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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
                                                                                                         (%)
                                                                                                                 Ratio

Source: 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 Supply




Note: 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 mill
4


     •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   Other
Notes: 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 Management
Source: 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 Netherlands
7
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 Country

Source: 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 messages
10


        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.

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Session 4 b maurice saade

  • 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 (%) Ratio Source: 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 Supply Note: 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 mill 4 •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 Other Notes: 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 Management Source: 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 Netherlands 7
  • 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 Country Source: 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 messages 10  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.