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A wave of food-price inflation is moving through the world, sparking riots and social unrest. For the first time in 35 years, food protests are erupting in many places at once.
In recent weeks riots were reported in countries such as Bangladesh, Egypt, Lebanon and many in sub-Saharan Africa. Even countries such as China, India and Brazil are worried and have resorted to export curbs and food rationing.
Sitting far away from these trouble spots, and basking in oil surpluses worth several trillions, Gulf countries seem fully-insulated from these woes. But in reality the region has more to worry about in this respect than some of the poorest nations, since experience has demonstrated that in times of extreme crisis food trade may come to a grinding halt.
The rising cost of food and potential future shortages due to export ban of staples like rice and wheat implemented by several exporting countries make this region vulnerable.
The Gulf states have started intervening in the market through various measures ranging from price caps to subsidies. Intervention multiplies as most subsidies are inflationary by nature. This calls for innovative thinking.
The crisis has to be taken with due seriousness. It has awakened some here to the idea of collaborating with some of the leading agricultural nations to invest in scientific cultivation.
By no means are the Gulf countries short of resources to fund such initiatives. According to the Institute of International Finance (IIF), if the oil price remains at about $100 a barrel, they are estimated to reap a cumulative windfall of almost $9 trillion by 2020.
Limited scope
Given the arid climatic conditions, the scope for investments in domestic agriculture is limited. However, this huge hoard of resources could come in handy to invest in countries where arable land is in abundance. Arguably such investments may even help the Gulf absorb its new riches, which are causing domestic economic distortions in terms of hyper consumer prices and asset price inflation.
Recent weeks saw some serious discussions in the UAE and Saudi Arabia on the possibility of investing in agricultural and livestock projects abroad and establishing holding companies to manage these projects.
In the 1980s people would have laughed at the idea of China becoming global industrial production hub or India becoming the back office to the world. With some massive shifts in economic equations, some of the world's poorest countries becoming the food production hubs with the support of Gulf's surplus capital are not as outlandish as it may appear today.
And for the Gulf sovereigns, investing a portion of their oil wealth in long-term food security may yield better real gains than investing in the shares of Wall Street investment banks that may be prone to losing money in underperforming assets.
For Gulf countries, investing a portion of their oil wealth in long-term food security may yield better real gains than investing in the shares of Wall Street investment banks.
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