The Wheat Value Chain and Food Security in the Middle East and North Africa
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Duke CGGC researchers Ghada Ahmed and Danny Hamrick gave the presentation at the International Policy Studies Organization (IPSO) conference on Middle East Dialogue on February 26, 2015. Following the presentation is a link to a YouTube video of the presentation.
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The Wheat Value Chain and Food Security in the Middle East and North Africa
- 1. The Wheat Value Chain and Food Security in the Middle East and North Africa Ghada Ahmed and Danny Hamrick Center on Globaliza7on, Governance and Compe77veness Middle East Dialogue February 26th, 2015
- 2. Agenda • Project overview: A Global Value Chain Analysis of Food Security and Food Staples for Major Energy-‐Expor?ng Na?ons in the Middle East and North Africa (MENA) • GVC methodology • Wheat value chain and food security in MENA • County case studies • Next steps 2
- 3. • Mul;-‐year project supported by US Dept. of Defense MINERVA Ini7a7ve and Army Research Office for University-‐Led Research • Collabora;on with the Nicholas School of the Environment to study food security in the Middle East and North Africa (MENA) • Rank food security of MENA countries based on mul7ple variables and data sources • Apply GVC approach to iden;fy vulnerabili;es and leverage points in key food commodi7es in MENA countries • Iden;fy risks and strategic op;ons to improve food security in the region Minerva Project Overview 3
- 4. What does the literature tell us about Food Security in the Middle East and North Africa? 4
- 5. Impact of Food Price Increases on Trade Balance (2007 – 2008) 5 RICE +102% WHEAT +112% MAIZE +204% Food Price Increases from 2005 -‐ 2011
- 6. MENA Country Typology and Level of Food Insecurity Resource-Poor Labor Abundant Resource-Rich Labor Abundant Resource-Rich Labor Importing Comoros Yemen Libya Djibouti Syria1 Bahrain Mauritania Algeria Kuwait Somalia Sudan Oman West Bank and Gaza Iran Qatar Egypt Iraq2 Saudi Arabia Jordan United Arab Emirates Lebanon Morocco Tunisia Israel* Acute Food Insecurity Moderate Food Insecurity Low Food Insecurity Food Security is measured as total exports divided by food imports and food production per capita. Low Risk is defined as having one or both measure above global average. Moderate risk is defined as having one or both below global average. Acute risk is defined as one or both measures less than 50% the global average. 1 Syria’s food insecurity is acute due to the current civil war 2 Data not available Source: CGGC based on data from world Bank Development Indicators and Breisinger et al, 2010 6
- 7. SOURCE: FAO, total tonnage of wheat exported Algeria has imported 16.6% of MENA’s wheat since 2007 Different regions within MENA rely on different countries as their leading source of imported wheat. Depending on the country, these rela7onships have persisted since 2007 Morocco has imported 9.3% of MENA’s wheat since 2007 Egypt has imported 25.9% of MENA’s wheat since 2007 France Russia Australia No s7ckiness Libya Syria Mauritania Saudi Arabia Iran Iraq Wheat Procurement Across MENA 7
- 8. What does the Wheat Global Value Chain Analysis add to Food Security Dialogues? 8
- 9. The GVC Approach Top down – the global economy with a focus on lead firms and inter-‐firm networks, using varied typologies of industrial “governance” Boom up – a focus on countries and regions, which are analyzed in terms of various trajectories of economic and social “upgrading” or “downgrading” 9
- 10. GVC ANALYSIS • Trace the geographic spread of produc7on • Map the compe77ve ecosystem of firms • Conduct stakeholder analysis of firms & organiza7ons • Analyze governance structures & enabling environment • Iden7fy upgrading trajectories and bojlenecks Inputs Processing Marke7ng Produc7on 10
- 11. Food Security 11 Domes7c Regional Interna7onal Dimensions of Food Security Geographic Scope Actors Availability Produc7on Storage Access Prices Incomes Distribu7on Marke7ng U7liza7on Domes7c End Use Diet Stability Domes7c Regional Interna7onal Shocks e.g. weather, markets, & unrest Government Farmers Firms Traders Government Traders Intermediaries Bakeries Farmers Bakeries Households Government Traders Banks Drivers of Food Security CONCEPTUALIZING FOOD SECURITY AND VALUE CHAINS
- 12. Wheat Global Value Chain Inputs R&D Seeds Fertilizer Pesticide Machines Soft, Hard, Durum wheat Smallholders Large farms Cleaning Elevators Feed Milling Livestock production Food manufacturers Wholesale Supermarkets & Grocers Production Processing Marketing Blending Trade Trading companies Domestic International Drying Mills Flour Milling Packaging Offshore production Labor Supporting activities and institutions Government Regulations Futures Trading Food aid Trade Policies Financial Intermediaries Infrastructure Logistics Land Water Storage Blending Bakeries 12
- 13. Key Risk Factors Affec7ng Food Security in MENA • Land • Water • R & D • Access to inputs • Agricultural Policies • Standards & cer7fica7ons Produc;ve Capacity • Transporta7on • Storage • Ports • ICT • Energy • Government Coops Infrastructure & Services • Country & regional stability • Public governance • Grain tenders • Access to finance Business Environment • Trade policies • Foreign reserves • Market access • Export-‐import procedures • Industry policies Trade & Investment Policy • Public-‐private coordina7on • Subsidies & price controls • Monitoring & accountability • Marke7ng Ins;tu;onal Elements Government Control 13
- 14. Egypt Iran Saudi Arabia Syria UAE Inputs Farms Elevators RetailMills State Private Both Ownership characteris;cs: Primary Ownership across Wheat GVC 14
- 15. How do we apply GVC Analysis to country cases? 15
- 16. 1970s 1980s 1990s 2007 onwards 2000s Self-‐Sufficiency Strategy Import-‐Based Strategy • Targe7ng self sufficiency • Achieved self sufficiency • Increased tariffs on wheat &flour imports (100%) • Subsidies peaked to $3 billion • Reduced wheat subsidies • Introduced wheat produc7on quotas • Reduced import wheat tariffs • Started phasing wheat produc7on & incen7ves • Water stress became a policy priority • Ministry of Water created • Increasing wheat imports • Investment in offshore agriculture • Expand wheat infrastructure • Introduced price controls & increased social spending Source: CGGC based on FAO, 2011; Al-‐Zahrani, 2009, Shejy, 2004, Al Majery, 2009 Saudi Arabia’s Wheat Policy Timeline 16
- 17. 1970s and prior 1980s 1990s 2012 onwards • Increase in government control of wheat value chain within Egypt • Crea7on of PBDAC to help supply farmers with inputs • Gradual easing of government control in terms of land use requirements and forced selling to government • 1989-‐Last increase in the cost of subsidized bread • Wheat price increases and stagnate cojon prices strains government • Protest over several issues, including bread availability • Overthrow of Mubarak government • Elimina7on of subsidized fino flour and bread easing of import restric7ons for private firms using fino • 1996-‐ Producers of fino flour and bread required to use imported wheat and shami flour subsidy eliminated 2000s • Policies focus on doubling storage silos • Aempted increase in domes;c produc;on • Reduc;on in imports • Wheat Shortages • Overthrowing of Morsi government Source: CGGC based on Kherallha et al 2000, Goldman 2013, MacFarland 2013 Egypt’s Wheat Policy Timeline
- 18. Mills Production Processing Consumption Storage Inland Silos moved to Ports Mills Bakeries Production Processing Consumption Bakeries 9.5 million tons 2012: 6,000 farmers 1993: 34,000 farmers Imports- Increasing 12.5 %/year Importing 4 - 5 million tons Small & Medium Farms • Price fixing $0.27/loaf • Food subsidy 0.24% of GDP • Increase labor and flour costs • About 25% of bakeries will go out of business • Up to 100% increase in bread prices • Bread rationing at 3 loaves • Food subsidy 2% of GDP • Available bread $0.7/ loaf Storage Need for Modern Silos Small & Medium Farms 2013 Saudi Arabia Wheat Value Chain Vulnerabili;es 2013 Egyp;an Wheat Value Chain Vulnerabili;es Red: Acute disruption points in wheat GVC Currency Reserves Source: Oil Currency Reserves Source: Suez Canal & Tourism
- 19. Saudi Arabian Bojlenecks Resource Scarcity Limited Capacity Infrastructure Deficit Inputs Production Processing Water Land Storage Transport 19 Price Controls Marketing Bakeries Dependency on interna7onal markets: global price vola7lity & limited feasibility of offshore produc7on
- 20. Egyp7an Bojlenecks Resource Scarcity Market Access Infrastructure Deficit Lack of Transparency Inputs Production Processing Marketing Water Seed Fer7lizer Aggregators Diverted U7liza7on Lack of technology Storage Transport Mills Black Market Monitoring Bread Weight 20 Dependency on interna7onal markets: global price vola7lity, access to foreign currency, & trade bans
- 21. Food Security Egypt Saudi Arabia Food Availability Wheat Imports Domes7c Produc7on Offshore Produc7on Food Security Strategy 2000 and 2014 High Low Moderate =2000 =2013 21
- 22. Next Steps • Research: – Black Sea Wheat GVC: Russia, Ukraine & Kazakhstan – MENA Corn GVC – Food security in Maghreb countries • Working Papers: – Food Security and Wheat Value Chains in MENA – Shising Governance Structures in the Wheat Value Chain: Implica7ons for Food Security in the Middle East and North Africa – Egypt Case Study 22
- 23. Ques7ons? Ghada Ahmed ghada.ahmed@duke.edu Danny Hamrick danny.hamrick@duke.edu