THE GRAIN CHAIN

Authors: Julian Lampietti, Michelle Battat, Arnold de Hartog,

Dana Erekat, Sean Michaels, Donald Larson

Food Security &

Managing Wheat Imports in Arab Countries

Presented by Maurice Saade, Sr. Agriculture Economist, The World Bank

Beirut, February 6, 2012

As a region, Arab countries are the most dependent on

imported grain

2

Net Exports of Grain (Trillion Calories), by Region, 2010

+24

-204

+56

Arab

Countries

(56%) Rest of Africa

(13%)

Oceania

Asia

(6%)

Former

Soviet Union

Central and South

America

North America

Europe +318

+60

-228

-62

+58

+

-

Net Exporter

Net Importer

Dependency

Ratio (%)

Source: Authors.

Context

The 3 main pillars for improving food security in Arab countries.

3

Note: Data based on a model that generated illustrative projections for Arab countries (including Sudan)

Source: Adapted from IFPRI, 2008

Volu

me o

f G

rain

s (M

illion M

T)

1. Address Demand

2. Enhance Supply

3. Manage Exposure to Import

Risks

Wheat Import Supply Chain (WISC): The analysis covers the supply chain from the unloading port to bulk storage at the

flour mill

4

BENCHMARKING EXERCISE:

•10 Arab countries (Bahrain, Egypt, Jordan, Lebanon, Morocco, Oman, Qatar, Saudi,

Tunisia, Yemen)

•2 benchmarks (Netherlands & South Korea)

•Objective is to…

• identify bottlenecks and provide recommendations for improvement

• identify opportunities for regional cooperation

• identify regional best practices (lessons learned from neighbors, or benchmarks)

Some Arab countries import wheat from a diverse range

of sources, while others do not

5

2009 Wheat Imports by Origin for Selected Corridors

0%

20%

40%

60%

80%

100%

EU-27 Black Sea Americas Australia Other

Share

of

Whea

t im

port

s by O

rigin

Notes: Wheat imports from Turkey are grouped in the Black Sea category.

Source: Authors.

Benchmarking

6

Average 2009 WISC Costs (Total: $40/mt)

29% ($12)

12% ($5)

22% ($9)

36% ($15)

Port Logistics

Storage

Transport to Inland Silos & Mills

WISC Management

Source: Authors.

Note: Costs are weighted averages for the ten participating Arab countries. Percentages may not add to 100 and values may not add to totals due to rounding.

Logistics efficiency was measured using two metrics: cost

and time

Benchmarking

WISC Costs in Arab countries in 2009 were up to four

times that of the Netherlands

7

10

8

5 5

3

1 1

3 3 2 2

1

3

3

5

3

2

3 4

1 0

0 1

0

0

2

4

6

8

10

12

14

Unloading Time Waiting Time

8

Source: Authors.

Vess

el W

aitin

g a

nd U

nlo

adin

g T

imes

(Indexed t

o the N

eth

erl

ands)

Benchmark Country

Bottlenecks at the port can significantly increase WISC

costs and transit times

Benchmarking

9

Source: Authors. AgWeb. http://www.agweb.com/what-a-day/, accessed October 4, 2011.

0% 0% 0% 0% 2%

6% 7% 10%

12%

21%

42%

51%

0%

10%

20%

30%

40%

50%

60%

Perc

ent

of

WIS

C C

ost

s

2009 Inland Transport Costs as a Share of Total WISC Costs

Efficient and reliable inland transportation is critical to

ensuring delivery of wheat

Benchmarking

Key messages 10

Arab countries are highly dependent on cereal imports, particularly wheat, and are vulnerable to high and volatile international prices.

Supply disruptions can threaten national security, suggesting that supply chains must be efficient and reliable.

Investments in wheat-import supply chains are critical to reducing Arab countries exposure to import price and supply risks.

Arab countries import ~40 MMT/year & $40/mt is $1.6 BN per year

Saving 10% of supply chain costs can help increase strategic reserves by one month

Strategic reserves can mitigate import risks for Arab countries. Increasing strategic reserves involves key tradeoffs that must be addressed when making policy decisions.

Improving the performance of the Wheat-Import Supply Chain is critical for food security in Arab Countries and needs to be an integral part in any food security strategy, in addition to enhancing domestic supplies and a better management of demand.