JEDDAH: The Arab world currently buys around one third of the world's traded wheat, a proportion expected to grow to near 40 percent over the next decade, Global Arab Network reported Friday. And once again, there is rising global concern about food price increases as some agricultural commodity prices, notably wheat, reach above the food crisis levels of 2008. There is a link and potentially a very positive one for the entire world if Arab countries manage their needs evenly over the years to come. "It's a very complex business of managing acquisition, transportation, storage and distribution all in the most efficient and least costly way," said Julian Lampietti, World Bank food security specialist. "And in essence, for a commodity as critical to the Arab world as wheat, this has iconic proportions." "There is already a noticeable trend showing Arab countries storing more wheat (right now the Arab world average is about three months) but their commodity management chains and infrastructure for everything from port handling to storage itself need to be sharply improved to adapt to this rising trend. A concerted effort across the Arab world to change this could result in cheaper and deeper country stocks of wheat which, given the appetite of Arab world for wheat imports (one third of traded wheat and rising), could help dampen volatility in the wheat price in times of scarcity. Simply put, if such a needy neighbor has a fully stocked pantry when the bakery down the street is low on bread, there will be less competition for the last loaf," he said. The current sharp rise in prices with its attendant specter of malnutrition and poverty – security is already challenged in a number of countries – just underlines the need to manage vulnerability to food price shocks by developing comprehensive strategies, including strengthening safety nets for the poorest, enhancing domestic food production, and reducing exposure to commodity market volatility, Lampietti said. It's that last piece that is driving new World Bank work being done in preparation for the first Arab Development Symposium in Kuwait in March with a focus on food security. This will grow into a fuller study due to be released by mid-2011 outlining what it takes to improve import supply chains in the Arab world. Ten Arab countries have already signed up to participate in the report, sharing their data to enrich its findings and benefit from custom-tailored analysis. And representatives from nine of these countries have already attended a workshop Lampietti's team put together with the World Bank Institute and the Food and Agriculture Organization in Rotterdam, showcasing the impressive workings of this world-leading port and how it manages massive flows of cereals. The concept of food security is quite different from food self-sufficiency. In pursuit of the latter, countries sometimes grow crops they could import more efficiently and more cheaply, often wasting a precious resource like water. Fossil aquifers in the Arab world have been depleted in the pursuit of growing wheat in the desert when a better choice, Lampietti argued, is buying smartly on world markets. This is the direction Saudi Arabia chose a few years back. Its wheat production is falling off sharply while it builds stock. But food security means effectively improving food import supply chain logistics, wheat arbitrage and storage and the associated policy environment. "The challenge now for the rest of the Arab world is to work to make the chain efficient," Lampiett added. "It's still a case of stocking up for lean times. In market terms this also means using stocks to buffer price hikes. If a buyer as big as the Arab world manages and builds significant storage - in line with their current ambitions - the dampening impact on world price volatility could be the Arab world's contribution to improving global food security." Lampietti warned that that this can't be achieved in a short period because a surge in demand would have the unwanted consequence of driving wheat prices even higher. "The key is the long view - putting the infrastructure in place today to build stocks in a slow and managed way. That was the lesson in Rotterdam where everything runs like clockwork and investments are multipurpose," he noted.
