DUBAI: Monday’s announcement that four countries, including the UAE, had severed diplomatic and business ties with Qatar could lead to food shortages and panic buying, analysts warned.
The country imports approximately 90 per cent of its food, with over 40 per cent alone coming via its single land border with Saudi Arabia.
“There will be shortages of food, certain things will be hard to find,” Christian Henderson, a Middle Eastern food expert at SOAS University in London, told Gulf News by phone.
Qatar is heavily exposed to the international market, Henderson added, and because it gets so much of its produce through its land border with Saudi Arabia, “prices will undoubtedly rise.”
Dairy, meat, vegetables and other fresh foods are expected to be heavily impacted.
There have been reports in the local press of panic buying, with residents of Doha pictured stocking up on water, frozen foods, canned goods and other essential items.
“Panic buying always makes things worse, and prices will go up,” Henderson said.
The researcher argued that it would become crucial for the government of Qatar to intervene.
“It will be a political necessity for the government to show they can support the people. It remains to be seen if they will step in, but they have the resources,” he added.
This kind of government support may involve flying in fresh foods from new markets such as Asia or Europe. Without this support from the state, costs will rise as private companies pass the added costs on to residents.
Doha has experienced severe poultry shortages in the past, most recently in 2012 when Saudi Arabia halted all exports of the meat to stabilise price at home.
In that instance, Qatar was forced to import Halal chicken from Bulgaria.
According to Monique Naval, a food analyst at Euromonitor International, the packaged food industry in Qatar could be severely affected given Monday’s events.
Naval told Gulf News in an email that given Qatar’s heavy dependence on imports from the GCC, “if there is an introduction of trading barriers, imported products may disappear from Qatari supermarket shelves in a very short period of time, leading to shortages of certain food items and consequently a spike in prices.”
Overall, she said, the impact of the diplomatic crisis on GCC food trade will be quite limited. Qatar is a small market, with its packaged food retail sales contributing less than 1 per cent to total GCC sales. The entire market in 2016 was valued at $25 billion (Dh91.8 billion), according to research by Euromonitor.
According to a research report on food and water security in Qatar, published in 2015 by Australian think tank Future Directions International, the country’s agricultural production is constrained by scarce water resources, infertile soil, harsh climatic conditions and poor water management. The report called on Doha to diversify its food supply in order to reduce Qatar’s vulnerability to supply disruptions, caused by regional conflicts and global food price spikes.
Giorgio Cafiero, CEO and Founder of Washington-based Gulf State Analytics, said the latest escalation in tensions represents a major threat to Doha’s economic health and security.
“This crisis has the potential to undermine Qatar’s food security interests given that the emirate relies on fellow GCC states for importing food, of which Qatar produces virtually none of its own,” he said by email.
Saudi Arabia, the United Arab Emirates, Bahrain and Egypt have broken off relations with Doha over what they claim is the country’s destabilising regional policy.
Qatar is accused of supporting militant Islamist groups, including the Muslim Brotherhood.
-With inputs from Fareed Rahman, Senior Reporter
