(MENAFN- Syndication Bureau) By Joseph Dana
By the looks of it, the global food supply chain hinges on just one country. Like other outdated systems of production currently breaking down as a result of years of pandemic and geopolitical recalibration, the way we produce and distribute food needs radical change. The centrality of Ukrainian wheat production is one particularly extreme demonstration of the weak links in the food system.
Ukraine, Russia, and Belarus are major food producers that are facing a deep crisis as a result of the conflict in the region. The International Monetary Fund said last week that this food crisis will have a dramatic effect on the global economy. “In emerging markets and developing economies,” the IMF warned, “increases in food and fuel prices could significantly increase the risk of social unrest.” As a result of the Ukrainian crisis, global food prices are forecast to spike leading to food shortages across many emerging market countries. The political and economic fallout is already revealing itself in Sri Lanka, Egypt, Tunisia and Peru.
The crisis has been made worse by Russia’s position as a major energy exporter. Countries trying to increase their own food production are running into additional energy and fertilizer challenges. The system is breaking down and developing nations are going to pay a heavy price for months, if not years to come.
The gravity of the situation has led to calls for intervention. Leading western newspapers such as the Financial Times have called for wealthier countries to step in and help poorer nations through this crisis. “Rich countries were seen to let down the poor during the pandemic over vaccine supply,” the FT proclaimed in a recent editorial. “They must not fail on the food crisis.”
In February, a global initiative called Agriculture Innovation Mission For Climate led by the United States and the United Arab Emirates kicked off an $8 billion effort to make farming cleaner and more efficient. The initiative will focus investments in agricultural technology (agtech) areas such as nanotechnologies, biotechnologies, robotics and AI.
This initiative is key but rich countries throwing money at the problem and reinforcing the existing supply chain alone is not going to solve the situation in the long term. At best, it will be a temporary measure to stop immediate suffering but a solution is going to require much deeper thinking. Production levels and prices will eventually stabilize but this moment of crisis is the perfect catalyst for a revolution in how food is produced and distributed.
Just like electric vehicles are a sustainable alternative to oil shocks and climate crises, agtech holds the answer to solving the problem of food shortage. The challenge is that many of the start ups driving the sector forward still lack critical investment and mainstream acceptance needed to transform food production.
A shift in consciousness about food such as the one we are watching because of the Ukraine conflict is needed for agtech companies to raise levels of capital required to challenge outdated models of food production. But it’s not going to be easy. Just 20 years ago, electric cars seemed out of reach for most people. The cost of producing and operating them was prohibitively expensive. But with the exponential leaps in technology, the cost of electric vehicles have come down. Tesla’s remarkable earnings over the past couple of years is proof that change is possible.
Where is the Tesla of agricultural technology? There isn’t such a unicorn yet but there are many companies emerging across the world that could evolve into a powerhouse. Given its natural challenges with food and water production, the Middle East is the ideal testing ground for the agtech company of the future. There is already a vibrant agtech sector stretching from Israel to the UAE. The Gulf, in particular, has had great success with urban farming techniques such as vertical agriculture that are able to produce food with very little water. Israel is a world leader in water irrigation techniques designed to get a lot of food production from little water.
While there has been a lot of talk about agtech in the region, the sector is still ripe for additional investment. Right Farm, a UAE company that has created a business-to-business digital platform for sourcing fresh produce, just raised $2.8 million from investors including Abu Dhabi state holding company ADQ’s venture platform. But that’s not enough investment to truly revolutionize the sector.
The Ukraine conflict is a wake up call that the global food supply chain is broken beyond repair. The problem of food insecurity will only get worse as climate change and population expansion create more pressure on the supply chain. Whoever cracks the agtech code has the opportunity to become the Tesla of this critical sector. Given its investment potential, food insecurity and geographical proximity to other food insecure countries, the Gulf could be leading this vital sector. The Tesla of agtech is out there. Will it be based in Dubai?
Joseph Dana is a writer based in South Africa and the Middle East. He has been reporting on the Middle East for over a decade with postings in Jerusalem, Ramallah, Cairo, Istanbul, and Abu Dhabi. He was formerly the editor-in-chief of emerge85, a media project based in Abu Dhabi exploring change in emerging markets.
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