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Session 4 b maurice saade

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  • 1. THE GRAIN CHAIN Food Security &Managing Wheat Imports in Arab Countries Presented by Maurice Saade, Sr. Agriculture Economist, The World Bank Beirut, February 6, 2012 Authors: Julian Lampietti, Michelle Battat, Arnold de Hartog, Dana Erekat, Sean Michaels, Donald Larson
  • 2. As a region, Arab countries are the most dependent on imported grain 2 Context Net Exports of Grain (Trillion Calories), by Region, 2010 Former Soviet Union +56 Asia Europe +58 +318 -204 (6%) North America -228 -62 Arab +24 Oceania Countries Central and South (56%) +60 America Rest of Africa (13%) + Net Exporter - Net Importer Dependency (%) RatioSource: Authors.
  • 3. The 3 main pillars for improving food security in Arab countries. 3 1. Address Demand Volume of Grains (Million MT) 3. Manage Exposure to Import Risks 2. Enhance SupplyNote: Data based on a model that generated illustrative projections for Arab countries (including Sudan)Source: Adapted from IFPRI, 2008
  • 4. Wheat Import Supply Chain (WISC): The analysis covers the supply chain from the unloading port to bulk storage at the flour mill4 •Objective is to… • identify bottlenecks and provide recommendations for improvement • identify opportunities for regional cooperation • identify regional best practices (lessons learned from neighbors, or benchmarks) BENCHMARKING EXERCISE: •10 Arab countries (Bahrain, Egypt, Jordan, Lebanon, Morocco, Oman, Qatar, Saudi, Tunisia, Yemen) •2 benchmarks (Netherlands & South Korea)
  • 5. Some Arab countries import wheat from a diverse range of sources, while others do not 5 Benchmarking 2009 Wheat Imports by Origin for Selected Corridors 100% Share of Wheat imports by Origin 80% 60% 40% 20% 0% EU-27 Black Sea Americas Australia OtherNotes: Wheat imports from Turkey are grouped in the Black Sea category.Source: Authors.
  • 6. Logistics efficiency was measured using two metrics: cost and time 6 Benchmarking Average 2009 WISC Costs (Total: $40/mt) 36% ($15) 22% ($9) 29% ($12) 12% ($5) Port Logistics Storage Transport to Inland Silos & Mills WISC ManagementSource: Authors.Note: Costs are weighted averages for the ten participating Arab countries. Percentages may not add to 100 and values may not add to totals due to rounding.
  • 7. WISC Costs in Arab countries in 2009 were up to four times that of the Netherlands7
  • 8. Bottlenecks at the port can significantly increase WISC costs and transit times 8 Benchmarking 14 Vessel Waiting and Unloading Times 12 3 (Indexed to the Netherlands) 10 3 8 5 6 3 10 4 8 2 0 3 1 5 5 4 0 2 1 3 3 3 2 1 2 0 1 1 0 Unloading Time Waiting Time Benchmark CountrySource: Authors.
  • 9. Efficient and reliable inland transportation is critical to ensuring delivery of wheat 9 Benchmarking 2009 Inland Transport Costs as a Share of Total WISC Costs 60% 51% 50% 42% Percent of WISC Costs 40% 30% 21% 20% 12% 10% 10% 6% 7% 2% 0% 0% 0% 0% 0%Source: Authors. AgWeb. http://www.agweb.com/what-a-day/, accessed October 4, 2011.
  • 10. Key messages10  Arab countries are highly dependent on cereal imports, particularly wheat, and are vulnerable to high and volatile international prices.  Supply disruptions can threaten national security, suggesting that supply chains must be efficient and reliable.  Investments in wheat-import supply chains are critical to reducing Arab countries exposure to import price and supply risks.  Arab countries import ~40 MMT/year & $40/mt is $1.6 BN per year Saving 10% of supply chain costs can help increase strategic reserves by one month  Strategic reserves can mitigate import risks for Arab countries. Increasing strategic reserves involves key tradeoffs that must be addressed when making policy decisions.  Improving the performance of the Wheat-Import Supply Chain is critical for food security in Arab Countries and needs to be an integral part in any food security strategy, in addition to enhancing domestic supplies and a better management of demand.