The Middle East has traditionally been a large importer of food; discouraged from using precious water resources to boost its domestic agricultural production, the region now finds itself hostage to fluctuating prices on the world cereal markets. International wheat prices reached their highest levels for several years at the end of 1995. The rise-largely the result of last year's reduced production in the US and the former Soviet Union-has been topped by further increases in the wake of UN warnings that global cereal stocks are down to dangerously low levels: US wheat export prices at the end of January were $215 a tonne, almost 40 per cent higher than a year earlier.
The Maghreb stands to be badly affected in the wake of last year's droughts. Morocco's wheat production in 1995 fell by 80 per cent to 1.1 million tonnes, while the barley harvest was down by 84 per cent. Wheat imports this year are set to increase by 150 per cent on 1995 to around 3 million tonnes, costing the kingdom about $660 million at current prices.
In Tunisia, both wheat and barley harvests were also substantially below average for the second year running. Wheat imports in 199596 are forecast to rise by over 60 per cent to around 1.3 million tonnes. In contrast, Algeria-which has also been affected by drought for the past two years-managed to record above-average crop production.
Egypt is the region's largest wheat importer, buying in around 6 million tonnes a year (t/y). This figure is unlikely to change in the coming months, despite the improved harvest in 1995. However, current wheat prices will force Egypt to pay around $1,320 million this year, compared with under $860 million at early 1995 prices.
Iran is the second largest wheat importer in the Middle East, buying around 3 million t/y in addition to 2 million t/y of other cereals.
Slight increases in its 1995 wheat and coarse grain production will be far outweighed by high levels of waste, caused by poor storage facilities: the FAO estimates that through waste the country loses as much as it imports.
However, at the beginning of 1996, Iran bought almost all of its requirements for the year from Canada at a reduced cost. The attempt to diminish the impact of current prices appears to have been successful: Agriculture Minister Issa Qalantari estimated the country's saving at around $190 million.
Before the Gulf crisis of 1990-91, Iraq's wheat imports were similar to those of Iran, at 3 million t/y. They currently stand at around 1 million r/y. If current negotiations with the UN on limited oil-for-food sales are successful, Iraq could re-emerge as another major wheat importer in the region.
Saudi Arabia was unique in the Middle East in becoming one of the world's largest wheat exporters during the 1980's. Supported by heavy subsidies, exports reached a peak of around 2.4 million tonnes in 1987. However, the burden in both financial terms and the depletion of finite fossil water resources have led to a change in agricultural policy, with a shift towards production of livestock and barley. of which it remains the world's largest importer. Bill Demaria of the International Grains Council predicts that wheat exports, which fell to around 1.5 million tonnes in 1994-95, will drop to a mere 0.4 million tonnes in 1995-96. At the same time, imports of other cereals will remain largely unaffected by new farming policies at around 5.5 million tonnes this year.
Changes in Turkey's agricultural policy have also turned it from an exporter to an importer of wheat. The FAO estimated that the country will import around I million tonnes of high-quality wheat in 1996, at a cost of $220 million at current prices. Likewise Israel, with domestic wheat production limited to between 100,000-200,000 t/y, will import around 1 million tonnes. Syria enjoyed a good crop in 1995 and is expected to import less than 1 million tonnes this year.
A FAO spokesman says that the only comparable period was 1980-81. At that time, high prices began to conform to seasonal patterns in January, beginning to fall after a December peak. Prices typically begin a decline at the beginning of the year, continuing to fall until the harvest in June. In 1995, prices began to rise in May, soaring dramatically after a slight fall in August. An expected drop in January of this year failed to materialise.
Although prices began to stabilise in midMarch at around $220 a tonne, until the harvest they are likely to remain vulnerable to concern about weather conditions and sudden surges in demand.
The poor harvest of 1995 was exacerbated by low carry-over stocks from 1994, the result of the failure of agricultural production to keep pace with global demand Stocks now stand at their lowest levels for 15 years. The FAO envisages a 4-5 per cent rise in global cereal production in 1995. Yet even if 1996 sees a successful crop, it will not be enough to replenish cereal stocks. While the FAO says it is too early to predict how prices will compare with 1995-96 levels, it regards hopes for a return to 1993-94 prices as optimistic.
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