FEATURE: Middle East marks Eid holiday as food gets more expensive

The Middle East celebrates the holiday of Eid with food at the center of many gatherings, but as Russia’s war on Ukraine drives up the prices of all kinds of basic ingredients, the gatherings of this year will weigh heavily on the family budget and governments will nervously watch their savings.

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The Eid holiday marks the end of the fasting month of Ramadan for Muslims and is marked by family gatherings and large meals.

Prices for Russian wheat exported from the Black Sea soared 45.9% last year to $394/tonne as of April 29, according to Platts’ valuations of S&P Global Commodity Insights. Expensive wheat has led to higher prices for flour and bread.

Valuations for Argentina FOB Up River soybean oil have climbed 53.61% over the past 12 months to $1,864.67/mt, while FOB Black Sea Ukraine sunflower oil has gained 28, 75%. High cooking oil prices mean more expensive fried chicken and cookies.

Some of the countries most at risk in the Middle East and North Africa are Oman, Lebanon, Egypt, Libya and Tunisia, as they depend more on Russia and Ukraine for their food resources, according to Lee Bridgett, retail and manufacturing analyst at S&P. Global commodity outlook.

Egypt gets 50% of its grain and 75% of its wheat from Russia and Ukraine, Bridgett estimated. Lebanon has also become heavily dependent on wheat imports from Russia and Ukraine since the country’s economic crisis began in 2019 and the port explosion in 2020 destroyed some grain stocks, he noted.

To make matters worse, more and more countries are implementing export restrictions. Tunisia has banned fruit and vegetable exports, which could particularly hurt Libya, which is Tunisia’s biggest export market, he said.

“The question is how long this war will last, but as things stand food prices are going to rise even more certainly for the rest of the year,” Bridgett said. “It just depends on how bad the situation is. If it gets really bad and countries are dealing with their own crisis, I don’t know how much they can or will help each other.”

Farmers also face price shocks, with natural gas being a major component of fertilizers.

The food “crisis”

The UN’s World Food Program has called the food situation in the Middle East and North Africa just before Ramadan a “crisis” that has pushed people’s resilience to a “breaking point”. Global food prices were already at a record high in February at the start of the war in Ukraine, with vegetable oil prices rising as COVID-19 rules limited workers’ ability to harvest.

High food prices in 2011 led to the Arab Spring protests that toppled some of the region’s governments, and preventing a repeat is a priority for leaders.

Wealthier nations — especially oil and gas exporters who have taken advantage of soaring energy prices and allied themselves with Russia in the OPEC+ coalition — have been stockpiling food. But overall, the Middle East and North Africa remains vulnerable, due to its heavy reliance on imports from as far away as Australia.

For now, global supplies are adequate, said Monika Tothova, an economist at the UN’s Food and Agriculture Organization. However, as supply chains become increasingly tight, Western sanctions impede transactions with Russia and key exports from Ukraine fall, the outlook looks dicey.

Iraq has seen several protests in recent years over economic conditions, while Libya, Lebanon and Egypt have been equally volatile. Sri Lanka is already experiencing riots over food shortages, while Peru has seen similar protests over high fertilizer prices and other grievances, Tothova noted.

“The relatively cheap supplies that also counted for shipping costs are gone,” Tothova said. “The Gulf traditionally got most of its food wheat from Australia, but Ukraine supplied the feed grain, so animal protein prices will rise. But we don’t see a global shortage at this point.

For years, countries in the Middle East have made food security a national priority.

Saudi Arabia was a wheat exporter in the 1990s, but the high cost of irrigation made imports more convenient. Saudi Arabia is currently benefiting from both high oil prices and ample grain stocks, with wheat supplies sufficient to meet domestic demand for 11 months, according to estimates from the US Department of Agriculture. Libya, Oman, Lebanon and Iraq are at the bottom of the inventory scale.

Grain stocks were already falling around the world, including in the Middle East. China has bought more animal feed, more agricultural products have gone to biofuels and there have been more production issues in the past two years, such as bad weather and COVID-19, Bridgett said. . “If we have a bad year for production in other countries for whatever reason, it could definitely become a problem for the Middle East. As long as current production estimates aren’t wildly off, I think the richest countries will be able to get by.”

Wealthier countries in the Middle East are taking steps to secure their own supplies, with Saudi Arabia recently lifting a ban on poultry imports from Thailand and making commitments to Ireland for poultry imports. beef, he said.

Security of supply

Abu Dhabi investment firm ADQ established in 2020 Silal, an agritech company, to increase locally grown, raised and manufactured foods and manage strategic food reserves. That same year, it bought a 50% stake in Al-Dhara Holding Co., which specializes in animal feed, cereals, fresh produce and dairy products, and in 2021 acquired a 45% stake in the commodity trader Louis Dreyfus Co., including a long-term commercial supply agreement for the sale of agricultural products in the UAE.

“When you think about food security in the Gulf, the focus is always on having enough availability so that there are enough stocks,” said FAO’s Tothova.

Egypt, the region’s largest wheat consumer, continued to issue tenders for future deliveries from Russia, but the national food subsidy amounted to $5.56 billion over the course of fiscal year 2021-22 (July-June) and is “likely to be quite significant”. spending to the economy,” Tothova said.

Wealthy Gulf allies have provided billions of dollars in aid to Egypt to boost its economy. Most of its grain imports come from Russia, Ukraine and Romania.

However, with no end to the Russian-Ukrainian war in sight, food security will remain a tenuous priority for governments in the Middle East.

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