NENA region adopts new food and trade policies in response to current global commodity market challenges

18 December 2022, Cairo, Egypt – Countries in the region have implemented a wide range of measures to tackle food security challenges and increase resilience to global shocks, says a new Food Policy Monitoring Bulletin released by the Food and Agriculture Organization of the United Nations (FAO) Regional office of the Near East and North Africa Region.

“The new bulletin presents recent global food and commodity market developments and their effects on the food security and nutrition situation of countries in the Near East and North Africa region. It also highlights cereal production and recent domestic food price developments in the region,” said Ahmed Mukhtar, FAO Senior Economist.

According to the bulletin, the Ukraine crisis has increased global food and fertilizer prices to record levels and has posed a severe challenge to Arab countries, threatening their recovery from the economic repercussions of the COVID-19 crisis. In addition, high global food prices have significantly increased domestic food price inflation, increased food import bills, and put pressure on trade balances and foreign exchange reserves in the region.

Furthermore, as the Russian Federation and Ukraine are significant suppliers of wheat, other cereals, and sunflower oil in the Arab region, the crisis has caused a considerable supply shock. Furthermore, due to the droughts and reduced domestic production, cereal import requirements have increased in 2022/23 in Arab countries.

Some of the measures taken by countries to tackle food security and increase resilience to global shocks include supporting domestic agriculture, expanding the area of the wheat crops to raise self-sufficiency (Egypt), referencing price increases for purchasing local production (Algeria, Tunisia, and Iraq), providing premium storage for wheat (Morocco), subsidizing irrigation water (Algeria), and providing feed at reduced prices to offset the rising costs of animal feed (Morocco). In addition, many countries in the region have increased subsidies to vulnerable people and boosting food stocks; for example, increased food reserves in Jordan have limited recent food price inflation.

Since the beginning of the Ukraine crisis, most trade-related measures were export bans (13 measures), followed by production subsidies (6 measures) in Arab countries. In addition, some measures restricted export licensing requirements (Tunisia) or obliged farmers to sell a certain share of their crop to the government (Egypt). In some instances, import tariffs have been liberalized (Morocco with oil seeds), or the import ban lifted (Saudi Arabia with poultry) to enhance food supply in the domestic market. In other instances, import tariffs have been raised (Saudi Arabia) to promote domestic production (such as livestock, fish, and vegetables), or an import ban has been introduced (Algeria with seeds).

Due to their dependence on international commodities markets and, to a large extent, Russia and Ukraine, several countries in the region aim to increase the diversification of imports (Egypt, Morocco) from countries such as Brazil, Argentina, or India.

However, budgetary constraints often limit countries' ability to mitigate food security risks. As a result, national and international financial institutions have been stepping up efforts to raise funds for Arab countries to support vulnerable households, strengthen countries’ resilience to food crises and enhance reforms in food security policies.

“FAO has increased its regional efforts to achieve sustainable food security for all and help vulnerable communities cope with and recover from recent shocks and crises. Examples are the recent policy recommendations developed by FAO for the region on Addressing food security challenges faced by Near East and North Africa region due to the Ukraine Crisis and a more detailed assessment of the vulnerabilities and potential impacts of the crisis on agrifood trade and food security situation in the region,” added Mukhtar.