This document summarizes the key points of a research paper on measuring the impact of fluctuations in global agricultural markets on food security in Arab countries. The research included two econometric models to estimate the effect of international food price changes. The results showed that Arab countries are vulnerable to volatility in international cereal prices and high food price transmission can negatively impact food security. The research recommended both short-term policies like price controls and long-term policies to boost domestic agriculture as ways for Arab countries to mitigate risks from global market fluctuations.

1. Submitted by
Sarah Hassan Mohammed Serag
Under supervision of
Prof. Ali Lotfy
Professor of Economics
Faculty of commerce at Ain Shams University
Former prime minister
Dr. Eman Hashem
Lecturer of Economics
Faculty of commerce at Ain Shams University
The impact of the fluctuations in global markets
for agricultural crops on the future of food
security in Arab countries (An econometric study)

2. Research problem
 Arab countries are characterized by having a problem of
food security, this is mainly due to the fact that they rely
heavily on the imports of food. As a result, they are
considered vulnerable to any international food crisis. On
the other hand, global agricultural markets are
characterized recently by severe and continuous price
fluctuations due to different factors. Hence, any
fluctuations in the international prices of agricultural food
crops may affect the state of food security in Arab
countries. Therefore, this research concentrates on
measuring the impact of the fluctuations in the
international prices of food on food security in Arab
countries through two econometric models.

3. Research objectives
 Identifying different factors that contribute to fluctuations
in the international prices of agricultural food
commodities.
 Studying the main characteristics of the agricultural sector
in Arab countries and its main challenges.
 Estimating the impact of the international prices of
agricultural food commodities on food security in Arab
countries.
 Identifying different policies and procedures that could be
applied to face the fluctuations in the international prices
of agricultural food commodities.

4. Research Hypotheses
 Arab countries are vulnerable to volatility in the international
prices of agricultural food commodities.
 Volatility in the international prices of agricultural food
commodities can negatively affect the state of food security in
Arab countries.
 Arab countries are capable of facing volatility of the
international prices of agricultural food commodities.

5. Research plan
Part One
An overview of the
fluctuations in
global markets of
agricultural food
crops
Part Three
The impact of
international food
price transmission
on food security in
Arab countries and
suggested policies to
face their
fluctuations
Part Two
Agriculture and food
security in Arab
countries

6. Part One
An overview of the
fluctuations in global
markets of agricultural food
crops
Chapter Two
Main reasons behind the
fluctuations in the
international prices of
major agricultural food
crops
Chapter One
An overview of global
markets of main
agricultural food crops

7. Chapter One
An overview of global markets for agricultural
crops
 Chapter one of this part concentrates on main agricultural food crops. In
2011, about 82% of world’s per capita intake of calories is from vegetal
products, and 45% of world’s per capita intake of calories is from cereals,
and as a result of the inability to study all types of cereals, the researcher
focused on the three mega crops of cereals; wheat, rice, and maize. In
addition, the chapter focused on studying the market of these three crops,
which include major producers, consumers, exporters, and importers. From
the analysis of these markets, we can deduce that most of the producers and
exporters of these three mega crops are the developed and the emerging
countries, while the share of the developing countries is very small. Finally,
the chapter provided an overview of the way prices of the agricultural crops
are determined.

8. Chapter Two
Main reasons behind the fluctuations in the
international prices of major agricultural food crops
 Chapter two of part one is concentrating on the main reasons behind the
fluctuations in the international prices of food crops; focusing on wheat,
maize, and rice. Reasons mentioned in this chapter are the unconventional
effects that affect prices, such as; the effect of climate change, the effect of
biofuels, the concentration of world’s exports of major food crops, Export
restrictions on world’s food crops, world’s aggressive food imports, the
decline in world’s food reserves, the impact of futures trading, the role of
emerging countries, and the lack of information on world’s food market. At
the end of the chapter, the researcher gave an overview of the role of crude
oil and fertilizers in affecting the international prices of food.

9. Part Two
Agriculture and
food security in
Arab countries
Chapter One
Main agricultural
characteristics of
the Arab region
Chapter two
The problem of
food security in
Arab countries

10. Chapter One
Main agricultural characteristics of the Arab
region
 In order to clearly understand the problem of food security in
Arab countries, chapter one concentrated on major agricultural
characteristics of the Arab region, and the main problems that
face the sector; such as, the scarcity of water resources, and the
high dependency on external water resources. Agricultural
labour force in Arab countries also faces many problems that
lead to high migration rates. Furthermore, investment in the
sector and the problems that are related to R and D are also a
major concern. On the other hand, climate change has some
negative effects on the agricultural sector in Arab countries;
such as, the repetition of drought periods and the lack of
rainfall.

11. Chapter two
The problem of food security in Arab
countries
 After presenting the problems of the agricultural sector in
the Arab region, chapter two provides some indicators of
food security in Arab countries. The evaluation of the
problem of food security showed that the main problem is
in the high dependency of Arab countries on the imports
of food, which makes the region exposed to the
fluctuations in the international prices of food. On the
other hand, there are some factors that contribute to the
problem of food security in the region; such as, the effect
of the problems that face the agricultural sector, and the
continuous growth in the number of population.

12. Part three
The impact of
international food price
transmission on food
security in Arab countries
and suggested policies to
face their fluctuations
Chapter one
Measuring the impact of
the transmission of
international prices of
agricultural food crops on
food security in Arab
countries
Chapter Two
Suggested policies to face
the fluctuations in the
international prices of
agricultural crops

13. Chapter one
Measuring the impact of the transmission of
international prices of agricultural food crops on food
security in Arab countries
 In chapter one, the researcher applied two types of models; model one
which measures the impact of the transmission of international food prices
to the domestic prices. And model two which measures the impact of the
domestic prices of cereals on consumers’ consumption of cereals. The
researcher chose wheat, rice, and maize as the main types of cereals. The
model was applied on 16 Arab countries and excluded Comoros, Libya,
Bahrain, Qatar, the UAE, and North Sudan, due to the lack of data on
domestic prices in these countries.
 As for model two, the researcher applied the model on only ten Arab
countries due to the lack of data of other countries. The model was applied
on Egypt, Jordan, Lebanon, Morocco, Palestine, Somalia, Syria, Yemen,
Tunisia, and Algeria.

14. Chapter Two
Suggested policies to face the fluctuations in the
international prices of agricultural food crops
 In chapter two, the researcher suggested some policies to face the impact of
international food price transmission on food security in Arab countries.
Suggested policies were divided into types:
 Short run policies: These policies concentrate on procedures taken by
countries to face the problem of high international food prices. In the light
of other countries’ experiences, the researcher suggested applying some
restrictions on the exports of cereals, reducing tariffs on the imports of
cereals, launching national reserves of cereals, in addition to applying some
social protection programs. However, these procedures can’t be applied for
a long time as countries are in need of policies that help in reducing
dependency on the imports of cereals.

15. Cont.
 Long run policies: These policies help in reducing dependency
on the imports of cereals through enhancing the role of the
agricultural sector in Arab countries. Policies such as
management of natural resources, enhancing the role of
agricultural labour force, building strategic national reserves,
adapting to climate change phenomenon, policies of
agricultural marketing, developing rural areas, developing the
role of R and D, supporting farmers, in addition to enhancing
agricultural investment are all policies that can help in reducing
the dependency on the imports of cereals.

16. Results
1. According to our study, the first hypothesis is true. Arab countries are
vulnerable to volatility in the international prices of agricultural food
commodities. However, not all Arab countries have the same degree of
vulnerability to volatility in the international prices of cereals. We can put
these countries in groups according to the highest food price transmission as
follows:
A. Wheat: In the case of wheat, Egypt, Jordan, Palestine, Yemen, and Algeria
are countries that have food price transmission that is higher than 0.50%.
B. Rice: In this group we can find Djibouti, Egypt, Somalia and Tunisia.
These countries have food price transmission that is higher than 0.50%.
C. Maize: In the case of maize, Kuwait, Egypt, Jordan, Lebanon, Palestine,
Somalia, and Yemen are countries that have food price transmission that is
higher than 0.50%.

17. Results
 Despite the fact that most Arab countries are vulnerable to volatility in the
international prices of cereals, some of them have high fiscal ability to face
the fluctuations in the international prices of cereals:
A. Countries with high price and quantity risk: This group includes countries
that highly depend on the imports of cereals and have low fiscal ability to
face the fluctuations in the international prices of food. Jordan, Lebanon,
Djibouti, Yemen, Tunisia, and Morocco are in this group.
B. Countries with high quantity risk and low price risk: This group includes
oil exporter countries. These countries have the fiscal ability to face the
fluctuations in the international prices of cereals, despite the fact that they
are highly dependent on the imports of cereals. Bahrain, Qatar, Oman,
Libya, UAE, Kuwait, Saudi Arabia, Iraq, and Algeria are in this group.
C. Countries with low quantity risk and high price risk: In this group we can
find Syria, Sudan, and Egypt. These countries are not highly dependent on
cereals, but they don’t have the fiscal ability to face the fluctuations in the
international prices of cereals.

18. Results
2. It turns out from our study that the second hypothesis is true. Volatility in
the international prices of cereals may have a negative effect on the state of
food security in some Arab countries. We can estimate the impact of food price
transmission on the future of food security by building a scenario that is based
on a change in the international prices of wheat, rice, and maize by 1%. It turns
out from this scenario that the impact of food price transmission on food
security may result in a decrease in the per capita intake of calories by 0.25%
in some Arab countries such as Egypt and 1.19% in the case of Palestine.
While in other countries the impact may be ineffective such as Yemen
(0.005%). However this scenario is based on a change in the international
prices of cereals by 1% only, while the increase in the international prices may
sometimes reach more than 100%

19. Results
3. According to our study, the third hypothesis is true. Arab countries are
capable of facing changes in the international prices of cereals as long as they
follow some policies and procedures as follows:
A. Short run policies: These policies are procedures that Arab countries can
implement to face the fluctuations in the international prices of cereals on
the short run. These procedures may include some export restrictions,
elimination of tariffs on imports, and launching national reserves of
cereals.
B. Long run policies: These policies help in reducing dependency on the
imports of cereals through enhancing the role of the agricultural sector in
Arab countries. Policies such as management of natural resources,
enhancing the role of agricultural labour force, building strategic national
reserves, adapting to climate change phenomenon, are all policies that can
help in reducing the dependency on the imports of cereals.

20. Recommendations
The recommendations of our study will not differ from the necessary policies
mentioned in the third result. Since Arab countries must follow some policies
in the short run and the long run to face the fluctuations in the international
prices of cereals. These policies are as follows:
1. Short run policies: Policies in the short run are procedures that Arab
countries can implement to protect themselves from the fluctuations in the
international prices of cereals. In the light of other countries’ experiences,
the researcher suggested applying some restrictions on the exports of
cereals, reducing tariffs on the imports of cereals, launching national
reserves of cereals, in addition to applying some social protection
programs. However, these procedures can’t be applied for a long time as
countries are in need of policies that help in reducing dependency on the
imports of cereals.

21. Recommendations
2. Long run policies: These policies aim at reducing
dependency on the imports of cereals through enhancing the
role of the agricultural sector in Arab countries. Such
policies may include management of natural resources,
enhancing the role of agricultural labour force, building
strategic national reserves, adapting to climate change
phenomenon, policies of agricultural marketing, developing
rural areas, developing the role of R and D, supporting
farmers, in addition to enhancing agricultural investment are
all policies that can help in reducing the dependency on the
imports of cereals.

22. Recommendations
3. Cooperation of Arab countries in adopting a common
agricultural strategy to enhance the role of the agricultural
sector is crucial to face the problem of food security in the
future. Without this cooperation, it will be difficult for Arab
countries to face the fluctuations in the international prices
of cereals and enhance the state of food security of the
region.