In the spirit of collaboration, the incredible individuals behind this project:
Anthony Aramouny
Ghassan Shammas
Malak Wehbe
Mohammad Abdul Rahman
Rawad Abi Zeid
Zeinab Mortada
Prices Variation Rational
Commodities price variation in Lebanon has been the center of many socio-economic activities and concerns in the past 2 decades. In fact, notwithstanding the underlying concept of inflation (or deflation), the issue has a deep social stability construct: Food security for the poor and the poorer. No matter what the GDP is per capita, it is essential to understand that when commodities prices vary a substrate of the Lebanese society feels the impact much stronger than others: those below the line of poverty.
The Problem
Relying on the data published by www.humdata.org on the yearly prices of goods in Lebanon, it is clear that the consumer encounters prices variation, within the same period of time between the different regions in Lebanon. This is clear in the visuals published below.
We believe that the problem resides in the following issues:
Lebanon lacks sufficient personnel involved in the prices control at the economy of economy and trade.
It has Limited reach on price controls and prices ceiling.
It Lacks specialized domestic food security experts.
It lacks total agricultural programming to supplement the market with commodities in crisis.
It lacks cheap national transport routes for bulk products such as railways. The cost of transport may exceed 30% of the final cost of a commodity.
Details
It is necessary to divide the time series into 3 periods:
From 2012 to October 2019 i.e. precrisis period
From October 2019 until end of 2021 (crisis period with subsidized goods)
2022 until now, post crisis and post subsidies.
The banking and financial crisis in Lebanon imposed mainly two constraints on the food security issue: i) the strong volatility of the exchange rate against a fixed low official rate of LB1500/$, ii) a subsequent spiraling inflation rate that was strongly reflected on the prices of goods in the country.
Meanwhile, during the first 2 years of the crisis, the government had subsidies on fuel and its derivatives, wheat and bread and some other commodities. The subsidies were lifted during 2021, and the prices were” floating”. For a short period of time, the prices oscillated without any rational and later stabilized due to the rapid dollarization of the retail market: The Lebanese Pound became almost obsolete, superseded by the US$ as a cash for retail transactions. It is to be noted that the salary of the public sector is still indexed to the “old” Lebanese pound exchange rate and hence the public servant are actually those who suffer the most the impact of price variation in Lebanon. Explore Our Interactive Dashboard below: For a more in-depth look at our project, we invite you to explore our interactive dashboard. It’s designed to provide you with detailed analytics, and visual insights into our work.
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The percentage of Food export in Gulf Countries in 2019 is extremely low and the imports is relatively high comparing to exports. Gulf countries exhibited a notable disparity between food exports and imports, with food exports being exceedingly low and food imports substantially higher. Qatar, Kuwait, and Saudi Arabia, in particular, heavily relied on food imports to meet their consumption needs. This underscores a regional dependence on international food sources and highlights the importance of addressing food security to ensure stable access to essential resources in the Gulf.
Impact of Tax rate on Import and Export
The tax rates in Gulf countries as seen in the map can linked to the imports and exports, reveal an interesting correlation. Lower tax rates, such as those in Qatar and Kuwait, can encourage trade and potentially offset their low food exports and high food imports. Conversely, higher tax rates, as seen in Oman, might contribute to higher food import figures. The relatively lower tax rate in the UAE supports its role as a regional trade hub, which is reflected in its balanced import and export figures. The interplay between tax rates and trade statistics underscores the significance of fiscal policies in shaping the trade landscape of these Gulf nation
Agriculture & Industry
Influence of Water Withdrawals in Agriculture and Industry on food imports and exports
The water withdrawals data indicate the extent of agriculture and industrial activity in Gulf countries. Higher agricultural water withdrawals, as seen in Saudi Arabia and Oman, suggest self-sufficiency in food production. Meanwhile, countries with lower agriculture withdrawals, like Kuwait, may rely more on food imports. These water withdrawals can be linked to food import and export dynamics, influencing food security and trade strategies in the region.
Influence of Employment in Agriculture and Industry on food imports and exports
Higher Agricultural Employment & Food Trade:
Oman and Saudi Arabia, with higher agricultural employment, might have a more significant capacity for domestic food production. This could relate to their lower food imports and potential for food exports despite modest industrial growth.
Lower agricultural employment in Bahrain, Kuwait, Qatar, and the UAE could imply a heavier reliance on food imports due to limited domestic agricultural output, aligning with their higher food import figures.
Industrial Employment & Food Trade:
Qatar’s high industrial employment might suggest a lesser emphasis on agriculture, potentially leading to higher food imports despite economic diversification.
Other countries, with varying industrial employment rates, might showcase different levels of agricultural emphasis, influencing their food import-export dynamics.
Solutions
Investment in Agricultural Innovation: Encourage technological advancements and innovation in agriculture to boost productivity, creating more jobs and improving food self-sufficiency..
Tax Reform: Implement tax policies that incentivize investment in both agricultural and industrial sectors, promoting growth and job creation in these areas.
Education and Skills Development: Invest in education and training programs to equip the workforce with the necessary skills for employment in agriculture, industry, and other emerging sectors.
Sustainable Resource Management: Implement sustainable water and land management practices to support agricultural growth without compromising environmental resources, thereby ensuring long-term economic stability.
UN Goals
Goal 8: Decent Work and Economic Growth:
Employment in Agriculture and Industry: The distribution of employment in agriculture and industry reflects the economic structure of countries. Goal 8 emphasizes the importance of decent work and employment opportunities for sustained economic growth.
Food Import-Export Dynamics: Countries with higher agricultural employment might have stronger domestic agricultural sectors, impacting their trade balance in food. Conversely, higher industrial employment might affect the reliance on food imports due to potentially reduced emphasis on agriculture.
Tax Policies: Tax structures impact economic activities and employment opportunities. Favorable tax policies can stimulate growth in both agricultural and industrial sectors, contributing to Goal 8’s aim of fostering economic growth and decent work.
By focusing on inclusive economic growth, job creation, and enhancing productivity in both agriculture and industry, countries can contribute significantly to achieving Goal 8, ensuring sustainable and equitable economic development.
UN Goal Link – Goal 2: Zero Hunger:
Food Import-Export Dynamics: Countries with high food imports or low food exports often face challenges in achieving food security. Goal 2 aims to end hunger, achieve food security, improve nutrition, and promote sustainable agriculture.
Agricultural Practices: Stronger agricultural sectors (linked to lower food imports or higher exports) directly contribute to achieving Goal 2. Sustainable agriculture practices, as encouraged by the goal, can enhance food production and reduce dependency on imports.
Contributors: Amin Ghobar, Basilio Diaz, Daniel Raidan, Sally Harb, Stephany Said, and Wissam Malaeb.
Wheat Supply and Food Insecurity in Lebanon
A principal element to boost food security in developing countries is matching the demand for wheat as it is one of the world’s most crucial staple crops. Lebanon, with almost 46% of its households being food insecure, imports around 80% of its food needs and is highly dependent on soft wheat to make Arabic flatbread.
Due to the crippling economic crisis in Lebanon, the diminishing foreign reserves to subsidize wheat imports, the Beirut Port Blast that led to the destruction of the grain silos, and the Russian invasion of Ukraine that had an effect on the supply chain and the wheat prices, Lebanon has been struggling with a negative wheat supply shock.
Lebanon’s Current Situation and the Effects on Wheat Resources and Supplies
The country is facing one of the most devastating economic crises globally since the mid-19th century. The Lebanese currency’s more than 90% value loss against the US Dollar, the inflation rate that exceeded 200%, and the grain reserves lost after the destruction of the Beirut Port – that stored around 85% of the country’s cereals with a maximum capacity of 120,000 metric tons of grain – contributed to the problem at hand. Additionally, Russia and Ukraine supply Lebanon with 70% – 80% of its wheat demand. After the invasion, wheat prices increased drastically and Lebanon, a bankrupt country, was unable to fight in the bidding war.
Moreover, the smuggling of subsidized flour and wheat to the Syrian market and the need to fulfill the nutritious needs of the 1.3 million Syrian refugees on the Lebanese grounds made the food security response an immediate priority.
In terms of Lebanon’s agricultural nature, the country relies on the import of wheat because available land that is viable for farming is not enough to meet the country’s demands and make Lebanon self-sufficient. The consumption demand in Lebanon is topped at 450,000 metric tons, and local wheat production only produces around 10-15% of such demand.
Lebanon needs to start implementing short-term and long-term fixes as the citizens are grappling to afford the increasing prices of bread in a country with a limited number of reserves.
Therefore, we came up with solutions that are divided into two levels of fixes
Short-term Fixes
Pursue avenues to continue subsidizing the price of bread. An example of that would be the “Lebanon Wheat Emergency Response Project” where a $150 million loan from the World Bank was taken that will be used in funding the imports for approximately six to nine months.
Long-term Fixes
Support farmers and develop irrigation programs to help increase local production of the wheat market up until it makes up 50% of Lebanon’s total supply. However, Lebanon can only have a 10% to 15% increase every year according to a study done by the Ministry of Agriculture. This means that it could take 5 to 6 years to reach the goal stated above.
In addition to that, rebuilding Lebanon’s national grain reserve by reconstructing the Beirut port silos and building two new storage silos nearby is another solution. This would cost $100 million and would create six months’ worth of reserves at any given time. Many countries have shown interest in helping Lebanon build those.
Finally, turning to the Ministry of Agriculture’s large and rent-free warehouses in Beqaa should be considered, as the government has been relying on private mills for storage which keeps storage levels on a day-to-day basis and paves the way for black markets. These warehouses only need some maintenance and would be ready for use.
Suicide is something no one wants to talk about, the majority of people who are feeling down don’t openly talk about it. The highest population that is being affected are countries that are surrounding Russia, and in South Africa. There are 800k people commit suicide each year, this is due to many economical issues in these countries. Imagine Karim a husband and a father of 2 living in a country where the basic human needs are neglected. Now Karim is struggling to find a job due to the high unemployment rate, this means he is not able to feed his wife and kids. Imagine being in his place in a country with a 26% unemployment rate. People that are unemployed have a higher chance of commit suicide due their mental health taking a hit this could spiral own a dark hole which is hard to come out off. Unemployment forced 40% of the population to suffer from severe or moderate food insecurity and this is the disruption of food intake or eating pattern due to the lack of money and other resources. Now Karim can’t just feed his family but also can’t get the basic human needs.
All these problems correlate strongly with the Social protection and Labor Programs when these programs are lacking the result were higher suicide mortality rate. These programs help the population in managing risks and protect them from food insecurities through various methods. Poland has a high social program and the results of the suicide mortality rate is significantly lower compared to Lesotho which is the opposite with high suicide rates and low social program . This indicates to lower suicide rates we must increase the aid to the population by offering labor market, unemployment benefits, and other programs. Now Karim can relax and calm down as help is on its way to assist him and other people who are in need.
