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TRANSCRIPT
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
Duke University Food Working Group
February 4th, 2015
Agenda
• Who we are • GVC methodology • 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)
• Wheat value chain and food security in MENA • Egypt case study • Next steps
2
Who We Are
3
Agri-‐food Value Chains
Food
Security
Inclusive
Developm
ent
Workforce
Developm
ent
Nutri7
on
Environm
ent
4
The GVC Approach Top down – the global economy with a focus on lead firms and inter-‐firm networks, using varied typologies of industrial “governance”
Bo>om up – a focus on countries and regions, which are analyzed in terms of various trajectories of economic and social “upgrading” or “downgrading”
5
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 boZlenecks
Inputs Processing Marke7ng Produc7on
6
• 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
7
What does the literature tell us about Food Security in the Middle East and North Africa?
8
Impact of Food Price Increases on Trade Balance (2007-‐2008)
9
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 2Data not available Source: CGGC based on data from world Bank Development Indicators and Breisinger et al, 2010 10
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
11
What does the Wheat Global Value Chain Analysis add to Food Security Dialogues?
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
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
• Border transit 7mes
• Industry specific policies
Trade & Investment
Policy
• Public-‐private coordina7on
• Subsidies & price controls
• Monitoring & accountability
• Marke7ng
Ins@tu@onal Elements
Government Control
14
Egypt
Iran
Saudi Arabia
Syria
UAE
Inputs Farms Elevators Retail Mills
State Private Both Ownership characteris@cs:
Primary Ownership across Wheat GVC
15
ADM Bunge Cargill
Louis Dreyfus Glencore
Input Suppliers
Grain Farms
Grain Traders
Bulk Grain Buyers
Grain Millers Processors
Grain Facili7es, logis7cs & Terminals
Financial Services e.g. credit and deriva7ves
70-‐90% of grains traded interna7onally are managed by the ABCDs
Source: CGGC based on company reports, literature review & interviews
Lead Firm Capabili7es
16
Wheat GVC Governance in MENA
Capability Codifiability Complexity
Government Agencies
TNCs
Global traders drive the flow of wheat & are involved in most of the VC
Governments influence the chain through policy, grain standards, subsidies, marke7ng & trade but highly depend on traders
strong weak 17
How is the CGGC applying the GVC in country cases studies?
18
EGYPT CASE STUDY
Bread, Freedom and Social Jus@ce
19
2000s
2013
Mills
Production Processing Consumption
Storage 6 months
Mills
Bakeries
Production Processing Consumption
Bakeries
9.5 million tons
8 million tons
Imports 10 million tons
Importing 4 - 5 million tons
Small & Medium Farms • < $.01/ loaf (govt.
subsidized price) • No enforcement of
rationing at 7 loaves
• Bread rationing at 3 loaves
• 5.5 % price increase in wheat flour
• 2.3% price increase in bread
• Available bread $0.7/loaf
Storage <3 months
Small & Medium Farms
Red: Acute disruption points in wheat GVC
Currency Reserves $36 billion
Currency Reserves $18.9 billion
EGYPT GVC 2000s and 2013
20
Egyp7an BoZlenecks and Leakages
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
21
Egyp7an BoZlenecks and Leakages
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
22
Egyp7an Policy Response
Lack of Transparency
Marketing
Storage
Transport
Black Market
Monitoring
Bread Weight
23
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 – Shioing Governance Structures in the Wheat Value Chain: Implica7ons for Food Security in the Middle East and North Africa
– Egypt Case Study • 2015 Middle East Dialogue Conference in Washington DC
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