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 Center on Globaliza2on, Governance & Compe22veness Duke University Linking Food Security to Sustainable Agricultural Policies in the Mediterranean June 20th, 2015 Milan

2. 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 rela2onships 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 s2ckiness Libya Syria Mauritania Saudi Arabia Iran Iraq Wheat Procurement Across MENA 2

3. Top down – the global economy with a focus on lead ﬁrms and inter-ﬁrm networks, using varied typologies of industrial “governance” BoOom up – a focus on countries and regions, which are analyzed in terms of various trajectories of economic and social “upgrading” or “downgrading” 3 Approach

4. Inputs Biotechnology Equipment Land Water Weighting Grading Blending Elevators Feed Mills Livestock GVCs Food service Bakeries Retailers Production Processing Marketing Commodity traders Domestic International Mills Milling Packaging Storage Smallholders Large Farms Farms Food manufacturers Enabling Environment Public governance Infrastructure Financial networks Private governance Logistics networks Consulting services Labor Trade 4 Constraints in MENA Source: Ahmed et al , 2012

5. Shifts in the Wheat GVC – From an Old Model to a New Model GlobalizaSon – High dependence on TNC Market Failure Risk ConsolidaSons - Traders are an oligopoly interac2ng with state monopolies Market Failure Risk DeregulaSon – State plays a key role Government Failure Risk Transforma2on in the VC Poten2al Impacts on MENA’s Food Security FinancializaSon – Increased food price vola2lity Market Failure Risk 5 strong weak

6. Key Risk Factors Affec2ng Food Security in MENA •  Land •  Water •  R & D •  Access to inputs •  Agricultural Policies •  Standards & cer2fica2ons ProducSve Capacity •  Transporta2on •  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 coordina2on • Subsidies & price controls • Monitoring & accountability • Marke2ng InsStuSonal Elements Government Control 6

7. EGYPT CASE STUDY Bread, Freedom and Social JusSce 7

8. 2000s 2013 Mills Production Processing Consumption Storage 6 months Mills Bakeries Production Processing Consumption Bakeries 9.5 million tons 8 million tons Imports 10 million tons Importing 4 - 5 million tons Small & Medium Farms •  < $.01/ loaf (govt. subsidized price) •  No enforcement of rationing at 7 loaves •  Bread rationing at 3 loaves •  5.5 % price increase in wheat flour •  2.3% price increase in bread •  Available bread $0.7/ loaf Storage <3 months Small & Medium Farms Red: Acute disruption points in wheat GVC Currency Reserves $36 billion Currency Reserves $18.9 billion EGYPT GVC 2000s and 2013 8

9. Egyp2an Bohlenecks and Leakages Resource Scarcity Market Access Infrastructure Deﬁcit Lack of Transparency Inputs Production Processing Marketing Water Seed Fer2lizer Aggregators Diverted U2liza2on Lack of technology Storage Transport Mills Black Market Monitoring Bread Weight 9

12. Conclusion •  Five TNCs account for over 70%-90% of global grain trade •  MENA is a convergence region where state- dominated old world models and TNC-led new world models meet, crea2ng unique challenges •  Market access is crucial for MENA •  Untapped opportuni2es in domes2c markets •  Need for collabora2on, transparency, and private sector par2cipa2on to meet food security needs 12

13. 13 Thank You! Ques2ons? Ghada Ahmed Ghada.ahmed@duke.edu

The Wheat Value Chain and Food Security in the Middle East and North Africa

The Wheat Value Chain and Food Security in the Middle East and North Africa

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The Wheat Value Chain and Food Security in the Middle East and North Africa