How is the Ukraine War affecting the Middle East?
The Wheat Crisis
The effects of the war in Ukraine are being felt across the world, particularly in the rising cost of living. One of the key drivers of this is an emerging wheat crisis. While we in the UK are feeling the impact of this, the UN has warned that the Middle East and North Africa region is likely to be particularly severely affected.
So what is causing the wheat crisis and what are the implications for the Middle East?
WHY IS WHEAT SO IMPORTANT?
Wheat is one of the cheapest and most versatile grains and a critical component of food security in developing countries. Despite being widely used throughout the world, the bulk of wheat production is concentrated in just a few producer countries. Russia and Ukraine account for almost 30% of the world’s wheat exports. Most of the wheat they export is purchased by countries in North Africa, the Middle East and Asia because of its comparatively low cost and short transportation times.
WHAT’S THE PROBLEM NOW?
The immediate problem is food access, not food availability. The Black Sea ports of Ukraine are currently blockaded by the Russian Navy, which means Ukraine is unable to export an estimated 20 million tonnes of grain from last year’s harvest awaiting export. This in turn means the silos are not available to store this year’s harvest of grain. There have also been unconfirmed reports of Russia stealing and destroying grain stocks. So far, international efforts to secure an agreement for the resumption of grain exports from Ukraine have failed, although there is hope a deal will be signed soon.
With less grain available, prices are rising fast. This is in addition to the inflationary effect of increasing food insecurity as a result of climate change and the impact of the pandemic. Rising fuel prices which affects the cost of transportation, and shortages of other food stuffs such as cooking oil are further pushing up the price of food.
The World Bank estimates that a single percentage point rise in global food prices results in an additional 10 million people falling into extreme poverty.
WHAT ABOUT THE LONG TERM?
It is hard to predict what will happen in the coming months, but a continuation of the conflict will almost certainly lead to a significant reduction in grain available to world markets and not just a problem of how to export existing grain stocks. The conflict will inhibit the ability of farmers to harvest this year’s crop (and sow for the next season). Added to which the Black Sea Port silos are still full of the last year’s (2021) crop.
Other countries are working to increase their output, but extreme weather conditions in places like India are making this difficult.
Fertiliser is also a big issue. A third of the world’s ammonia and potassium is exported from Russia and Ukraine. World prices are at a record high. If farmers are unable to afford fertiliser, crop yields across the world will be adversely affected.
WHAT ABOUT THE MIDDLE EAST?
Bread is a staple food in many counties in the region, often eaten with every meal, or in the worst cases instead of a meal. The colloquial word for bread in Egypt is ‘aish’, meaning ‘life’. Many Middle East countries rely heavily on Russian and Ukrainian wheat imports because of its comparatively low price.
80% of both Lebanon’s and Egypt’s wheat imports come from Russia and Ukraine. Lebanon only has facilities to store one month’s supply (partly as a result of the port blast in 2020 destroying the silos), so any disruption in supply or rise in price very quickly has a significant impact. Over three-quarters of Lebanon’s population were already living in poverty at the end of 2021, as a consequence of Lebanon’s ongoing economic crisis. There is little or no ability to absorb further prices rises.
In Egypt the price of bread is subsidised, with the government providing five loaves a day to around 70% of the population for a nominal cost – which has not increased since 1989. The decline in wheat imports, and the rising price of fuel for transportation is pushing up the the costs of other processed foodstuffs. The rapidly increasing cost of bread is forcing the government to consider raising prices, while knowing this would be a very unpopular move.
Israel’s domestic wheat production only covers about 10% of consumption and, like many countries, climate change is threatening to reduce yield, making it more reliant on imports. Israel has previously imported about half of its grain and cereals from Ukraine.
The West Bank and Gaza both import the vast majority of their wheat and have limited storage facilities. In Gaza existing stores of wheat have now been used up so they are relying on new (more expensive) imports. As a result, flour mills have shut down and laid off workers because their product is now more expensive than flour imported from Egypt or West Bank. A major issue for the West Bank is the rising cost of animal feed, which is threatening the livestock farming sector.
Historically, both Iraq and Syria had been growing enough wheat domestically to meet demand. But the recent conflicts and the effects of drought and temperature rises has drastically decreased yields, so they too rely on imports.
WHAT IS THE RESPONSE?
Governments are doing what they can to respond to the crisis. Many are looking to source alternative supplies of wheat from other countries, although some of these are starting to impose export restrictions to protect prices for domestic consumers. Israel is at the forefront of scientific development in irrigation and desalination to make agriculture possible in drier climates, which could be vital in increasing wheat yield in other regions. Israel has recently signed a deal with Azerbaijan to help them grow wheat for import to Israel from 2025 and is also looking to sign a deal with Egypt to help with agriculture in desert climates. However, any effects from this will take time to be felt.
As well as looking at ways to increase cultivation in co-operation with other countries, the Egyptian government is also providing farmers with higher-yield seeds to increase the harvest.
Lebanon’s economic and political crisis is hampering the country’s ability to respond. A new government has not yet formed following the recent elections and the country is already on the brink of bankruptcy. Any large-scale programme to increase domestic wheat production is an unlikely prospect.
Iraq is also in political deadlock, since October last year, so has no formal budget, limiting its response options. However, the Iraq Parliament did recently pass emergency legislation allowing government to use public funds for food security and development needs.
Similarly, the Palestinian Authorities have passed legislation to combat the price rises and keep bakery businesses running, adding temporary VAT exemptions to wheat flour.
WHAT WILL THE IMPACT BE?
Despite these initiatives, food insecurity is likely to rise across the Middle East in the coming months, if not years. This will have a ripple effect, resulting not just in hunger but in a rising demand for healthcare resulting from poor diet and malnutrition. Education will be affected, with more children falling behind because they cannot concentrate because of hunger, or dropping out of school altogether to do poorly paid work to help supplement family income. Migration levels will rise as people are forced to try to find a better life for themselves.
The number of people in the region needing the help of projects such as those supported by Embrace is increasing and certain to increase further.