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
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.
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
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)
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.
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.
WISC Costs in Arab countries in 2009 were up to four times that of the Netherlands7
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.
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.
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.