#09 The Qatari wealth

On a tiny place in the Southwest Asia

One of the biggest contrasts we witnessed so far happened during the transition from India towards Qatar. From the beautiful and emerging Asian country to the third highest GDP per capita in the world: Doha. The city is responsible for a major part of the economic and financial activity in the country, with a population of approximately 900.0 thousand people, and imports almost entirely all the food consumed.

Being in touch with a predominantly Muslim nation, unlike the Christian majority in Brazil, is a true exercise of understanding and pursuit of non-judgment. The Islam is severely criticized – particularly in the West – for the way women are treated, and for the stiffness of its principles.

I personally consider it a privilege to get to experience this culture (despite its controversial aspects), and to observe natives in their genuine behavior, in their habitat. A critical look at the events is necessary, but I don’t consider myself able to judge Qatar. I won’t accuse what’s unknown to me, having been raised in a different environment.

We were in Doha in a very special time of the year for Muslims, the Ramadan, the ninth month of the Islamic calendar. It is the month in which Muslims practice the ritual fasting, the fourth of the five pillars of Islam. It is a time of renewal of faith, and deep experience of fraternity, cherishing values like life and family. It is extremely disrespectful to ingest any food/liquid in the presence of the faithful. That was really a different experience for us.

We stayed in the country for a short time (four days), and relied on the monitoring of Kara Knudsen, scholar from the 2013 Nuffield program.

Day 1: at our first visit, were with David Beatty, from the Meat and Livestock Australia (MLA). The company, public institution, conducts research in the Australian meat industry, and promotes Australian livestock products overseas.

Australia is one of the most efficient livestock producers in the world, and third largest exporter of beef. It is estimated that the gross income of cattle and calves in the country moves closer to US $ 7.7 billion. We discussed mainly the challenges of the domestic products insertion in foreign markets, and the potential Qatari demand. Local population grows aggressively, and the country is getting ready to host thousands (millions?) of tourists in the 2022 edition of the World Cup – hundreds of buildings throughout Doha, mostly in order to meet the event.

Day 2: we were at Hassad Food, presented by Andrew Goodman.

Since its creation, the company has adopted a state of the art of investment model, aiming at international opportunities under viable prospects to sustain the Qatari food needs.

Hassad Food operates vertically in several chains, in Qatar, Australia, Pakistan and Oman, potentially expanding its influence in Europe, North and South America.

Through its various subsidiaries, the company produces 9.0 thousand tons of fodder, 3.0 million flowers, 100.0 tons of vegetables, 190.0 thousand tons of grain and 290.0 thousand sheeps.

Being awesome at Roza Hassad

The country’s major goal is to ensure food security to its inhabitants, whether through large international enterprises, or supporting local communities to develop their production.

Currently, Hassad is engaged in showing the government that much can be grown in the desert. We then reflected on what is most economically advantageous: to invest as much as possible in facilitating food into the country, and in the firmament of trade agreements with others, or to share efforts with possible projects that would stimulate the local agriculture, even though this comes under such adverse conditions?

From a superficial perspective, the encouragement of regional production is obvious, but then Andrew, in a very insightful way, showed us some of the projects that would enable agricultural development in Doha on a sustainable manner, a research that has been structured for years, with help of dozens of scientists, agronomists and economists. We could then have an idea of the challenge of growing plants in wilderness regions. It’s about billions of dollars in investment, decades of tillage and gigantic constructions that would allow appropriate environmental conditions for the vegetation growth (the temperature there gets easily to 50°C). What is the cost of opportunity of a billionaire investment like this? What would be the potential expansion of consumption, or improving food security if this capital was directed to the Qatari influence on the global agricultural trading? Conclusions are not that obvious...

In the afternoon, we met Mohammad Fawzy and Salim Pathan, from Qatar Flour Mills (QFM).

The QFM has 40 years of experience, and imports and processes grains in Doha, distributing its derivatives throughout the country. That was a unique experience for me: meeting a business driven by inelastic (theoretically) demand, which will ensure supply, independent of market conditions. The conditions here are exceptional, but still amazing.

Estimates of proportional population growth of Qatar are impressive. Over the past five years, the Qatari population expanded from 1.5 million to 2.2 million, and for the next five that number is expected to reach 3.5 million. Providing food to a country that imports 98% of its food consumption involves a complicated math. It is due to meet the current demand, thinking ahead in the accelerated population growth, always with a margin of stock able to supply the country for at least six months (stock/use must be equal to 50% of the year’s demand plus changes in increased consumption).

At QFM

I asked Salim and Mohammad if, due to Qatar’s exposure to exogenous circumstances (international market), there was some kind of safety mechanism against fluctuations in commodity prices. The answer was no, there is not. The QFM ensures the provision of its product, no matter what is paid in inputs. The country is demand driven, not price driven. That, my friends, is what privilege means.

Reflecting the population growth, QFM is always running at full capacity, and always expanding. Expectations as to business directions are, so far, the best possible.

Day 3: we visited the fruits and vegetables market and the camels one. Fresh fruits, beautiful vegetables, very well conserved food... and under a 50ºC sun. It's amazing how efficient is the logistics system in the region. In extreme heat conditions, companies import, process, distribute and commercialize highly perishable products across the country without any quality compromise.

Being in Qatar was like being on the bubble Singapore: a highly capitalized country with big dreams and projects, fairly because it can subsidize them.

Still, the good listener captures what is said and also what is not. What about the unskilled workers? Those holding the menial activities, the simple ones, primary in the value chain... Do they have access to the same development opportunities? Are they participating in the country’s growth? Are they native or hand labor imported from emerging economies? Who is building the more than 500 structures waiting for the World Cup in 2022? That's for the good listener to find out.