51791 March 2009 . Number 3 IMPROVING FOOD SECURITY IN ARAB COUNTRIES Julian Lampietti, Sean Michaels, Nick Magnan 1 · Declining growth in agricultural productivity; Introduction: Arab countries, more so than · Thin international cereal markets and countries in any other region, are extremely low stock levels which increase price vulnerable to food-price shocks. Furthermore, sensitivity; current projections indicate that they will be · Climate change, which results in unable to meet demand with production, which unstable global production; will steadily increase their vulnerability to food- · Biofuel subsidies that encourage shifting price shocks. There is therefore, a need to land away from food production; develop policies to improve food security for all · Potential decoupling of petroleum and Arab countries. food commodity prices. Reliance of Arab countries on food imports: There are also regional factors which may not The graph below illustrates that Arab countries affect world prices but do contribute to are the largest net importers of cereal in the increasing food security risks within the region. world. First, factors such as high population and income growth and rapid urbanization that increase the demand for food are higher in the region than the world at large. Second, key food production inputs- water and land- are more constrained in the region than elsewhere. Projections indicate that vulnerability will increase: Arab countries are more vulnerable to global food-price shocks than countries in other regions and projections indicate that their vulnerability will increase in the years to come. While Arab countries are extremely reliant on Dependency on Cereal Imports will Increase cereal imports, they can more effectively asses their exposure to food security risks and employ appropriate strategies to address demand, increase production, and mitigate risk. Factors that heighten Arab countries' vulnerability to food-price shocks: A combination of global and regional factors is responsible for heightening Arab countries' vulnerability to food-price shocks. The following global factors critically affect the availability of food and the region's access to it: 1 Julian Lampietti, Lead Specialist, MNSSD, Sean Michaels, Consultant, MNSSD, Nick Magnan, Consultant, MNSSD. Improving food security: Improving food security market volatility. These three pillars will emerge as requires a three pillar approach: as seen in the table key factors in improving food security. below, pillar one consists of strengthening safety nets, while providing people with access to family Countries need to consider the way in which they planning services, and promoting education; pillar can combine these three pillars to create a two centers around the need to enhance domestic comprehensive and integrated strategy. food sources; and pillar three consists of managing Address demand Manage market volatility 160,000 '000 MT of cereal 120,000 (incl. feed) 80,000 40,000 Increase supply 0 2000 2010 2020 2030 Note: Dashed lines were generated by decreasing demand by an additional 0.5 percent each year and increasing production by one percent each year. These lines are purely demonstrative and do not come from the model. Source: Authors. Adapted from IFPRI, 2008. Strategy Matrix- Priorities for Arab Countries: The following base priorities allow Arab countries to tailor viable strategies to deal with their price and quantity risks. 2007 Fiscal Balances (percentage of GDP) and 2005 Cereal Balances (metric tons) High · First priority: Advise on the use of and · First priority: Advise on investments in provide financial instruments to hedge risk foreign infrastructure · Second priority: Invest in R&D and rural · Second priority: Advise on the use of and Cereal Import Dependency livelihoods provide financial instruments to hedge risk Djibouti Morocco Algeria Kuwait Qatar Jordan Tunisia Bahrain Libya Saudi Arabia Lebanon Yemen Iraq Oman UAE · First priority: Invest in R&D and rural livelihoods · Second priority: Advise on the use of and provide financial instruments to hedge risk Egypt Sudan Low Syria 0 Deficit Surplus Fiscal Balance March 2009 · Number 3 · 2 Steps toward implementation: Given that Last, strategies for addressing demand, Arab countries are extremely vulnerable to increasing productivity and profitability, and food-price shocks and that current projections managing risk all have budgetary indicate their vulnerability will steadily consequences that individual MNA countries increase; there are some critical steps to be need to consider when mapping out a implemented as mitigation measures. First, comprehensive food security strategy the countries will need to undertake a long- term national food balance projection 2 . Contact MNA K&L: Second, and as noted before, the countries will Nadir Mohammed, Director, MNA Operational also need to explore actions that strengthen Core Services Unit: David Steel, Manager, MNA Development safety nets, provide family planning services, Effectiveness Unit: and promote education. Third, they will need to identify potential investments that increase Regional Quick Notes Team: domestic productivity to narrow the trade gap Omer Karasapan, Dina El-Naggar, Roby Fields, and that increase farm profitability to improve Najat Yamouri, and Aliya Jalloh food security at the household level. Fourth, Tel #: (202) 473 8177 countries will also have to determine their tolerance to cereal market volatility and The MNA Quick Notes are intended to summarize employ risk mitigation strategies that ensure lessons learned from MNA and other Bank Knowledge and Learning activities. The Notes do not they are not overexposed. necessarily reflect the views of the World Bank, its board or its member countries. 2 A food balance sheet presents a comprehensive picture of the pattern of a country's food supply during a reference period. The food balance sheet shows for each food item - i.e. each primary commodity and a number of processed commodities potentially available for human consumption - the sources of supply and its utilization (FAO). March 2009 · Number 3 · 3