Reference Date: 16-October-2012
|
FOOD SECURITY SNAPSHOT
-
Bread subsidies result in lower consumer price index in 2012
-
Influx of refugees from Syria puts strain on resources
|
Cereal import requirements to remain high
Following the price hikes of 2007/08, Jordan increased its strategic reserve of wheat from 3 to 10 months as a precaution against future increases in food prices. According to the Ministry of Industry, as of mid-October 2012, wheat stocks were over 716 000 tonnes, of which 367 000 tonnes was in the Ministry’s warehouses and 350 000 being shipped to Jordan. Around 297 000 tonnes of barley were also stocked (143 000 tonnes in warehouses and 153 000 in transit).
Cereal import requirements in 2012/13 (July/June) are forecast at 2.2 million tonnes, a slight decline of about 4 percent from 2011/12. Wheat imports are estimated at about 700 000 tonnes, about 9 percent lower than the last five years average during which the policy change of higher strategic stocks was implemented.
In the same period, imports of barley (for feed) are expected to go up by about 11 percent, compared to the average, to 780 000 tonnes to match the increasing demand. An average level of about half a million tonnes of imported maize is also forecast for animal feed. Rice imports are forecast to remain stable, at about 170 000 tonnes.
During the 2011/12 fiscal year, Jordan’s purchases were dominated by Black Sea origin wheat. However, the position of the exportable surplus in the region may alter geographic composition of suppliers.
In support to the economic reforms and as part of the US Food for Progress programme, the United States granted Jordan 50 000 tonnes of wheat valued at USD 17 million in September 2012. Proceeds from wheat sales will be used to construct the Karak Dam, completion of which will increase yields on adjacent farmlands.
In order to increase production, in September 2012 the government announced its decision to subsidise every tonne of wheat and barley for seeding purposes by JD50. One tonne of wheat seeds will be sold to farmers at JD400 (approximately 560 USD/tonne at September 2012 exchange rates), while one tonne of barley seeds will be sold at JD340 (about 480 USD/tonne).
Bread subsidies result in lower consumer price index in 2012 - Government considering streamlining of subsidy system
According to the national Department of Statistics, in August 2012 the monthly rate of food price inflation (year-on-year) reached almost 6 percent, fueled by high increases in vegetable prices which increased by over 32 percent. By contrast, bread and cereal prices declined by 0.29 percent due to Government support schemes that prevented the transmission of high international wheat prices to local markets. Meat and poultry prices, usually a significant contributor to the overall food price inflation, have stabilized.
The Government faces a particularly high budget deficit of USD 2.8 billion due to energy import costs and subsidies. Disruptions in pipeline shipments of natural gas from Egypt, which normally provide 80 percent of the country’s electricity, resulted in the government switching to more expensive diesel suppliers to supply electricity.
The IMF Executive Board has approved a loan of USD 2 billion for Jordan to give the country time to correct the imbalances in the budget and the Balance of Payments while maintaining social stability. Pressed by budgetary issues and fiscal deficit, the government is currently considering streamlining the current subsidy system. Direct cash payments to deliver subsidies to targeted segments are considered. Around 1 percent of GDP is spent on food subsidies, and about 2.4 percent on fuel subsidies (2011 figures).
Influx of refugees from Syria puts strain on resources
According to the Foreign Ministry, about 180 000 Syrian refugees are within Jordan’s borders. In August 2012 the Government issued an urgent plea to international organizations for USD 700 million to help fund a second refugee camp and provide healthcare to the displaced people. The WFP is assisting refugees through food vouchers in most of the country and through the provision of in-kind food distributions in Zaatari refugee camp and some of the transit centres hosting refugees.