by Suad Hamada
– Bahrain –
They live in the richest states in the world but cannot afford to buy essential commodities because their countries were busy promoting oil related investments, rather than securing profitable food and agriculture industry.
• Once flush with cash, many families in the Gulf are adjusting to higher prices. Photograph by Biju Hari. •
This is the fate of many limited income Arabian Gulf citizens and residents who are coping with the prices of food and other necessities that are increasing on a daily basis.
In the journey to protect and improve oil revenues, many of the important occupations at the core of the regions’ economy before the discovery of oil, such as fishing and farming, were scrubbed. Once these countries realized that oil, as a natural resource, would eventually deplete, they shifted their focus to business and development, leading to an environmental crisis marked by shrinking agricultural lands and reclamation. This problem is especially significant for Bahrain, a tiny island.
Before the 1960s, the Gulf States were once among the poorest nations in the world. Since their independence in the sixties and seventies, they have since emerged among the richest and most influential.
All Gulf Cooperation Council countries dedicated their wealth to their people at varying levels through a host of social programs, but unfortunately such focus resulted in “dependent citizens” who have now to come to rely on the governments to provide the solutions to their financial problems. Even uniform salary increases (some as high as 70 percent, like in the UAE) didn’t help because of inflation and the crazy consuming habits of citizens who had become used to high incomes and stable prices over the years.
Bahrainis are now noticing the affects of inflation more than other Gulf countries, mainly because of Bahrain’s low oil exportation and high population (1 million plus) relative to its size.
• The gap between rich and poor in Bahrain is showing signs of strain under the food crisis. Photograph by Biju Hari. •
Bahrain has been subsidizing important commodities, such as red meat and flour, since the seventies, but securing reasonable prices for rice has been real a challenge for a country that has limited agricultural lands. Similar to other citizens in Gulf countries, Bahrainis consider rice a daily staple, but the once affordable 40 kilogram bag of the finest Basmati rice that used to sell for $45 USD, doubled in price in the last year.
The government of Bahrain reacted by giving 15 per cent salary increases to public employees, as well as including other important products in its subsidy program and granting all families around $120 USD in monthly assistance. It also bought huge tracts of land in Thailand and the Philippines early this year for rice cultivation.
Researcher Dr Abdullah Al Hadad says that urbanization has badly affected agriculture resources in Bahrain as its fruits and vegetable production met public demand before the economic revaluations. He says a lack of planning has contributed to the reduction of agricultural lands in Bahrain as high-rise buildings have been constructed in all parts of the Kingdom – sparing nothing in their way, even farms.
Dr Al Hadad explains that food is one of the main means for security and stability, and suggests leasing lands in Arab countries such as Iraq, Egypt and Sudan to solve Bahrain’s dependency on imports and contribute to solving unemployment in these states.
The researcher says that certain measures should be taken by the government as food security could prevent many social, economic and political conflicts.
The Assistant Undersecretary of Agricultural Production, Jaffar Habib, says that to increase the local food stocks his Ministry of Municipalities and Agriculture Affairs has been negotiating with other government bodies to import important raw materials at lower prices to motivate businessmen to invest in food production industries in the country.
• Feverish development and poorly executed urban planning has eliminated much of Bahrain’s agricultural lands. Photograph by Biju Hari. •
“We are also working with other Gulf Cooperation Council (GCC) states to promote regional businessmen to invest in food related projects in order to meet the demands in the region,” Habib says. “Our biggest challenges are the limited agricultural lands in Bahrain (that don’t exceed 6,000 hectares) and shortage of water resources, so we are forced to use treated water for irrigation, despite conflicts we are facing from the public who fear the hygiene and purity of the water.”
Habib says the lack of local manpower to work the farms is also a challenge but that the government is moving towards training locals to join the sector.
On the measures taken by Bahrain to curb soaring prices, the government has exempted local and imported food stuffs from taxation and stored future reserves of rice and wheat – now subsidized 50 percent more than before.
Habib explains that the country has also earmarked $106 million USD to remedy the effects of soaring prices and alleviate the rising cost-of-living burden on Bahrainis. “According to the kingdom’ strategic agricultural development scheme, Bahrain will work on maximizing food products and attaining self-sufficiency, relying on scientific and technological means from now until 2030.”
Inflation and the high cost of living are mostly felt by the 12,000 needy Bahraini families who live on monthly assistance of no more than $400 USD. They are mainly widows, ill people, handicapped, divorcees and children who cannot take up jobs.
To encourage financial independence, the government, through its social Development Ministry, launched the Productive Family Project in the seventies to train and promote families to run small businesses from home. The Ministry even marketed their products, both inside and outside Bahrain, and established special centers to safeguard their interests. Popular for selling home/handmade products like fresh pickles and other edibles, as well as clothes and accessories, family-run businesses are in high demand for their reasonable prices. But the project was hit badly by inflation, many of the businesses cannot provide services and products for the same prices as their costs increase; hiking their prices would only turn away customers who would then prefer to buy from bigger shops.
Economist and researcher, Abdulhameed Abdulghafar, predicts low revenues for these families if they don’t adopt new policies. He says that they will either have to increase prices to protect their profit margins or keep prices unchanged and adjust to lesser revenues. He also recommends those who have cannot afford to reduce their prices because of the competition to shift to new businesses.
• As Gulf countries cope with rising inflation, Bahrainis and their neighbors may face some serious adjustments to their lifestyles and consumption habits. Photograph by Biju Hari. •
“I don’t think that the prices will go back to what they used to be, but it might reduce to a certain extent in the future,” he says. “Productive families should be creative and search for business projects that could generate profit despite inflation.” He advises groups of families to come together to establish their own business collectives to leverage their budgets and survive inflation. “Productive families should try their best to stay in business – they shouldn’t let go of being financially independent.”
But soaring prices have a positive side for oil-producing countries according to a study by the Mckinesy Global Institute. It indicates that the oil revenues of the six GCC states – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates – will collect up to $6.2 trillion USD in profits over the next 14 years if crude prices stay above $70 per barrel. That’s more than triple the amount they earned over the last 14 years and more than twice the size of the British economy today – or four times the total profits of the Global Fortune 500 companies combined.
Through the Cooperation Council, Gulf countries must now examine the factors that affected the purchasing power of their citizens (despite the billions in revenue expected at the year’s end from oil-related trade) and work on changing the public’s consumption habits and over-dependency on government. Most importantly, by working towards reinforcing Gulf food security, they will identify ways of combating the direct impact of the world food crisis on the region.
About the Author
Suad Hamada has been a journalist in Bahrain since 1997. Her writing focuses on politics and women’s empowerment in both Bahrain and the larger Arab region. She has participated in national campaigns for the elimination of discrimination against Bahraini women, seeking to give them a voice in a society – that while liberal in comparison to its neighbors – still marginalizes and oppresses its female citizens.
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