1. Setting priorities for food security in the Arab
world ESCWA
Early results of an international collaboration
Nadim Khouri, ESCWA
Conference
Food Secure Arab World, A roadmap for policy and research
IFPRI-UNESCWA
Beirut, February 2012

2. Outline: Early results of a growing
collaboration
 A three-pronged food security strategy for the Arab
states region;
 Preliminary findings with immediate policy
implications:
 Safety nets
 Agriculture productivity
 Improved markets and financing;
 Agenda for further policy research and
implementation for now and the future.

3. Agricultural Research Corporation Sudan; American University of Beirut; Economic and Social Commission for Western Asia;
International Center for Agricultural Research in the Dry Areas-Jordan; International Center for Agricultural Research in the Dry
Areas-Syria; International Institute for Environment and Development; International Fund for Agricultural Development;
International Food Policy Research Institute; Food and Agriculture Organization; University of California Davis; University of
California Berkeley; University of Naples Federico II; University of Jordan; Virginia Polytechnic and State University; World Bank

4. High import dependency of Arab
Countries

5. Food prices – World and MENA region
Source: World Bank, 2010/11 data from the Middle East and
North Africa Region

6. Net trade in food
Vulnerable countries with high cereal import
dependency and large fiscal deficit: Comoros, Djibouti,
Jordan, Lebanon, Morocco, Palestine, Somalia, Tunisia,
Yemen;
Less dependent countries but fiscally strained: Syria,
Sudan and Egypt;
Dependent but fiscally sound: Bahrain, Qatar, UAE,
Kuwait, Libya, Algeria, Saudi Arabia, Iraq, Oman
Sources: Adapted from “Improving food security in Arab Countries”’, WB, FAO and IFAD 2009

7. Percent of arable land and permanent crops

8. Conflict affected countries and food
security
Source: ESCWA

9. Food security risk Matrix – Arab region
10
Syria
Surplus
Mauritania
5
Less import dependent, fiscally Least vulnerable
strained
Food balance (%GDP)
0
QUANTITY RISK
Tunisia
Morocco
Egypt Sudan Saudi Arabia
-5 Kuwait
Lebanon Jordan
Djibouti
-10
Yemen
Deficit
Comoros
Import dependent, but fiscally sound
Most vulnerable
-15
-15 -10 -5 0 5 10 15 20 25 30
Deficit Fiscal balance (% GDP)
PRICE RISK Surplus
Source: ESCWA calculation based on International, Monetary Fund, WEO, WB, Food price forecasts and WDI

10. Food security risks and vulnerabilities
in the Arab Region
Change in poverty 1990-2010
 Heavy dependence on imports =>
6
vulnerable to international food
commodity price shocks
Average growth rate of GDP between 1990
Lebanon
Jordan  Growing population higher than
Yemen 5
Syria
Tunisisa the world rate, particularly in rural
Egypt
areas
4
Morocco  Child malnutrition and youth
unemployment rise despite GDP
and 2010
Mauritania
3 growth and poverty reduction
Algeria
 Limited investment in agricultural
Comoros
2 productivity
Djibouti  Regional political unrests
1  Volatility of petroleum prices and
depletion of natural resources in
0 the region (especially water)
-1.5 -1 -0.5 0 0.5
Annualized change in poverty
1 1.5  Concentration of the poor in rural
areas
 Poor transport/storage
infrastructure
Source: World Bank, UNSD, compiled by ESCWA

11. Policies and programs that were used to address the
recent price shocks in Arab countries
Programs use
categorical targeting
approaches, and are not
limited to the poor.
Most cash-transfer
programs are small
(<1% of GDP).
Difficult to remove or
scale back.
In the wake of crisis,
governments are
expected to reduce
food subsidies in light
of pressures to expand
public expenditures to
stimulate the economy.

12. What should Arab countries do?
A proposed three-pillar strategy to address food security
includes:
1. Strengthening safety nets, family planning services and
education to cope with rising consumption;
2. Enhancing agricultural productivity through optimization of
investments to increase productivity and profitability;
3. Reducing exposure to market volatility, enhancing rural
livelihoods through cost-effective investments.
Source: “Improving food security in Arab Countries”’, WB, FAO and IFAD, 2009

13. Illustration of possible outcome of the
three pillar strategy
• Management of overall consumption levels reduce quantity and price risks;
• Increasing domestic production reduce quantity risks;
• Smoothing exposure to market volatility by better management of imports reduce
price risks.

14. Specific Policies, programs and
investments
1. Strengthening safety nets
2. Enhancing agricultural productivity
3. Reducing exposure to market volatility

15. 1. Strengthening safety nets
What types of safety nets - to protect small farmers and the poor?
Most effective safety-net: increase the productive capacity of rural communities
by improving their access to improved farming technologies and invest in skills and
education of people from rural areas.
Cash transfers to most vulnerable;
Safety nets need to target rural poor;
Most favorable programs are: cash transfers, followed by food stamps or other
near-cash assistance;
Least desirable options: direct subsidies and food distribution.
Sources: “Improving food security in Arab Countries”’, WB, FAO and IFAD, 2009
“What types of safety nets would be most efficient and effective for protecting small farmer and the poor against volatile food prices?” A. Alwang et al, 2010

16. 2. Enhancing agricultural productivity
2007/2008 international price shocks were translated into domestic price
shocks
Investments in research, rural finance
and infrastructure
Better management of existing water
resources through water harvesting and
supplementary irrigation
Grass-roots farmer led R&D
Knowledge dissemination to small
farmers
Access for private firms to public funds
on competitive basis
Source: “Improving food security in Arab Countries”’, WB, FAO and IFAD, 2009
“Farmers’ response to soaring food prices in the Arab Region”, I. El-Dukheri et al, 2010

17. 2. Enhancing agricultural productivity
Elasticity of farmer’s response to increased food prices
Source: “Farmers’ response to soaring food prices in the Arab Region”, I. El-Dukheri et al, 2010

18. 2. Enhancing agricultural productivity
Research and
infrastructure
investment (esp. in
irrigation)
supported by
appropriate
policies and
institutions, could
increase per capita
calorie availability
by 35% in 2050 –
MENA region
Source: “ The future role of agriculture in the Arab region’s food security” Sulser et al. 2011

19. 2. Enhancing agricultural productivity
The cost of self-sufficiency: an extreme modeling exercise
At current yield levels, Morocco is capable of achieving 85% self-sufficiency in cereals.
This would require land to be
diverted from high value crops
HVCs, with opportunity cost USD
1.03 billion in gross revenue.
The absolute value of the Value
Tradeoff Elasticity (VTE) is increasing
as the proportion of land in cereals
increases.
The land set aside for cereals is of
increasingly high potential for HVCs
– self sufficiency in cereals will be
very costly.
Source: “ Modeling the limitations and implicit costs of cereal self-
sufficiency-the case of Morocce” Magnan et al. 2010

20. 2. Enhancing agricultural productivity
The unmet potential of rainfed agriculture
 Greater investment in
research and extension
 Encouragement of private
sector participation
 Creating policies to encourage
technology adoption, market
participation and more
sustainable use of natural
resources by smallholder
farmers
Source: “ The potential of small-scale rainfed agriculture to strengthen food security in Arab Countries”,Haddad et al. 2011

21. 3. Reducing exposure to market volatility
Foreign land acquisitions
Principles for responsible
agricultural investments:
1.Respect for land and resource
rights
2. Food security and rural
development
3. Transparency, good governance
and enabling environment
4. Consultation and participation
5. Economic viability and
responsible agro-enterprise
investing
6. Social sustainability
7. Environmental sustainability
Source: “International investment in developing country agriculture”, D. Hallam, 2010

22. 3. Reducing exposure to market volatility
The role of storage National Strategic
Reserves
Regional or pan-Arab
Reserve
Legislative and
organizational changes
in national
procurement rules
Employ financial risk-
hedging instruments;
Source: USDA for stock-to-use ratio, World Bank for price index of wheat
Future contracts,
options contracts
Source: “Grain reserves and food security in the MENA region,”. Wright and Cafiero 2011
“Improving food security in Arab Countries”’, WB, FAO and IFAD, 2009,

23. 3. Reducing exposure to market volatility
Risk management through strategic purchases
 Stockpiling may be effective-but costly, driven by political considerations-
crowding out effect on private investments
 “Spot” purchasing proven and transparent – but vulnerable to market
volatilities
 Forward Contracts – strong capacity for stock management and demand
forecasting is required
 Financial “hedging” products, - may need to be modified to be Sharia-
compliant for use in the Arab region
Suitable for the Region: Bilateral and Multilateral
agreements with the major producers
Source: “Grain import dependency in the MENA region: risk management options” Sadler and Magnan 2011

24. Areas for policy research, definition,
implementation
 Assistance to transitions to Democracy:
 Smart cash transfer and other safety net interventions;
 Scaling up: More public funds to rural areas, increased agricultural
productivity, local markets promotion, infrastructure—a race with “ashaeriya”;
 Assistance to Somalia, Yemen, others;
 Longer Term—but we need to start immediately:
 Human resources: women, capacity building, attracting innovators;
 Evaluation of the 2009 LAS pan-Arab investment program for food security;
 More lessons from on-the-ground successes in land, water, fertilizer
management and rainfed agriculture and adaptation to climate change;
 Innovative models for equitable large (and small…) scale investments in food
production between Arab countries;
 Intensify biotechnology advances in improving food supply (not necessarily
GMOs);
 Studies on integration of the agricultural markets of the Arab region (a
common agricultural policy?)