Middle East, Winter 2013, World — January 5, 2014 at 11:01 am

The Grain Drain

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In 2011, a protester in Cairo’s Tahrir Square, was photographed with a bagel and two hot dog buns taped to his head. His “bread helmet” became a misunderstood symbol of the Egyptian revolution, with news feeds on social media platforms becoming flooded with jokes about the doubtful protection it provided, Yet this undermined its real significance. Between 2007 and 2008, bread prices in Egypt, the world’s largest wheat importer by absolute volume, increased by 37 percent due to a global rise in grain prices, and domestic food price inflation has skyrocketed annually, hitting 18.9 percent in the year before the fall of President Mubarak. Adding that on top of rising unemployment, fewer people were able to afford a basic commodity.

Though the Arab Spring is most commonly characterized as a “revolution against oppressive and undemocratic regimes,” an indirect trigger was the spiking price of wheat. “Of the world’s major wheat-importing [state-owned] companies per capita, the top nine importers are all in the Middle East; seven had political protests resulting in civilian deaths in 2011,” writes Tony Sternberg in “Chinese Drought, Wheat, and the Egyptian Uprising: How a Localized Hazard Became Globalized.” When government food programs failed to ensure an adequate supply of bread to its people, they rebelled.

International media covering the Arab Spring discussed in great detail the political motives of the protesters, yet they paid little attention to its indirect causes. From summer 2009 to winter 2010, China had experienced its driest period in 60 years. What does a natural hazard occurring in China have to do with the revolutions in the Middle East? It was China’s increased demand for wheat in 2010 that was the primary cause of the global rise in prices. Sternberg calls this phenomenon “the globalization of hazard”. Yet not only China’s harvest was affected that year. Droughts, heat waves, and fires decreased wheat production in Russia (down 32.7 percent) and Ukraine (down 19.3 percent). Cold and rainy weather had the same effect in Canada (down 13.7 percent), whereas excessive rain reduced exports in Australia (down 8.7 percent). In August, the Russian government decided to impose an export ban on grains, fearing an increase in domestic prices and grain shortages, cutting off 14 percent of the global wheat trade, and as a result directly harming its biggest client – Egypt. This combination of decreased supply and increased demand doubled the price of wheat from 8

$157 per metric ton in June 2010 to $326 per metric ton in February 2011. That year, Egypt imported 10.6 million metric tons of wheat, almost 10 percent more than the year before. It is needless to point out the devastating effect this increase had on pocketbooks in Cairo.

This is not to understate the political factors that played a role in the Arab revolutions, such as popular dissatisfaction with the political regimes, lack of political freedom, and the desire for justice and democracy. However, the lack of food security did have an aggravating effect. The very same effect played a role in both the French and Russian revolutions, and history has shown time and time again that a sharp increase in food prices has the power to inflame a country’s political situation, causing rebellion.

Many have linked the scope of the natural disasters that occurred in 2010 with global climate change. Sarah Johnson and Jeffrey Mazo of the International Institute for Strategic Studies (IISS), argue in “Global Warming and the Arab Spring” that “there is … increasing confidence that weather extremes over the past decade are linked to anthropogenic global warming…one calculation derives an 80 percent probability that the July 2010 heat record in Moscow would not have occurred in the absence of such warming.” It is hard to establish the probability of the occurrence of other natural hazards that took place that year, but it is important to understand that the indirect consequences of those events may cause various problems, one of them being food security. The extreme weather in Russia or China did not directly cause political turmoil in the Middle East and North Africa, but it is crucial to understand that due to the interconnectivity of the globalized world and global economy, local hazards have begun to have a larger impact on a global stage than ever before.

unnamed-4Again this year, China’s harvest will suffer from climate change-related hazards. In July 2013, Reuters reported that Chinese crops suffered from frost in the growing period, resulting in 20 million metric tons of wheat being declared unfit for human consumption. This will once more result in increased imports by China, and a subsequent global increase in prices. The Egyptian economy and political scene is far from stable, and another food supply crisis could potentially trigger another wave of protests.

China’s unpredictable wheat demand is a problem that has to be addressed. Otherwise, it becomes almost impossible for major wheat importers, like Egypt, to predict the prices of this critical commodity, resulting in an inadequate budget plan. Indeed, USDA data from the last five years shows that of the world’s top five importers – Egypt, China, Brazil, Indonesia, and Japan – all but China have shown demand fluctuations of about 10 percent from year to year. In contrast, Chinese demand is almost impossible to predict. From 2008 to 2012, China’s annual import growth rates were 881.6 percent, 189.8 percent, -33.5 percent, 216.4 percent and 9.1 percent, respectively. This year China is expected to increase its imports by another 165.6 percent. In order to implement policies aimed at achieving food security, governments need to incorporate predictions on the prices of wheat. This task is almost impossible if China’s imports fluctuate so widely. Countries that only import a small fraction of their domestic needs are able to deal with the skyrocketing increases in global wheat prices and limit their effect by drawing down their stockpiles, consequently averaging out the prices for its citizens. China, for example, despite its huge fluctuations in demand for wheat on global markets, does not experience similar fluctuations in domestic prices, because its imports constitute only 6.6 percent of its actual consumption. Though small on a domestic scale, China is the second largest importer of wheat by absolute volume. In addition, according to Reuters, China’s state stockpiler Sinograin holds between 20-30 million metric tons of wheat, securing itself in case of any natural disasters or sudden rises in global prices. On the other side of the spectrum are countries such as Egypt, which import 50 percent or more of their demand and are thus heavily influenced by the global market for grain. Those countries need to find a more sustainable solution in order to be more independent from those fluctuations.

Thus far, the Food and Agricultural Organization of the United Nations (FAO) has advised Cairo to decrease the amount of international wheat used in the production of flour for its bread-subsidy program. With 25 percent of the country’s population living below the poverty line, this program has been heavily relied upon, but as the FAO points out, “the government’s expenditure on the bread-subsidy program and concerns over its sustainability, together with the budgetary implications, have provoked heated discussions in the country.” However, the FAO’s plan may be hard to complete, because a shortage of fertilizers and diesel to run irrigation equipment has caused the Egyptian harvest to decline. Farmers complain that over the last two years production costs have doubled, making wheat less profitable.

Cairo struggles to answer a fundamental question: Given the poor conditions of Egyptian agricultural land, how can the national harvest be increased so the country can distance itself from fluctuations in the global wheat demand? Once known for its fertile land, Egypt is no longer an agricultural power. Increases in population are putting too much pressure on the nation’s outdated agricultural system. The limited water supply and the practically antique irrigation systems limit the amount of land that is suitable for agriculture. One of the solutions that is being considered is genetically modified (GM) wheat. In 2004, researchers led by Ahmed Bahieldin at Cairo’s Agricultural Genetic Engineering Research Institute (AGERI) produced drought-tolerant wheat by transferring a gene from barley into a local wheat variety. Bahieldin says that, “the gap between supply and demand makes GM drought-tolerant wheat very important for increasing cultivation in areas where sub-optimal conditions such as water deficit, salinity, or high temperature prevail.” The new crop variety is still being tested for the potential harmful effects it may have on people and the ecosystem. However, considering the natural hazards affecting countries all over the globe, genetically modified crops could potentially become the only available solution.

Faycal Haggui from the University of Saskatchewan argues that, “the rate of growth of wheat yields is decelerating at an increasing rate in developing and developed countries alike.” The development of high-yielding varieties is no longer enough to sustain our increasing needs. All of this means that the world might be close to reaching a wheat production plateau. In other words, future world supply may not meet the future demands of an increasing global population, creating an undeniable imperative to come up with new solutions. Given the rate of population growth, increasing climate change related hazards, and the potential looming wheat production plateau, governments have to adapt quickly if they want to maintain a stable food supply for their citizens. Some possible solutions being discussed include limiting wheat consumption globally or encouraging changes in peoples’ diets from grain-based to more meat-based staples, but those seem very unlikely to succeed. Given the amount of grain and water needed to produce a kilogram of meat compared to grain products, it seems unsustainable so far. In fact, with the increasing population, it appears necessary to create genetically modified crops that will be more nutritious, better adaptable to new growing conditions, and have higher resistance to pests, as well as being harmless for both humans and the ecosystem.

Food security is one of the major problems faced by every government, no matter the size of its budget. With cereal grain consumption constituting, on average, more than 50 percent of daily caloric intake world-wide, it is essential for every country to secure the availability of grain for its citizens. The example of Egypt and other Arab countries shows how the failure to do so may catalyze political turmoil that can result in revolution and anarchy. Even though the effects of climate change on a global scale are highly disputed, due to the increasing interconnectivity of our globalized world, local hazards will have increasingly detrimental effects on the food security of other countries.

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