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Food security threats escalate in Arab nations due to Russia’s withdrawal from a grain agreement and India banning the export of white rice.
This article was translated from Arabic to English
Growing concerns over the world’s food supply, particularly in relation to staple crops like wheat and rice, have been made worse by recent political and economic developments. Several Arab countries, notably Tunisia, Lebanon, Egypt, and Sudan, are expected to suffer grave effects as a result of this crisis, including a failure to secure adequate food supplies.
These nations are particularly vulnerable due to their difficulty acquiring basic goods. The situation is made worse by the increasing cost of imported foods, which will undoubtedly exacerbate the protracted financial and monetary crises these countries have been facing for years.
Wheat supply crisis
In July 2023, Russia unexpectedly announced that it was leaving the “Black Sea Grain Transportation Initiative,” sending the world’s wheat markets into a tailspin. The initiative, which was endorsed by Russia, Ukraine, and the UN in July 2022, was essential in allowing Ukraine to resume food exports. It opened up the Black Sea, which Russia had previously subdued by its military campaign, as a secure route for humanitarian aid. In return for granting these facilities, Western trade sanctions had excluded Russian food exports, as they were linked to Russia’s war with Ukraine.
Russia’s withdrawal from the initiative raised concerns over the safety and security of food shipments from Ukrainian ports to international markets. Unfortunately, these concerns have already materialized, as Russia has begun targeting the Ukrainian port of Odessa and its grain storage facilities in the aftermath. Due to this strong approach, the exemptions given to Russian food exports that allowed their export notwithstanding the sanctions imposed on Russia will be revoked.
The implications of these developments on a global scale cannot be underestimated. Prior to the outbreak of war between Ukraine and Russia, the two countries together supplied approximately one-third of the world’s wheat needs. Despite the ongoing conflict, Ukraine remains a significant provider of grain imports to countries in eastern and southern Africa, which are already grappling with the effects of drought and reduced agricultural yields.
It is important to note that wheat and corn accounted for 78 per cent of Ukrainian agricultural crops exported to the international market, facilitated by the “Black Sea Grain Transportation Initiative.” The joint coordination center of the initiative, comprising representatives from Russia, Ukraine, the United Nations and Turkiye, reported that 27 per cent of the grain shipments exported under the initiative were directed to low- and middle-income countries, with notable destinations being Egypt, Lebanon, Sudan, Iran and Somalia.
Subsequently, Russia’s withdrawal from the initiative resulted in a significant impact on international food markets, leading to a loss of secured grain supplies for an entire year. This development directly contributed to a 17 per cent increase in wheat prices by July 26, 2023, compared to the beginning of the same month.
Furthermore, the World Food Program faces challenges as it lost a primary source of low-cost wheat from Ukraine which it relied upon to support humanitarian emergencies in Yemen, the Horn of Africa and Afghanistan.
Currently, all available data suggests that the repercussions of Russia’s withdrawal from the grain agreement may persist for months. This situation coincides with Russian President Vladimir Putin’s attempts to leverage this issue as a means to pressure Western countries into lifting more sanctions imposed on Russia.
Meanwhile, Turkish President Recep Tayyip Erdogan’s influence in mediating with Putin to revive or extend the agreement, as seen in previous stages, has diminished following Turkiye‘s agreement to Sweden’s accession to NATO and decisions deemed favorable to Ukraine, as perceived by Moscow.
Indian rice export ban shock
India has long held the title of the largest exporter of rice globally, with its farms supplying more than 40 per cent of the world market’s demand for white and basmati rice.
However, in a surprising move, India recently announced an immediate ban on the export of white rice from the country, following Russia’s withdrawal from a grain agreement. This decision has sent shockwaves through the global rice supplies, compounding the earlier impact of Russia’s wheat supply shock.
This decision came in an attempt to reduce the prices of rice in the local Indian market after it increased by 11.5 per cent during the past year and by 3 per cent in the last month. The local increase in rice prices is a result of climate change repercussions and declining production rates due to a drought that affected vast areas of India. The figures indicate that India exported about 22 million tons of rice last year, half of which was of the white rice variety, which is now banned from export. This indicates the expected decline in the global rice supply.
One of the most concerning aspects of the ban is that it specifically targets white rice, which many African countries heavily rely on due to its affordability compared to the higher-priced Basmati rice. As a result, several African nations will be faced with the challenge of seeking alternative, more expensive rice sources.
In the Arab region, Egypt and Sudan are particularly dependent on imported white Indian rice, making them vulnerable to the impact of this ban. Conversely, Gulf countries will not be as affected since they primarily rely on importing Indian Basmati rice, which is not subject to the export ban.
The implications for Arab food security
These developments pose significant challenges to food security in Arab countries. A notable example is Lebanon, which has faced difficulties since 2022 when it relied on a $150 million loan from the World Bank to ensure the import of wheat. This loan was necessary due to the decline in the central bank’s reserves, which disrupted wheat supplies and led to the halt of bread production in various regions of the country.
Due to the cancellation of the grain agreement, Lebanon is expected to face challenges in meeting its local market’s wheat needs. The surge in wheat prices will cause the value of the World Bank loan to deplete at a faster rate than anticipated. The main issue for Lebanon is its heavy reliance on Ukraine, which currently supplies 80 per cent of its wheat requirements. With the decrease in Ukrainian grain exports following the agreement cancellation, the Lebanese government will be compelled to explore alternative sources. Turning to distant markets to secure wheat will drive up the cost of this commodity, further exacerbating the risks to Lebanese food security.
Similarly, Egypt finds itself in a fragile position amidst these developments. In May 2023, Egypt struggled to pay for its wheat imports due to a scarcity of foreign currency reserves, raising concerns about a potential shortage of wheat. To tackle this problem, Egypt sought a $400 million loan from the United Arab Emirates in July 2023 to finance wheat imports.
As global wheat prices continue to rise, Egypt’s financing issues concerning wheat procurement are expected to multiply. This will likely force the Egyptian government to reduce the support it provides for bread prices in the local market.
Consequently, the burden on vulnerable social groups will double, as subsidies on such a basic and essential commodity cannot be easily done away with. The risk of social unrest will increase significantly, potentially leading to political instability and threatening the government’s stability, especially under the leadership of President Abdel Fattah el-Sisi.
Tunisia has been grappling with a severe drought crisis for years, leading to a dangerous decline in agricultural crops and an increased reliance on imports to meet basic food needs. This crisis has been compounded by a serious monetary and financial downturn, putting the country’s food supply chains at risk. In 2022, Tunisia witnessed its worst wheat season in history, resulting in the need to secure a $150 million loan from the World Bank to import grain from abroad.
Given these challenges, Tunisia now faces an escalating financing crisis due to the global rise in wheat and rice prices. The Saied government’s negotiations with the International Monetary Fund have reached a deadlock, and the country has been unable to secure a loan from the Fund.
As a consequence, the Tunisian government may be compelled to make further concessions to the fund during ongoing negotiations, potentially involving the approval of some socially painful conditions, such as lifting subsidies on basic necessities and freezing wages.
Meanwhile, Sudan appears to be the most vulnerable country in the Arab region concerning food security. Approximately 11.7 million Sudanese, about a quarter of the population, are currently suffering from acute hunger due to a one-third decline in agricultural crops in 2022, primarily caused by droughts.
Sudan has faced a critical wheat import crisis following the outbreak of the Ukrainian war, as it heavily relied on importing grains from the Black Sea region. The situation is expected to worsen with Russia’s withdrawal from the grain agreement. Additionally, Sudan will have to contend with the decision to ban the export of white Indian rice, which was previously relied upon to meet the country’s imported rice needs.
In the case of Sudan, the current situation appears deeply tragic due to the ongoing war between the Sudanese army and the Rapid Support Forces, which has been gradually escalating into a civil war with regional and international implications.
Despite these turbulent circumstances, there seems to be a lack of coordinated official efforts to address the consequences of the food supply crisis and establish a minimum level of social protection nets. As a result, dealing with the repercussions of this crisis falls primarily on the shoulders of humanitarian and international organizations.
In conclusion, the global food crises will undoubtedly have severe repercussions on various parts of the Arab region, and it is imperative for governments to acknowledge and prioritize this issue in the future. Public policies must focus on short-term remedies that aim to secure alternative and cost-effective supply lines, mitigating the impact of the scarcity of rice and wheat in the global markets. These measures should include emergency aid programs designed to assist the most vulnerable groups in overcoming the challenges of this stage.
For the long term, there is no alternative to developing comprehensive strategies to ensure food security. This involves strengthening local agricultural sectors and providing support to help these sectors cope with the effects of drought and climate change.