Duke CGGC researchers Ghada Ahmed and Danny Hamrick gave the presentation at the International Policy Studies Organization (IPSO) conference on Middle East Dialogue on February 26, 2015. Following the presentation is a link to a YouTube video of the presentation.

1. The
Wheat
Value
Chain
and
Food
Security
in
the
Middle
East
and
North
Africa
Ghada
Ahmed
and
Danny
Hamrick
Center
on
Globaliza7on,
Governance
and
Compe77veness
Middle
East
Dialogue
February
26th,
2015

2. Agenda
• Project
overview:
A
Global
Value
Chain
Analysis
of
Food
Security
and
Food
Staples
for
Major
Energy-­‐Expor?ng
Na?ons
in
the
Middle
East
and
North
Africa
(MENA)
• GVC
methodology
• Wheat
value
chain
and
food
security
in
MENA
• County
case
studies
• Next
steps
2

3. • Mul;-­‐year
project
supported
by
US
Dept.
of
Defense
MINERVA
Ini7a7ve
and
Army
Research
Office
for
University-­‐Led
Research
• Collabora;on
with
the
Nicholas
School
of
the
Environment
to
study
food
security
in
the
Middle
East
and
North
Africa
(MENA)
• Rank
food
security
of
MENA
countries
based
on
mul7ple
variables
and
data
sources
• Apply
GVC
approach
to
iden;fy
vulnerabili;es
and
leverage
points
in
key
food
commodi7es
in
MENA
countries
• Iden;fy
risks
and
strategic
op;ons
to
improve
food
security
in
the
region
Minerva
Project
Overview
3

4. What
does
the
literature
tell
us
about
Food
Security
in
the
Middle
East
and
North
Africa?
4

5. Impact
of
Food
Price
Increases
on
Trade
Balance
(2007
–
2008)
5
RICE
+102%
WHEAT
+112%
MAIZE
+204%
Food
Price
Increases
from
2005
-­‐
2011

6. MENA Country Typology and Level of Food Insecurity
Resource-Poor
Labor Abundant
Resource-Rich
Labor Abundant
Resource-Rich
Labor Importing
Comoros Yemen Libya
Djibouti Syria1
Bahrain
Mauritania Algeria Kuwait
Somalia Sudan Oman
West Bank and Gaza Iran Qatar
Egypt Iraq2
Saudi Arabia
Jordan United Arab Emirates
Lebanon
Morocco
Tunisia
Israel*
Acute Food Insecurity Moderate Food Insecurity Low Food Insecurity
Food Security is measured as total exports divided by food imports and food production per capita. Low
Risk is defined as having one or both measure above global average. Moderate risk is defined as having one
or both below global average. Acute risk is defined as one or both measures less than 50% the global
average.
1
Syria’s food insecurity is acute due to the current civil war
2
Data not available
Source:
CGGC
based
on
data
from
world
Bank
Development
Indicators
and
Breisinger
et
al,
2010
6

7. 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
rela7onships
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
s7ckiness
Libya
Syria
Mauritania
Saudi
Arabia
Iran
Iraq
Wheat Procurement Across MENA
7

8. What
does
the
Wheat
Global
Value
Chain
Analysis
add
to
Food
Security
Dialogues?
8

9. The
GVC
Approach
Top
down
–
the
global
economy
with
a
focus
on
lead
firms
and
inter-­‐firm
networks,
using
varied
typologies
of
industrial
“governance”
Boom
up
–
a
focus
on
countries
and
regions,
which
are
analyzed
in
terms
of
various
trajectories
of
economic
and
social
“upgrading”
or
“downgrading”
9

10. GVC
ANALYSIS
• Trace
the
geographic
spread
of
produc7on
• Map
the
compe77ve
ecosystem
of
firms
• Conduct
stakeholder
analysis
of
firms
&
organiza7ons
• Analyze
governance
structures
&
enabling
environment
• Iden7fy
upgrading
trajectories
and
bojlenecks
Inputs
Processing
Marke7ng
Produc7on
10

11. Food
Security
11
Domes7c
Regional
Interna7onal
Dimensions
of
Food
Security
Geographic
Scope
Actors
Availability
Produc7on
Storage
Access
Prices
Incomes
Distribu7on
Marke7ng
U7liza7on
Domes7c
End
Use
Diet
Stability
Domes7c
Regional
Interna7onal
Shocks
e.g.
weather,
markets,
&
unrest
Government
Farmers
Firms
Traders
Government
Traders
Intermediaries
Bakeries
Farmers
Bakeries
Households
Government
Traders
Banks
Drivers
of
Food
Security
CONCEPTUALIZING
FOOD
SECURITY
AND
VALUE
CHAINS

12. Wheat Global Value Chain
Inputs
R&D
Seeds
Fertilizer
Pesticide
Machines
Soft, Hard, Durum wheat
Smallholders
Large farms
Cleaning
Elevators
Feed Milling
Livestock
production
Food
manufacturers
Wholesale
Supermarkets &
Grocers
Production Processing Marketing
Blending
Trade
Trading companies
Domestic
International
Drying
Mills
Flour Milling
Packaging
Offshore production
Labor
Supporting activities and institutions
Government Regulations Futures Trading Food aid Trade Policies
Financial Intermediaries Infrastructure
Logistics
Land
Water
Storage
Blending
Bakeries
12

13. Key
Risk
Factors
Affec7ng
Food
Security
in
MENA
• Land
• Water
• R
&
D
• Access
to
inputs
• Agricultural
Policies
• Standards
&
cer7fica7ons
Produc;ve
Capacity
• Transporta7on
• 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
coordina7on
• Subsidies
&
price
controls
• Monitoring
&
accountability
• Marke7ng
Ins;tu;onal
Elements
Government
Control
13

14. Egypt
Iran
Saudi
Arabia
Syria
UAE
Inputs Farms Elevators RetailMills
State
Private
Both
Ownership
characteris;cs:
Primary
Ownership
across
Wheat
GVC
14

15. How
do
we
apply
GVC
Analysis
to
country
cases?
15

16. 1970s
1980s
1990s
2007
onwards
2000s
Self-­‐Sufficiency
Strategy
Import-­‐Based
Strategy
• Targe7ng
self
sufficiency
• Achieved
self
sufficiency
• Increased
tariffs
on
wheat
&flour
imports
(100%)
• Subsidies
peaked
to
$3
billion
• Reduced
wheat
subsidies
• Introduced
wheat
produc7on
quotas
• Reduced
import
wheat
tariffs
• Started
phasing
wheat
produc7on
&
incen7ves
• Water
stress
became
a
policy
priority
• Ministry
of
Water
created
• Increasing
wheat
imports
• Investment
in
offshore
agriculture
• Expand
wheat
infrastructure
• Introduced
price
controls
&
increased
social
spending
Source:
CGGC
based
on
FAO,
2011;
Al-­‐Zahrani,
2009,
Shejy,
2004,
Al
Majery,
2009
Saudi
Arabia’s
Wheat
Policy
Timeline
16

17. 1970s
and
prior
1980s
1990s
2012
onwards
• Increase
in
government
control
of
wheat
value
chain
within
Egypt
• Crea7on
of
PBDAC
to
help
supply
farmers
with
inputs
• Gradual
easing
of
government
control
in
terms
of
land
use
requirements
and
forced
selling
to
government
• 1989-­‐Last
increase
in
the
cost
of
subsidized
bread
• Wheat
price
increases
and
stagnate
cojon
prices
strains
government
• Protest
over
several
issues,
including
bread
availability
• Overthrow
of
Mubarak
government
• Elimina7on
of
subsidized
fino
flour
and
bread
easing
of
import
restric7ons
for
private
firms
using
fino
• 1996-­‐
Producers
of
fino
flour
and
bread
required
to
use
imported
wheat
and
shami
flour
subsidy
eliminated
2000s
• Policies
focus
on
doubling
storage
silos
• Aempted
increase
in
domes;c
produc;on
• Reduc;on
in
imports
• Wheat
Shortages
• Overthrowing
of
Morsi
government
Source:
CGGC
based
on
Kherallha
et
al
2000,
Goldman
2013,
MacFarland
2013
Egypt’s
Wheat
Policy
Timeline

18. Mills
Production Processing Consumption
Storage
Inland Silos moved
to Ports
Mills Bakeries
Production Processing Consumption
Bakeries
9.5 million tons
2012: 6,000 farmers
1993: 34,000 farmers
Imports- Increasing 12.5 %/year
Importing 4 - 5 million tons
Small & Medium
Farms • Price fixing $0.27/loaf
• Food subsidy 0.24% of GDP
• Increase labor and flour costs
• About 25% of bakeries will go
out of business
• Up to 100% increase in bread
prices
• Bread rationing at 3
loaves
• Food subsidy 2% of
GDP
• Available bread $0.7/
loaf
Storage
Need for Modern
Silos
Small & Medium
Farms
2013
Saudi
Arabia
Wheat
Value
Chain
Vulnerabili;es
2013
Egyp;an
Wheat
Value
Chain
Vulnerabili;es
Red: Acute disruption
points in wheat GVC
Currency Reserves
Source: Oil
Currency Reserves
Source: Suez Canal & Tourism

19. Saudi
Arabian
Bojlenecks
Resource
Scarcity
Limited Capacity
Infrastructure
Deficit
Inputs Production Processing
Water
Land
Storage
Transport
19
Price
Controls
Marketing
Bakeries
Dependency
on
interna7onal
markets:
global
price
vola7lity
&
limited
feasibility
of
offshore
produc7on

20. Egyp7an
Bojlenecks
Resource
Scarcity
Market Access Infrastructure
Deficit
Lack
of
Transparency
Inputs Production Processing Marketing
Water
Seed
Fer7lizer
Aggregators
Diverted
U7liza7on
Lack
of
technology
Storage
Transport
Mills
Black
Market
Monitoring
Bread
Weight
20
Dependency
on
interna7onal
markets:
global
price
vola7lity,
access
to
foreign
currency,
&
trade
bans

21. Food
Security
Egypt
Saudi
Arabia
Food
Availability
Wheat
Imports
Domes7c
Produc7on
Offshore
Produc7on
Food
Security
Strategy
2000
and
2014
High
Low
Moderate
=2000
=2013
21

22. Next
Steps
• Research:
– Black
Sea
Wheat
GVC:
Russia,
Ukraine
&
Kazakhstan
– MENA
Corn
GVC
– Food
security
in
Maghreb
countries
• Working
Papers:
– Food
Security
and
Wheat
Value
Chains
in
MENA
– Shising
Governance
Structures
in
the
Wheat
Value
Chain:
Implica7ons
for
Food
Security
in
the
Middle
East
and
North
Africa
– Egypt
Case
Study
22

23. Ques7ons?
Ghada
Ahmed
ghada.ahmed@duke.edu
Danny
Hamrick
danny.hamrick@duke.edu