Table of contents
Introduction / 1
1.1. Definition of Project / 1 1.2. Particular Challenges / 1 1.3. Specific Questions / 2 1.4. Data and Methodology / 3
2. The Food Price Crisis – A Brief Overview of Main Arguments / 4 2.1. Rising Demand / 4 2.2. Shift in Consumption Pattern / 6 2.3. Higher Energy, Transportation, and Fertilizer Costs / 7 2.4. Biofuel / 8 2.5. Climate Change / 12 2.6. Water Scarcity / 13 2.7. Declining Food Reserves and Speculation / 14 2.8. Dollar Depreciation / 16
3. The State of Agricultural Supply in ODC Countries / 17 3.1. Preliminary Remarks / 17 3.2. Where do ME-ODC Countries Stand? / 18
4. More in Depth Analysis of ODC Countries / 24 4.1. Overview / 24 4.2. Lebanon / 24 4.2.1. General Economic Conditions / 24 4.2.2. The State of Food Security / 26 4.2.3. Market and Trade Overview / 27 4.3. Syria / 30 4.3.1. General Economic Conditions / 30 4.3.2. The State of Food Security / 30 4.3.3. Market and Trade Overview / 32 4.4. Jordan / 34 4.4.1. General Economic Conditions / 34 4.4.2. The State of Food Security / 34 4.4.3. Market and Trade Overview / 35 4.5. Iran / 37 4.5.1. General Economic Conditions / 37 4.5.2. The State of Food Security / 38 4.5.3. Market and Trade Overview / 39 4.6. Iraq / 40 4.6.1. General Economic Conditions / 40 4.6.2. The State of Food Security / 41 4.6.3. Market Overview / 43 4.7. Yemen / 44 4.7.1. General Economic Conditions / 44 4.7.2. Food Security / 46 4.7.3. Market Overview / 47 4.8. Palestine / 48 4.8.1. General Economic Conditions / 48 4.8.2. Food Security / 49 4.8.3. Market Overview / 50 4.9. Summary / 51
5. Food Crisis, Market Dynamics, and Policy Options / 54 5.1. Introduction / 54 5.2. How Efficient are Markets? / 54 5.3. How do Suppliers React to Rising Food Prices? / 56 5.3.1. Supply Adjustment in Theory / 56 5.3.2. Smuggling / 57 5.3.3. Hoarding / 58 5.3.4. Charity based Supply / 59 5.4. How do Consumers react to Rising Food Prices? / 59 5.4.1. Demand Adjustment in Theory/ 59 5.4.2. A Snapshot of the Food Price Rises in ODC Countries / 60 5.4.3. Substitution Effects / 61 5.5. Recommended Short and Long Term Policies to Fight Food Price Inflation / 62 5.5.1. What Government Should Do in Theory / 62 5.5.2. Agrarian Reforms / 62 5.5.3. Family Planning / 64 5.5.4. Income Redistribution / 65 5.5.5. Building Transportation Infrastructure / 67 5.5.6. Building Financial Infrastructure / 67 5.5.7. Short Term Response Policies / 68 5.6. Response Policies in Practice / 69 5.6.1. Tax Reductions / 70 5.6.2. Use of Buffer Stocks / 70 5.6.3. Export Bans / 70 5.6.4. Cash Transfers / 71 5.6.5. Food-for-Work Programs / 71 5.6.6. Food Stamps / 72 5.6.7. School Feeding / 72
6. Assessment of the Social Cost of the 2006-2008 Food Price Crisis / 72 6.1. Methodology / 72 6.2. Discussion of Results / 73 6.3. Application of Results to ODC Countries / 74 6.4. Final Word of Caution / 78
7. Concluding Policy Recommendations / 78 7.1. Contingency Planning / 78 7.2. Emergency Preparedness / 80 7.3. Crisis Response Policies / 81
8. References / 83
9. Appendix / 87
List of figures
Figure 1: Population Weighted Per Capita Income of China and India and IMF Food Price Index (2005 = 100) / 5 Figure 2: Estimated World Import Growth of Selected Commodities over 2005-2007 Average / 6 Figure 3: Ammonia (USD/ton) and Gas Prices (Mont Belvieu, TX Propane Spot Price FOB, Cents per Gallon), January 2000=100 / 7 Figure 4: Pros and Cons of Biofuel / 8 Figure 5: OECD Biofuel Production and Feedstock Consumption Forecasts / 9 Figure 6: Simulations of Changes of World Prices of Feed Stock Crops and Sugar in 2020 / 10 Figure 7: Calorie Availability Changes in 2020 / 10 Figure 8: World Population and World Food Production Index (1961-2004) / 11 Figure 9: Agricultural Productivity by 2080 (with carbon fertilization, less pessimistic view) / 13 Figure 10: Water Scarcity / 14 Figure 11: Stock-to Use Ratios and Prices / 15 Figure 12: Food Price Incex and USD/EUR Exchange Rate (Jan 2005=100) / 16 Figure 13: Internally Displaced in Iraq / 42 Figure 14: Land Inequality vs. Cereal Yield / 63 Figure 15: Residual Agricultural Productivity and Population Growth Rate / 65 Figure 16: Estimated Food Inflation Elasticities / 74
List of tables
Table 1: Relative Agricultural Productivity in ODC Countries / 20 Table 2: Elasticity of Cereal Yield to various Determinants / 23 Table 3: Development Potentials of Credit Markets and Transportation Infrastructure / 23 Table 4: Lebanon’s Top-Ten Agri-Food Imports in 2006 / 29 Table 5: Lebanon’s Major Import Partners of Basic Foods in 2004 / 29 Table 6: Syria’s Top-Five Agri-Food Imports (2003) / 33 Table 7: Syria’s Major Import Partners of Basic Foods (2004) / 33 Table 8: Jordan’s Major Import Partners of Basic Foods (2004) / 36 Table 9: Iran’s Major Import Partners of Basic Foods (2004) / 39 Table 10: Yemen’s Major Import Partners of Basic Foods (2004) / 48 Table 11: Agriculture and Food Security among ME-ODC Countries – Stylized Facts / 52 Table 12: Relative Food Share Expenditures as an Indicator for Market Efficiency / 55 Table 13: Marginal Increases of Total Revenues to 1% Increases of Price / 59 Table 14: Snapshot of Food Price and General Inflation as Reported in Local Newspapers / 61 Table 15: Undernourishment and Income Inequality / 66 Table 16: Short Term Response Policies / 69 Table 17: Food Price Elasticity of Undernourishment (Pooled OLS double log regression) / 73 Table 18: Estimation of Socioeconomic Impacts of Food Price Crisis on ODC Countries / 76
List of appendix items
Appendix Item 1: Data Description / 87 Appendix Item 2: Agricultural Productivity Regressions / 88 Appendix Item 3: Regression Results Food Expenditure Shares / 90 Appendix Item 4: Cereal Yield vs. Land Inequality / 90 Appendix Item 5: Cereal Yield vs. Fertility / 91 Appendix Item 6: Compilation of Socioeconomic Indicators of ODC Countries / 92
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