Food security in oman

Food Security in OmanPosition and Prospects

Hemesiri KotagamaDepartment of Natural Resource EconomicsCollege of Agricultural and Marine SciencesSultan Qaboos University

Hemesiri Kotagama

CONTENT

Global position on food securityOman’s position on food securityOman’s prospects to achieve food

security– Wheat– Fish– Role of Government

Hemesiri Kotagama

GLOBAL POSITION ON FOOD SECURITY: PAST

Malthusian Theory (1798)– Exponential growth of population and arithmetic

growth of food production will leads to a dooms day.

– Never happened in mass scale, although there had been food crisis's during short periods in some areas.

– Last experienced was during early to mid 1970s.

– Crisis was short lived due to benefits of the green revolution.

Hemesiri Kotagama

GLOBAL POSITION ON FOOD SECURITY: PAST AND PRESENT EXPECTATION

Definition of food security (UN/ FAO)– Food security exists when all people, at all

time, have physical, social and economic access to sufficient, safe and nutritious food which meets their dietary needs and food preferences for an active and healthy life.

Millennium Development Goal (UN)– Halve between 1990 and 2015 the proportion

of people who suffer from hunger.

Hemesiri Kotagama

GLOBAL POSITION ON FOOD SECURITY: PRESENT REALITY

Since 2007 – “silent tsunami of hunger is sweeping the world.”

Within 2 years– Food prices rose by 83%.– Wheat and rice prices have nearly tripled (300%).

1% increase in food price reduces the calorie intake by 0.5% among the poor.

Rising food prices have pushed 100 m people below poverty line.

Poor countries were double punched by rising food and petroleum prices.

Hemesiri Kotagama

GLOBAL POSITION ON FOOD SECURITY: Economic Reasons

Price is determined by the interaction of demand and supply.

Demand based reasons.– Economic boom in developing countries (India and

China) 37% of world population in India and China Increased income (more than 600 million new

middle class) Leading to increased demand for food and meat

– Corn and wheat diverted to feed from food– Food conversion ratio (700 cal of animal feed

produces 100 cal in beef, 7:1)

Hemesiri Kotagama

GLOBAL POSITION ON FOOD SECURITY: Economic Reasons Cont.

Threat of climate change and high petroleum prices induces agro-fuel (ethanol) production.

In the past demand for grain was driven by largely population growth and demand for grain for animal products (about 21 m tons a year).

President Bush signed the “Energy Independence and Security Act” on 19th December 2007, which mandates 36 billion gallons of bio fuel to be produced yearly by 2022.

By 2008 demand for grain for bio fuel is 114 m tons (28% of the projected harvest).

By 2020 US and EU demand for grain for ethanol production will be 400 m tons a year.

US estimate is that the impact of bio fuel production as 3% increase in food prices but WB estimate is 75%.

China aims at producing 15 billion litres of bio fuel by 2020. To produce 1 litre of ethanol from maize 2400 litres of water is required.

Corn requirement to fill a tank of a car with 18.5 gallon capacity could feed a human being for 270 days.

Hemesiri Kotagama


Market Speculation for Food– Investments in grain and livestock

futures has more than doubled to about $65 Billion from $ 25 Billion in November 2007.

– More than half the value of corn, soya and wheat of US (the largest exporter) has already been bought.

Hemesiri Kotagama


Supply Based ReasonsRise in oil prices increasing the cost

of production of food and transport.– Modern farming is energy intensive– Price of fertilizer increased much faster

than food prices (2007-2008)

Hemesiri Kotagama


Climate FactorsDrought in major grain producing

areas– Australia, second largest exporter of

wheat

Hemesiri Kotagama


Complacency– Ignoring investments in agricultural

education, research and technological adoption.

Investment in agricultural research in developing countries is only 0.6% of GDP richer countries it is 5% of GDP.

Removing government intervention and allowing the market to provide food– Structural adjustment/ Privatization

Hemesiri Kotagama

WORLD CONCENSUS

“Food issue not only concerns the economy and people’s well-being of each country but also bears on the development and security of the whole world”.

Chinese President, Addressing the G8 Leaders in Tokyo 9th July 2008.

Hope– China feeds 20% of the world’s population with

9% of world’s arable land.– China has met 95% of its food demand and

exported 8 m tons of grain annually.

Hemesiri Kotagama

GLOBAL POSITION ON FOOD SECURITY: Is it real?

Reutlinger et al. (1986)– “The world has ample food. The growth of global food

production has been faster than the unprecedented growth of the past years. … millions of poor people do not share this abundance. They suffer from a lack of food security caused mainly by a lack of purchasing power”.

Leathers and Foster (2004)– “… the world food problem has grown less severe, but is

still a long way from solution”. It may not be real, we may have the resilience

to overcome temporary difficulties. However, it is a ‘wake-up’ call.

Hemesiri Kotagama

OMAN’S POSITION: PAST AND TREND

Oman up to 1970’s with low population (0.65 m) and subsistence farming has been nearly self-sufficient in food.– Past (1970) cultivated wheat extent was

1700 ha and produced 3000 M Tonnes, imports was 0 US $.

– Now (2006) the cultivated wheat extent is 500 ha and produced 775 M Tonnes, the import is 294 thousand US $.

Hemesiri Kotagama

Hemesiri Kotagama

Hemesiri Kotagama

OMAN’S REPORT TO WORLD FOOD SUMMIT 2006

Food security 2005 (% domestically produced)– Milk 29%– Red meat 34%– Poultry eggs 53%– Poultry meat 35%– Fish 134%– Dates 108%– Total fruits 70%– Total vegetables 56%

Hemesiri Kotagama

OMANS POSITION: PRESENT

Annual inflation in Oman in the past 18 years was 1% or less.

Inflation this year 10%.Food prices have increased by

– 17-20%.

Hemesiri Kotagama

OMAN’S SHORT TERM RESPONSE

Secured 200,000 tonnes of rice, sufficient to feed the population for 2 years. (Observer, 4th May 2008)

State workers salaries were increased by 43%.

Hemesiri Kotagama

OMAN’S PROSPECTS: WHEAT

Hemesiri Kotagama


Hemesiri Kotagama


World Average 2.75 MT/Ha Oman Average 3.16 MT/Ha

Hemesiri Kotagama


Oman has traditionally grown wheat and the climate is conducive for wheat production.

At present Oman is in a position to import its wheat requirement. Although wheat prices have increased recently, the increase in oil prices may compensate increases in wheat price.

Reliance on imported wheat alone may put Oman at risk in the event of wheat embargoes.

Considering the limited supply of suitable land and water for agriculture, major shifts in land and water use away from crops cultivated at present will be required to produce significant amounts of wheat.

Therefore, Oman may aim for and achieve partial wheat sovereignty.

Hemesiri Kotagama

OMAN’S PROSPECTS: FISH

The decreased availability of fish in domestic markets is despite increased population and income in Oman.

0

20

40

60

80

100

120

140

160

2000 2001 2002 2003 2004

Fish landed Total exports Local use

000Ton

29%

-12%

83%

Hemesiri Kotagama


It was hypothesized that the transport function of Omani fish markets is inefficient.– The transport function is favoring export

markets instead of domestic markets.

A “Transport Model” based on linear programming was developed for the analysis.

Hemesiri Kotagama

Sohar

Masirah

MahootJBBA

Dubai

IbriNizwa

Seeb

Hemesiri Kotagama

Observed and Optimal Prices: Kingfish

Hemesiri Kotagama


Oman’s fish market if efficient, yet favouring exports over domestic markets.

The big “trade-off” : Efficiency vs. Equity.

Less fish in domestic markets will impact food balance and security, particularly in the interior areas.

Hemesiri Kotagama

OMAN’S PROSPECTS: ROLE OF GOVERNMENT

Given resource scarcity and increased population and income;– Oman will have to depend on world market for

food. Government has a role to reduce the risks of

high prices and export restrictions etc.– Maintain justifiable planned buffer stocks and not ‘panic buy’.– Establish a unit to monitor and guide food imports by private

sector (Economists).– Diversify food import sources.– Encourage investments on agriculture (education, research and

production) in Oman and in foreign nations (Food Diplomacy).

Hemesiri Kotagama