Author: Margherita Camurri - Junior Researcher G.E.O. Politics
Abstract
Most countries of the Middle East and North Africa (MENA) region face a structural vulnerability which stems from their dependency on global food imports. As a matter of fact, the region’s inability to become food self-sufficient due to its low agricultural productivity, coupled with the rising regional demand, led to the creation of a wide gap between domestic food production and consumption. In this context, imports became key to meet the food needs of the region’s population. However, at the same time, this import dependency became a source of vulnerability because it exposed them to the issue of food price volatility.
This paper outlines the implications of MENA’s food imports dependency, firstly explaining why food price volatility represents a problematic issue, and secondly investigating the causes and the consequences of the region’s inherent dependence on foreign food markets. Lastly, the paper attempts to highlight the current nature of this issue, by describing the impacts of the Ukrainian Crisis on MENA countries’ domestic food markets and food security.
Introduction
At present times, the world’s population, especially in less-developed countries, is becoming increasingly reliant on global and regional markets for food supply: for instance, from 1961 to 2009, the dependence on imports of cereals in the global market increased by 77% (Brinkman & Hendrix, 2011). This is particularly true for the Middle East and North Africa (MENA), whose agricultural productivity is too low to meet the food needs of an increasingly dense population. As a matter of fact, the region’s inability to become food self-sufficient, coupled with the rising regional demand, led to the creation of a wide gap between domestic food production and consumption that has been eventually covered by imports. Notably, the MENA region started to rely heavily on foreign markets due to its necessity to address the alarming levels of food insecurity that hit its population: estimates show that over 55 million people are currently undernourished (Belhaj and Soliman, 2021). However, while food imports have allowed MENA countries to meet their populations’ daily food demand, the structural dependence on the global food market has also turned into a huge source of vulnerability.
The severity of the issue became particularly evident during the global food crisis of 2007-2008, when global prices drastically skyrocketed, directly impacting large importers’ household and government budgets. Indeed, global food price volatility proved to have significant impacts on large importers of food, creating market uncertainty and affecting the food security of their populations, especially the most vulnerable households (Hajkowicz, Negra, Barnett, et al., 2012). At present times, global food prices are still subjected to significant fluctuations, and thereby continue to affect the food security of the MENA region, which remains largely dependent on food imports. The current nature of this issue was indeed recently demonstrated by the impacts of the Ukraine Crisis on large food importers. In 2021, in the MENA region, inflation had already surged to 14.8%. After the Russian invasion of Ukraine, food prices increased by a further 34% (IMF, 2022). This new increase in food prices dramatically hit several MENA countries, which now face new challenges in meeting the food needs of their already vulnerable populations.
Thus, this paper outlines the implications of MENA’s food imports dependency, firstly explaining why food price volatility represents a serious issue, and secondly investigating the causes and the consequences of the region’s inherent dependence on foreign food markets. Lastly, the paper highlights the current nature of this issue, by describing the impacts of the Ukrainian Crisis on MENA countries’ domestic food markets and food security.
- Understanding the Issue of Food Price Volatility
One of the main issues related to the global food market is price volatility, defined as “the extent to which food prices change over time” (Hajkowicz, Negra, Barnett, et al., 2012). Rapid and frequent fluctuations, as well as periods of excessively high or low prices, are indeed usually associated with crises, as they fuel uncertainty in farmers, traders, retailers, consumers and governments. In particular, on the supply side, price volatility leads to lower investments and lower risk attitudes in production. On the other hand, high and fluctuating prices negatively affect consumers by reducing or making more uncertain their access to food. This is particularly true for poor and vulnerable households, whose incomes do not adjust with inflation and who usually do not have the means to adapt their consumption patterns, so that price instability ends up directly affecting their food security.
Global food price volatility is thus a concerning issue because, most of the time, changes in food prices have a direct impact on food security, and thus risk driving a spike in the world’s hunger and malnutrition levels (Kalkuhl, von Braun & Torero, 2016). Prices are indeed key variables to assess food security risks: their changes significantly affect both producers’ profits (and thus their incentive to produce) and consumers’ food costs (thus their purchasing power). The international community, however, started to look at the issue of food price volatility with serious concern only after the global crises of 2007-2008, when the world’s food prices reached an historic peak, driving up inflation and sparking riots in 48 countries. In fact, in 2007-2008, the nominal prices of almost all food commodities rose by over 50%, hindering the purchasing power of millions of people, and thus fomenting social discontent (Brinkman & Hendrix, 2011).
World’s food prices are inherently volatile because the demand for food tends to have a low elasticity, and small changes in supply can largely affect prices (Brinkman & Hendrix, 2011). In particular, there are a number of factors that can drive a surge in food prices. On the demand side, rising incomes are often translated into changing patterns of food consumption, while demographic growth undoubtedly leads to higher demand. On the supply side, one must consider the possibility of lower investments in agriculture, higher production and transport costs, and weather shocks (such as drought or floods). All these factors have the effect of driving the market to a situation of disequilibrium in which the overall volume of available food is not able to meet the total demand. This unbalance, in turns, tends to push food prices up, which risks having negative effects on the food security especially of vulnerable and poor populations (Hajkowicz, Negra, Barnett, et al., 2012).
At the same time, however, it is important to stress that higher global prices do not necessarily translate into higher domestic prices. Whether they do, depends on a number of structural factors, such as: an economy’s dependence on food imports, the degree of market competitiveness, as well as a country’s choice of policy measures, including tariffs, quotas and government subsidies (WFP, 2009). Broadly speaking, fluctuations in the world’s food prices tend to affect more significantly fragile states and less developed countries. As a matter of fact, fragile or conflict-affected states often have less competitive markets and higher transportation costs, due to a lack of proper infrastructures and investments. Moreover, they tend to be highly reliant on food imports and their governments usually have less means to mitigate the impacts of price volatility on their population (Brinkman & Hendrix, 2011). For all these reasons, fragile regions, such as MENA, are more exposed to food security risks driven by surges in global food prices.
- MENA Countries’ Structural Dependency on Food Imports
The MENA’s food market is characterized by a structural food import dependency: today, almost half of the region’s food is imported. As a matter of fact, starting from the 1960s, while the regional food demand started to grow – mainly as a result of the rapid demographic growth, but also of a significant nutritional transition –, the domestic supply proved to be unable to fulfill the total consumption levels. In this way, the region’s inability to become food self-sufficient, coupled with the rising levels of regional demand, soon created a wide gap between domestic food production and consumption that was eventually covered by imports. Between the 1960s and the end of the 2000s, the region saw its food imports dependence grow from around 10% to around 50% (Mouël et al., 2016). Still at present times, if some countries, such as Israel and Turkey, are largely self-sufficient, most MENA countries rely heavily on foreign markets to meet their daily food demand. This is especially true for cereals. Indeed, although the region hosts only 4% of the global population, MENA countries annually make up for a third of the world’s total purchases of cereals (World Bank, 2021).
MENA countries’ dependency on food imports was mainly a consequence of an economic policy strategy that dates back to the last decades of the 20th century. At that time, many developing countries, faced with scarce agricultural potential – due for instance to serious weather and geographical constraints – and with alarming levels of food insecurity, decided to decrease their investments in agricultural development, and to lean on foreign food markets. Since, at that time, the depreciation of the dollar had significantly reduced import costs, this policy choice was deemed to be a rational approach to favor their development (Dupont & Thirlwell, 2011).
However, this strategy soon proved to have negative effects too. Indeed, the heavy dependence of many MENA countries on food imports ultimately made them highly vulnerable to global price volatility, which, in the past, was caused for instance by restrictive trade policies, financial speculation, and weather shocks or conflict outbreak in exporting countries. This is a concerning issue because, although there are significant variations in each country’s ability to mitigate the impacts of global price fluctuations on the domestic market, price instability always poses a threat to food security. As a matter of fact, even when global food price volatility does not directly lead to an increase in local prices, uncertainty can still negatively affect the equilibrium of domestic markets (Climate Diplomacy, 2022).
- Reasons Behind MENA Region’s Dependency on Food Imports
MENA countries’ inherent dependency on food imports stems from their low food production capabilities. This inability to become more self-sufficient is as consequence of both purely natural constraints, dictated by the region’s geographical and climatic features, and of its agricultural underdevelopment, caused by governments’ policy choices, political instability, and the general lack of proper investments and infrastructures.
As far as natural constraints are concerned, MENA has the driest environment in the world, which makes the region largely unsuitable for agriculture. This is firstly due to its land constraints: in a majority of MENA countries, around one-third of land is agricultural land (cropland and pastures) and only 5% is arable, while the rest is either urban or dry desert. Furthermore, the region is characterized by a very low land productivity due to the severe soil degradation caused by wind and water erosion. Secondly, the MENA is the most water-stressed region in the world: MENA countries can rely on only 0.5% of the total world’s fresh water. Several countries indeed rank below the widely accepted water scarcity criteria of an annual 1000 m3 of water per capita. Consequently, agriculture largely depends on rain precipitation, which however is becoming increasingly uncertain due to the effects of climate change (OECD & FAO, 2018).
As a matter of fact, the already adverse MENA’s natural environment has become even drier and unsuitable for agriculture due the impacts of global warming. Although the precise effects of climate change vary from country to country, in general, the data collected in recent years show that the entire MENA region has become hotter, and precipitation has progressively diminished, making episodes of drought more frequent. These trends are expected to escalate in the future, further affecting the potentiality of the region's agricultural sector. In several MENA countries, agricultural production is predicted to decrease by around 20% by the end of the century (Bucchignani et al., 2018).
At the same time, despite the agricultural sector being one of the pillars of MENA’s economies – employing around 70% of the rural population and constituting a key component of their GDP – the investments that have been devoted to its development have so far been unable to effectively increase food self-sufficiency. Indeed, most MENA countries were not capable of designing agricultural policies that took into account the natural constraints of the region, so they did not manage to improve their land productivity. Moreover, most governments did not devote sufficient efforts and resources to promote development and technological progress in the food sector. For instance, in North Africa, the reduction of public financial resources allocated to the sector, the progressive privatization process, and the increasing opening to external markets’ competition was made at the expense of small farms. Indeed, smaller farms – which dominate the regional agricultural sector accounting for 80% of the total production – remained characterized by a very low productivity (UNECA, 2012).
In some states, investments in agricultural development have also been hindered by countries’ decisions to devote a larger share of their budget on military spending. In this respect, another factor that has largely impacted some MENA countries’ ability to become more self-sufficient is both domestic and inter-state violence. As a matter of fact, conflicts affect a country’s ability to produce, trade and access food by damaging infrastructures and polluting arable lands. In some cases, food itself is used as a tool of terror, or becomes an incidental or intentional target of militants intended to inflict losses on the population (Brinkman & Hendrix, 2011).
- The Consequences of MENA Food Price Vulnerability
The vulnerability that stems out of MENA region’s dependence on food imports captured the attention of the international community especially during the 2007-2008 global food crisis, when prices drastically rocketed, impacting importers countries’ households and governments’ budgets (OECD & FAO, 2018). At the household level, the experience of the global food crisis of 2007-2008 showed that the surge in food prices significantly hit the purchasing power of the poorest and the most vulnerable sectors of the population, degrading ood security. As a matter of fact, if the few households that were net sellers of food could benefit from higher prices, the majority of the MENA population was harmed. Notably, millions of people were pushed below the poverty line and were forced to shift to less-balanced diets (Gamal, 2009). On the other hand, at the government level, the prompt increase in food prices deepened net-importer countries' balance of payments by placing a heavy burden on public budgets (Martin & Ivanic, 2016).
Additionally, several scholars have pointed out that the uncertainty provoked by the 2007-2008 global food crisis has significantly contributed in fomenting social unrests and demonstrations in the MENA region. In this respect, it is interesting to explore the case of the Arab Spring. Indeed, after MENA’s food prices reached an historic peak in 2010, inflation was found to be a crucial aggravating factor in the onset of the Arab Spring revolutions. Indeed, the threat of food insecurity significantly contributed to exacerbating citizens’ social grievances, caused by decades of political corruption and economic instability (Climate Diplomacy, 2022).
In this way, the case of the Arab Spring illustrates the nexus that exists between food security, instability, and violence. Severe hunger and malnutrition are indeed widely recognized as multipliers of not only social and economic insecurity, but also of political instability. As a matter of fact, in several circumstances, food insecurity has contributed to fostering people’s discontent and sparking violent riots: after the 2007-2008 surge in global food prices, violent demonstrations were organized in 48 countries. Consequently, addressing the issue of food security of MENA countries – and thus the vulnerability that stems out of their dependency on food imports and global price volatility – is key to improving the stability of the region (Brinkman & Hendrix, 2011).
- A Current Issue: Impacts of the Ukrainian Crisis on the MENA region
Following the Russian invasion of Ukraine and the outbreak of the war, world’s food commodity prices surged to reach the highest levels ever registered since the 1990s. This is due to the fact that, at present times, Russia and Ukraine account for around a third of the global wheat and barley supply, so that large importers that depend on their markets for food are highly vulnerable to changes in their production patterns (ISPI, 2022). Notably, the FAO Food Price Index has registered a 12.6 % increase from February to March for a basket of commonly-traded food commodities. Furthermore, from February to March, the FAO Cereal Price Index was 17.1 % higher, while the FAO Vegetable Oil Price Index rose by 23.2% (FAO, 2022).
The impacts of the Ukraine Crisis were particularly acute in the MENA region which, due to its structural dependency on food imports, was drastically hit by the increase in food prices. After Russia’s invasion of Ukraine, the price of cooking oil has increased by 36% in Yemen and 39% in Syria, while the price of wheat flour has risen by 14% in Palestine, 15% in Libya and 47% in Lebanon (WFP, 2022). Moreover, although so far Russian imports of grain have not been sanctioned, large importers are facing numerous challenges in transferring payments to Russian companies and insuring ships. Another element that has contributed to the recent surge in food prices is the dependence of several MENA countries – such as Jordan, Yemen, Palestine, Lebanon and Tunisia – on imports of oil and gas. As a matter of fact, the war in Ukraine has also led to a sharp increase in the price of oil and gas, which in turn raised transport costs and further pushed up inflation levels (ICG, 2022).
This situation is creating new challenges to MENA governments for meeting the food needs of their already vulnerable populations. As a matter of fact, while some countries, like the Gulf Arab states, can rely on their food reserves to meet their populations’ demand, others, like Lebanon, have none of such reserves, which makes the prospect of shortages very real (ICG, 2022). Learning from the experience of the global food crisis of 2007-2008 and the Arab Spring, given the economic hardship and the aggravated levels of food insecurity, the outbreak of a new wave of social unrest is not implausible. As a matter of fact, it is important to consider that the new surge in prices caused by the war in Ukraine, if not adequately tackled by local governments, could serve as a catalyst for future demonstrations in the most fragile MENA states. For instance, people’s inability to afford food commodities and the lack of a proper government response, have already fostered anger and street protests in Iran and Sudan (Karam, 2022).
Conclusion
This paper has investigated the implications of MENA’s food import dependency, explaining why food price volatility represents an issue for the food security of millions of people, with the aim of stressing the urgency to take the necessary measures to address it. Moreover, by referring to the present impacts of the Ukraine Crisis as reference case study, the analysis has attempted to underline the current nature of this issue. As a matter of fact, even today, global food prices are still subjected to significant fluctuations, and thereby continue to affect the food security of the MENA region which, for its part – due to climate change, demographic growth, natural constraints and poor agricultural development – is still facing mounting challenges in relying on its own domestic market for food consumption.
The vulnerability of the MENA region that stems out of their reliance on food imports is expected to persist also in the future. As a matter of fact, firstly, under current trends, the already significant agricultural import dependence of most MENA countries is predicted to rise further by 2050 (Mouël et al., 2016). Secondly, food prices are expected to remain largely volatile in the coming years. Thirdly, global demographic growth and surging economies in emerging markets, together with the use of food grains for biofuels, and the effects of climate change, will probably continue to drive the demand for food higher (Brinkman & Hendrix, 2011). Consequently, it is key for MENA countries to adopt adequate measures that could improve their agricultural productivity, for instance by engaging in efforts to mitigate the impacts of climate change, reduce food waste and losses along the supply chain, or invest in technological advancement. Indeed, if the structural dependence of the MENA region on the global food markets is not reduced, the food security of millions of people will further deteriorate and poverty rates will sharply increase.
In a regional context marked by low food productivity, the uncertainty of the impacts of climate change and the rapid demographic growth, it is thus important to consider that food security should be addressed as a priority issue. This is particularly important if one considers how hunger and malnutrition can operate as multipliers of social, economic and political instability, fostering discontent and, in some cases, sparking violent demonstrations. From this point of view, tackling the issue of food security in MENA countries – and thus the vulnerability that stems out of their dependency on food imports and global price volatility – is key to improving the stability of the region (Brinkman & Hendrix, 2011).
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