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"The situation has been difficult for years. We now have to preserve every grain of wheat or barley from this year's harvest, otherwise we will have no immunity", the Governor of the Central Bank of Tunisia commented on the potential economic repercussions for Tunisia, a few days after the war began.
More than half of the country's grain imports are dependent on Ukraine and Russia. As a result, there are growing concerns about the risks that the war will have on wheat and barley supplies.
Countries from which Tunisia imports grains (2017-2019)
Source: The Observatory of Economic Complexity (OEC)
On a global scale, Russia and Ukraine account for more than one third of the world' s grain exports*. The Black Sea region is thus central to world food production and supply, with Russia being the world's largest wheat exporter, while Ukraine is ranked fifth.
This is why concerns about grain supplies arose along with the announcement of the military operations in Ukraine in late February. Food prices have now reached record high levels, according to the UN Food and Agriculture Organisation ( FAO). World wheat and barley prices, for example, are up 31% compared to the previous year.
"The war has significant implications for food security. It will particularly affect countries that depend on Russia and Ukraine for 30% or more of their wheat supply. Many of these countries are less developed, low-income or food-deficit, and are spread across North Africa, Asia and the Near East." The Food and Agriculture Organisation of the United Nations (FAO).
According to the same organisation, it is likely that countries that are dependent on wheat imports, including Tunisia, will significantly increase the quantities required, which will put additional pressure on the world supply. The continuation of the war since February 24, 2022, risks reinforcing a global food crisis that may affect more than 50 countries.
The impact of war on food accessibility
Due to the central role of both countries in the global production and export of grains, any disruption of their agricultural and trade flows leads to alterations in the supply and pricing of grains worldwide.
In Ukraine, spring grain crops are usually ready to be harvested in early summer. However, in the current context, the ability of Ukrainian farmers to harvest and market them is very uncertain. The mass exodus of the population has reduced the labour force and the number of agricultural workers. On top of this, access to agricultural fields is becoming increasingly difficult. This is why on March 03, 2022, the Ukrainian authorities announced a ban on wheat exports in order to "prevent a 'humanitarian crisis in Ukraine', to 'stabilise the market' and 'meet the population' needs for essential food products."
On the other hand, Russia's Black Sea ports are still operating and no significant disruption to agricultural production is expected from them in the short term. However, given Russia's position as the world's leading wheat producer, the financial sanctions imposed on Russia could lead to a shortage of the global supply.
"The scope and duration of this conflict are still undetermined. Potential disruptions to the agricultural activities of these two major basic commodity exporters would seriously aggravate the global food insecurity, given the high and fluctuating international prices of food and supplies." The Food and Agriculture Organisation of the United Nations.
At the same time, as military confrontations intensify, the number of countries that ban the export of a certain food group in order to protect their local food security is increasing, having risen to 13 countries, led by Russia. In addition to the initial announcement of the temporary suspension of fertiliser exports on March 10, Russia has again declared restrictions on grain exports intended for four former Soviet countries, in order to avoid shortages and rising prices. in an official statement, the UN Food and Agriculture Organisation warned that "reducing import duties or using export restrictions would help solve food security problems in some countries in the short term, but would also lead to higher prices on world markets".
Tunisia relies on grains to ensure food security
The Tunisian diet, according to the National Household Nutrition Survey, consists mainly of grain, with the average annual consumption at about 174.3 kg per person. The consumption pattern varies according to the region.
The average grain consumption per capita in rural areas exceeds the average per capita consumption in urban areas by more than 30 kg. Additionally, half or more of the calories, albumin and iron, are provided by grains.
Au cours des dernières années, la consommation annuelle de céréales des Tunisien·nes s'élève à plus de 3 millions de tonnes, réparties équitablement entre blé dur, blé tendre et orge.
Percentage of imported grains in relation to the total national needs (2018-2021)
Source: The Tunisian Grain Board
The concept of food security, as it is defined today, is quite different from how it used to be understood. Food security is not the same as the concept of food self-sufficiency, which is based on the ability of a state to meet all the national needs for food through domestic production alone. The 1996 World Food Summit definition states that: “Food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life”.
This definition, according to the Food and Agriculture Organisation, is the most in line with current developments as it allows countries to manage the constant increase in food consumption and to compensate for fluctuations in production and prices.
A dependency to ensure food security
In order to ensure food security, Tunisia has to rely on foreign markets, which supply about two-thirds of their grain needs. In recent years, this dependency has increased, particularly with the repercussions that the Covid-19 crisis has had on the quantities and prices of world grain production. Thus, local grain production covers only a small part of the total needs of Tunisians.
The Tunisian Grain Board [Office des Céréales] has a monopoly on importing to be able to cover the country's needs that are not met by local production. To cover these needs, grain imports are carried out through restricted international bids launched when the feasibility of the purchase is validated. According to the Director General of Agricultural Production, Abdelfattah Said, the purchasing commission of the Grain Board determines its requests based on the price of grain on the international markets and the stock supply, which has to cover four months of consumption. The purchasing commission publishes monthly calls for bids in order to compensate for what has been consumed.
Saïd details the purchasing procedures: "Bids are awarded to the suppliers who offer the lowest price, taking into account the specific conditions required in Tunisia in terms of quality."
"We don't have a lot of storage capacity. Sometimes the market prices go down and we can't buy grain because we can't find a place to store it. This is because the total storage capacity between both the Grain Board and private individuals is no more than 1.4 million tonnes." Abdelfattah Said, Director General of Agricultural Production at the Ministry of Agriculture.
Tunisia generally sources its grain according to the world grain production calendar that corresponds to the harvest seasons of each region around the world, since prices fall in periods of abundance. In autumn, spring wheat crops are imported from Eastern Europe and the countries of the Black Sea region, whilst in winter, crops are imported from North and South America.
For the rest of the year, Tunisia relies on imports from the strategic stocks of the major producing countries in Western Europe or around the Black Sea. In summer, the Tunisian supply relies mainly on local production.
Percentage of imported grains in relation to the total national needs (2018-2021)
Source: The Tunisian Grain Board
As for local production, the Grain Board is responsible for supervising, regulating and controlling the collection, reception, storage and sale of all quantities of grain collected by the grain collecting agencies. However, the difference between the amount of grain produced annually and the amount of grain collected by the Board is considerable. "We produce about 1.6 million tonnes per year, of which only about half is stored by the Grain Board", Abdelfatteh Said explains, Director General of Agricultural Production at the Ministry of Agriculture.
The Director General links the state's inability to collect all the grain crops to the liberalisation of the barley trade in Tunisia. According to him, local production was previously divided between 450,000 tonnes of barley, 950,000 tonnes of hard wheat, with the rest divided between other types of "triticale" soft wheat.
"With the increased demand in recent years for feed materials, the price of which has risen on international markets, producers have started to prefer selling their barley crops on the local market, and the state does not store any of it. If you combine this with seeds and private consumption, as well as smuggling and inefficient collection channels, the State only collects half of its grain harvest per year." Abdelfattah Said, Director General of Agricultural Production in the Ministry of Agriculture.
A crisis accentuated by war
"At the moment, ships are arriving with our grain imports as usual. We have enough stocks available until May or June. After that period, we will rely on the Tunisian harvest, which will reinforce our stocks. We don't have a problem at the moment." This was what Mahmoud Elyes Hamza, Minister of Agriculture, said in response to concerns that contracted purchases would not reach Tunisian ports.
However, the threat to food security started to show towards the end of 2021. On december 20, 2021, before the outbreak of war, and even before fears of an armed confrontation intensified, the Tunis Afrique press agency announced that four foreign ships loaded with imported wheat, barley and flour remained at sea without being able to access the commercial port of Sfax to unload their cargoes due to the inability of the Grain Board to ensure payment for the imported goods. The official press agency attributes this situation to "the downgrading of Tunisia's credit rating in recent months. It has been classified as amongst the countries that are unable to pay, which has led foreign suppliers to demand immediate payment."
This is all within the context of a growing deficit in Tunisia's food trade balance due to the rise in commodity prices caused by the Covid-19 crisis. The total value of grain imports has increased from about $513 million in 2019 to about $849 million in 2021.
Value of grain imports, in millions of dollars (2018-2021)
Source: The Tunisian Grain Board
The decline in Tunisia's foreign exchange reserves (which stood at 127 days at the time this article was published) is complicating the process of meeting thr imported grain needs.
Faced with an unprecedented rise in food commodity prices, which have reached record levels, food dependency is weighing on public finances, which are still suffering the repercussions of the Covid-19 crisis.
Evolution of the average purchase price per tonne (2018 -2021)
Source: The Tunisian Grain Board
At the end of January, prices rose, partly due to fears of a Russian invasion of Ukraine, according to the latest publication of the Tunisian Observatory of Agriculture. On the other hand, while grain prices have continued to rise after the start of the war, the actions of the Tunisian state have been limited to a statement by the Ministry of Agriculture, according to which: "The Grain Board has been able, during the past period, to finalise the supply programme to ensure the country's needs for durum wheat and barley are covered until the end of May 2022, and soft wheat until the end of June 2022."
According to this statement, during this period, Tunisia will be spared the turbulence resulting from the conflicts in the Black Sea Basin region.
As for the Central Bank, it noted in a statement that "in the absence of urgent appropriate decisions, the rise in global commodity and energy prices and the decline in activity of the main trading partners, in addition to the uncertain climate, would worsen the current account deficit and increase inflationary pressures in the coming period."
Despite numerous attempts, it has not been possible to obtain any precise information on the measures taken by the government or the Grain Board in this difficult situation. However, according to the Director General of Agricultural Production, Abdelfatteh Said, the ministry is focusing on improving the yield of local grain production and expanding the collection and storage capacity for this year's crop.
"This year, we will exploit all the possibilities that exist to store as much of the crop as possible. This probably means using private collection centres, as well as the reserves of the Grain Board and State Lands", says Abdelfattah Said, the Director General of Agricultural Production.
However, reliance on crops to ensure food security in the coming months does not seem to be a guarantee, given the fluctuation in local production that has historically been linked to changing climatic factors. Said says: "The situation so far is considered satisfactory, but it is likely to deteriorate, depending on the rainfall." Meanwhile, supplies for the following months remain dependent on the fragile situation in Ukraine and the vulnerability of global markets.
