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The	
  Wheat	
  Value	
  Chain	
  and	
  Food	
  Security	
  in	
  the	
  
Middle	
  East	
  and	
  North	
  Africa	
  
	
...
Agenda	
  
•  Project	
  overview:	
  A	
  Global	
  Value	
  Chain	
  
Analysis	
  of	
  Food	
  Security	
  and	
  Food	...
•  Mul;-­‐year	
  project	
  supported	
  by	
  US	
  Dept.	
  of	
  Defense	
  MINERVA	
  
Ini7a7ve	
  and	
  Army	
  Res...
What	
  does	
  the	
  literature	
  tell	
  us	
  about	
  Food	
  
Security	
  in	
  the	
  Middle	
  East	
  and	
  Nor...
Impact	
  of	
  Food	
  Price	
  Increases	
  on	
  Trade	
  Balance	
  	
  
(2007	
  –	
  2008)	
  
5	
  
RICE	
  
+102%	...
MENA Country Typology and Level of Food Insecurity
	
  
Resource-Poor
Labor Abundant
Resource-Rich
Labor Abundant
Resource...
SOURCE:	
  FAO,	
  total	
  tonnage	
  of	
  wheat	
  exported	
  
Algeria	
  	
  
	
  has	
  imported	
  
16.6%	
  
of	
 ...
What	
  does	
  the	
  Wheat	
  Global	
  Value	
  Chain	
  
Analysis	
  add	
  to	
  Food	
  Security	
  Dialogues?	
  
8...
The	
  GVC	
  Approach	
  
Top	
  down	
  –	
  the	
  global	
  economy	
  with	
  a	
  focus	
  on	
  lead	
  firms	
  
an...
GVC	
  ANALYSIS	
  
	
  
•  Trace	
  the	
  geographic	
  spread	
  of	
  produc7on	
  
•  Map	
  the	
  compe77ve	
  ecos...
Food	
  Security	
  	
  
11	
  
Domes7c	
  
Regional	
  	
  
Interna7onal	
  
Dimensions	
  of	
  
Food	
  Security	
  	
 ...
Wheat Global Value Chain
Inputs
R&D
Seeds
Fertilizer
Pesticide
Machines
Soft, Hard, Durum wheat
Smallholders
Large farms
C...
Key	
  Risk	
  Factors	
  Affec7ng	
  Food	
  Security	
  in	
  MENA	
  
•  Land	
  
•  Water	
  
•  R	
  &	
  D	
  
•  Acc...
Egypt	
  
Iran	
  
Saudi	
  Arabia	
  
Syria	
  
UAE	
  
Inputs Farms Elevators RetailMills
State	
   Private	
   Both	
  ...
How	
  do	
  we	
  apply	
  GVC	
  Analysis	
  to	
  
country	
  cases?	
  
15	
  
1970s	
   1980s	
   1990s	
   2007	
  onwards	
  2000s	
  
Self-­‐Sufficiency	
  Strategy	
  	
   Import-­‐Based	
  Strategy...
1970s	
  and	
  prior	
   1980s	
   1990s	
   2012	
  onwards	
  
•  Increase	
  in	
  government	
  control	
  of	
  
whe...
Mills
Production Processing Consumption
Storage
Inland Silos moved
to Ports
Mills Bakeries
Production Processing Consumpti...
Saudi	
  Arabian	
  Bojlenecks	
  
Resource	
  
Scarcity	
  
Limited Capacity
Infrastructure	
  
Deficit	
  
Inputs Product...
Egyp7an	
  Bojlenecks	
  
Resource	
  
Scarcity	
  
Market Access Infrastructure	
  
Deficit	
  
Lack	
  of	
  
Transparenc...
Food	
  Security	
  
Egypt	
   Saudi	
  Arabia	
  
	
  
Food	
  Availability	
  	
  
Wheat	
  Imports	
  
Domes7c	
  
Prod...
Next	
  Steps	
  
•  Research:	
  	
  
–  Black	
  Sea	
  Wheat	
  GVC:	
  Russia,	
  Ukraine	
  &	
  Kazakhstan	
  
–  ME...
Ques7ons?	
  
Ghada	
  Ahmed	
  
ghada.ahmed@duke.edu	
  
Danny	
  Hamrick	
  
danny.hamrick@duke.edu	
  
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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. 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. 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. 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. 4. What  does  the  literature  tell  us  about  Food   Security  in  the  Middle  East  and  North   Africa?   4  
  5. 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. 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. 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. 8. What  does  the  Wheat  Global  Value  Chain   Analysis  add  to  Food  Security  Dialogues?   8  
  9. 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. 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. 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. 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. 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. 14. Egypt   Iran   Saudi  Arabia   Syria   UAE   Inputs Farms Elevators RetailMills State   Private   Both  Ownership  characteris;cs:   Primary  Ownership  across  Wheat  GVC   14  
  15. 15. How  do  we  apply  GVC  Analysis  to   country  cases?   15  
  16. 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. 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. 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. 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. 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. 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. 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. 23. Ques7ons?   Ghada  Ahmed   ghada.ahmed@duke.edu   Danny  Hamrick   danny.hamrick@duke.edu  

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