FEED Business Worldwide - December, 2011
Middle East and North Africa Grains Summit 2011
by Julius ARIFIN
Fifty delegates from all over the world met at the Point Hotel Barbaros in Istanbul, Turkey for the inaugural Middle East and North Africa (MENA) Grains Summit on September 26 and 27, 2011. With the challenges of geopolitical instability, economic recessions, and overpopulation facing the region, the presentations and panels at the MENA Grains Summit 2011 focused on long-term strategies aimed at securing the food supply chain inputs, as well as addressing food security issues.
The opening presentation was held by Marc Sadler, team leader for the Agricultural Risk Management Team of the World Bank, covering the world market outlook at present. While world grain production was rising to meet consumption, supply has been overtaken demand. This has caused feed grain inventories to decline, particularly in the United States. The presentation exhorted governments to "Put Food First", with measures such as increasing funding for agricultural technologies, and promoting free trade in agricultural produce.
Market transparency will also be assisted by the Agricultural Market Information System (AMIS), a G20 initiative introduced in June 2011 and due to publish its first report a year later. AMIS aims to improve global agricultural market transparency, and accelerate early policy discussions to avoid policy responses that attempt to remedy a given country's economic problems by worsening those of others. The members are expected to be the G20 nations, as well as seven other large importers and exporters, representing 90% of global consumption and production of grains.
Dr Mahendra Shah, senior policy advisor to the Qatar National Food Programme, warned that the policies promoting the use of biofuels produced from commodity crops have driven up the prices of grains. Citing studies by the Organization of the Petroleum Exporting Countries Fund for International Development (OFID), Shah predicted a drastic increase in grain prices of up to 30-50% by 2050 as a result of biofuel production, as well as a risk of hunger for 140 million people, based on a scenario of accelerated production of biofuels in order to meet stated production goals by countries such as Australia and the America. According to Shah, the benefits of first-generation biofuels in addressing and mitigating the factors involved in climate change were overstated, and the current rate of biofuel production was "not sustainable in the long run."
"The era of low food prices that we saw until the beginning of the millennium is over," Shah said. "Biofuels are also starting to compete with food use, and the question is, how far we will take these biofuels? If you look at the cereal price index itself, prices will increase substantially over the period."
Of the cereals used for ethanol biofuel production, two-thirds have to come from increased crop production, according to Shah. The remainder would have to come from reduced consumption for feed and food. This increased crop production would result in competition for arable land of up to 30 to 45 million hectares, as well as another 10 million tonnes of fertliser usage, which would offset much the benefits of using biofuels over conventional oil in reducing greenhouse gas emissions. As such, Shah recommended a transition towards third-generation biofuels that did not use commodity crops as part of its production, relying instead on non-crop sources such as algae.
Climate change itself was a major topic at the MENA Grains Summit. Dr Shah presented another study on the impact of climate change and weather patterns on food and water security, both current and projected. Crop production and yields in rainfed cultivated land may drop by up to 10% worldwide by 2080, and in the worst-case scenario, up to 175 million additional people will be at risk of hunger. Global water scarcity will also impact about 62% of the world's population by 2030.
Shah suggested new technologies and research as a possible solution, using the example of the AQUIESS weather modification technology, which can perform oceanic rainfall acquisition to targeted regions, as was demonstrated in 2007 in Saudi Arabia. Signals launched from ground-based stations were used to adjust the flight paths of weather systems to bring significant rainfall.
The recent political unrest in the MENA region was also addressed, in a presentation by Dr Alan Bullion, head of the Analysis Team of Agra Informa, London. The presentation assessed the geopolitical risks to the grains supply chain, and the uprisings in countries such as Egypt, Tunisia, and Libya were cited as examples of risks to the supply chain, along with natural disasters such as the earthquake in Japan, or piracy and agro-terrorism in ports.
According to Bullion, risk assessment and planning is key. "You cannot protect against every single risk," he said, "nor should you try to."
Therefore, key "choke points" should be identified, and the impacts that they may have on the grains supply chain should be minimized through appropriate measures and tools. These include buffer stocks, robust contracts and price guarantees, and contingent funds for disaster relief.
As demand for grain rises across the Middle East and North Africa region, the MENA Grains Summit 2011 helped suggest solutions for the challenges and constraints facing the region. Future iterations of this summit will be able to build on this firm foundation.
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