, sparse arable lands and scarce potable water, the pressure for Saudi Arabia to produce more grains domestically is irresistible. Its growing young population will likely make that demand escalate over the next decade. Food insecurity in the region is such that Saudi Arabia endeavoured to grow wheat in the desert, but to no avail, as costs were five times above international averages. The region is bound to be food-insecure for quite some time.

The unstable geopolitical situation in the region is enticing countries to hoard strategic stocks. To buy these stocks, countries will want to keep the price of oil up. The moral contract between the Middle East and the western world in relation to oil and food is an old one, long in need of updating. Because the global recovery is anything but robust, the socio-economic fabric of our society may need to adjust. As we saw in the 1970s, oil prices compelled many to revisit the way they live. This led to new technologies and strategic innovation.

As we move ahead, these unsettling developments in North Africa and the Middle East will directly impact Canadian consumers, who will have to pay more for groceries. Most are getting used to the idea, but may not be aware that prices of food products may jump by five to seven per cent or more across the board in the next 12 months. Input prices for our processors have jumped due to rocketing commodity prices. Wheat is up approximately 70 per cent over last year, corn has almost doubled. Food-store chains have announced that they will review their pricing strategies in weeks to come. Although it is unlikely that Canadians will riot any time soon, the situation is worrisome for consumers of lesser means.

Food systems around the world are primed to explode and the Middle East will likely provide the spark. However, improbable as it may seem, this looming upheaval could be advantageous in the long run. Food security will continue to affect policies around the world. But we can imagine a future in which food security is not so closely coupled with oil, that most volatile resource. Not only is it an opportune time for the world to deal with its dependence on oil and the Middle East’s control over it, but the end of the food-for-oil nonsense may revolutionize the way we feed ourselves. The oil shock in the 1970s revamped our behaviours and boosted world food production. This new shock may also change how we make ourselves, as a planet and a nation, food-secure.

Sylvain Charlebois is an associate dean, College of Management and Economics, University of Guelph.