The document discusses the political economy of wheat value chains in Sudan following the 2019 political transition. It analyzes the policy preferences of key stakeholders to improve wheat affordability and domestic production. While cash transfers are the least controversial option, macroeconomic instability risks undermining their effectiveness. Reforms to agricultural credit and irrigation systems could boost production but may face opposition. Bread subsidies remain important politically but are costly economically. Overall, balancing competing interests across the complex wheat system poses ongoing challenges for policymakers.

1. Sudan Strategy Support
Program (SSSP)
Wheat & Its Role for Food Security in Sudan
International Food Policy Research Institute
Feb. 9, 2022
The SSSP is funded by:

2. 4. Political economy of wheat value chains:
Opportunities and challenges
Presented by: Khalid Siddig

3. Overview of Session
1. What are the constraints and
opportunities of key wheat supply chain
actors? Insights from a recent survey
(presented by Oliver Kirui)
2. How well are wheat markets integrated?
Findings from a co-integration analysis
(presented by Khalid Siddig)
3. What are the distributional consequences
of wheat policy in Sudan? A simulation
model analysis (presented by Paul
Dorosh)
4. Political Economy of Wheat Value Chains
(presented by Khalid Siddig)

4. 4. Political economy of wheat value chains: Opportunities
and challenges
Presented by Khalid Siddig
Based on a paper by Resnick (2021)

5. Research questions and methodology
Questions
 How did the 2019 political transition affect the viability of reforms within the wheat value
chain?
 What are the policy preferences of relevant stakeholders for improving the affordability of
wheat products and the productivity of domestic wheat farmers?
 And which policy interventions are most feasible (as of October 2021)?
Methods
 Political settlements framework that looks at horizontal, elite factions, their vertical ties with
different constituencies, and the financial mechanisms that underlie the settlement
 Process tracing based on newspaper reports and secondary data on wheat prices, protests,
macro trends
 Semi-structured interviews with 20 knowledgeable respondents in the wheat value chain
conducted in August – September 2021

6. Wheat Value Chain: Pre- and Post-Revolution
Post-Revolution, Khartoum State
Pre-Revolution
Actors:
ABS = Agricultural Bank of Sudan
CBS = Central Bank of Sudan
FMoA = Federal Ministry of Agriculture
FMoF = Federal Ministry of Finance
FMoI = Federal Ministry of Industry
SRC = Strategic Reserve Corporation
KFSC = Khartoum Food Security
Company

7. Policy Chronology of Flour, Bread, and Protests
Source: Price data is from various newspaper reports cited in the text and interviews with Khartoum bakeries. Protest data is from the Armed Conflict Location and Event Data Project (2021).
Khartoum protests
Protests elsewhere
Subsidized bread prices per loaf
Subsidized wheat flour prices to bakeries (per kg)
Prices
(SDG,
nominal)
Protests
and
riots
(number)
Protests
and
riots
(number)
Prices
(SDG,
nominal)
Pre-Revolution Post-Revolution

8. Price incentives Regulation
Productive
investments
Cash
transfers
No bread subsidies, but
bread input subsidies
and tax exemption
Enforce flour extraction
rates by SSA
Warehouses close to
bakeries, bakeries’
gas
Support
cash
transfers
Enforce flour extraction
rates by SSA
Deterrent laws with wheat
flour monopolies, tracking
tools like phones
Timely provision of
inputs, support
irrigation canal repair
Bread subsidies
Pass Consumer Protection
and Flour Improvers Laws
and regulate wheat
monopolies
Petroleum products
for operations
Attractive prices for
farmers and timely
funding from ABS for
inputs
Supports banking system
reforms to raise value of
deposits
Irrigation investments,
fertilizers/seeds, but
no obligation to grow
wheat
No fuel subsidies and
phased withdrawal of
bread subsidies
Varieties, inputs
(timely and equitable
distribution). Capital
to ABS => less import
Attractive prices for
farmers and timely
funding from ABS for
inputs
Short-term subsidies
for inputs to wheat
farmers
Bakeries
Resistance committees
Consumer unions
Farmers
Federal Ministry of
Industry
Ministry of Agriculture
(Federal/ State)
Federal Ministry of
Finance
Agricultural Bank of Sudan
Strategic Reserve
Corporation
International Monetary
Fund
World Bank
European Union
FCDO
Policy Preferences

9. Policy Preferences
Two Goals: Improving bread affordability and enhancing domestic wheat production
Four Levers: 1) Subsidies, 2) Regulations, 3) Productive Investments, and 4) Cash Transfers
Areas of Contention:
 Bread price subsidies – supported by consumers and resistance committees, opposed by bakeries and IMF
 Other input subsidies – supported by bakeries and farmers, opposed by some donors
 Productive investments in wheat – supported by wheat farmers, opposed by some donors who don’t see it as viable
Areas of Congruence:
 Regulation - Passage of consumer protection laws, enforcement of flour extraction laws, passage of competition laws
against wheat monopolies
 Productive investments – reforms need to Ag Bank of Sudan to deliver affordable inputs effectively, support irrigation
investments, and reforms in the expenditure portfolio
 Cash transfers – supported by most stakeholders, though extreme inflation and price volatility raises questions about
sustainability

10. Conclusions
 Wheat politics:
o The affordability of wheat flour/ bread crucial for achieving political and economic stability.
o Needed reforms involve difficult economic choices that could upset certain constituencies
 Samarat (Thamarat):
o Cash transfers is the least disruptive policy intervention, with least amount of opposition and
minimal threat to the big players (e.g., millers)
o However, it may not be sufficient to quell demands for bread or fuel subsidies from the rest
of the actors in the value chain due to:
• macroeconomic volatility and inflation, does not target urban middle class, does not
address farmers’ concerns, lack of trust in the government.
 Public sector:
o Reforms and capacity development for better legislations and implementation of
interventions
o Re-examining the role of ABS in supporting farmers and the institutionalization of production
input provision and subsidies as a mean of enhancing domestic wheat productivity

11. Conclusions
 Fuel subsidies:
o Regressive (70 % went to the top income quintile),
o Influence various elements of the value-chain that indirectly affect the poor (i.e., fuel costs
affect productivity of farmers, millers, and bakeries).
 Wheat vs. other cereals?
o A longer-term effort requires shifting the narrative about wheat and bread and rethink the
role of other cereals (e.g., sorghum)
o Marketing and information campaigns may encourage consumption of less-expensive, locally
grown alternatives to wheat (Global Panel 2017).