Factors affecting the food gap and the share of self-sufficiency of selected commodities: the case of Arab countries

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1 Factors affecting the food gap and the share of self-sufficiency of selected commodities: the case of Arab countries Elham Giuma Elbogghi 1, Abdullah Alawad 2, Artan Qineti 3 Slovak University of Agriculture in Nitra 1,2,3 Faculty of Economics and Management, Department of Economic Policy Tr. A. Hlinku 2 Nitra, Slovak Republic 1,2,3 : elhamjum@yahoo.com, abdullah.alawad@outlook.com, artan.qineti@gmail.com Abstract Agriculture and food situation has entered in the Arab world since the mid-seventies in a critical stage, due to the growing demand for food and agricultural products in particular, high population growth rates, in addition to high food prices in the global markets and shrinking of the relative importance of the agricultural sector in the Arab economic structures. This has resulted in worsening food shortages and therefore resorts to foreign sources to fill the food deficit. Therefore, in this the paper we tried to identify the most important factors affecting the problem of the growing food gap, and the deterioration of selfsufficiency rates of selected food commodities (wheat and flour, maize, rice, red meat, white meat). We chose these goods based on their relative importance. In spite of the importance of productivity, the share of these commodities in the value of food imports exceeds production rates. So, we have set up methodological framework that includes estimating equations of general time trend during the period , expected future quantities of the food gap, and identify the most important factors affecting the amount of the gap and the share of selfsufficiency of goods under study. The main findings reveal that Arab countries are significantly exposed to the FNS risks, mainly driven by the food trade deficit between Arab countries, high unemployment, and high population growth rates. This resulted in the expansion of the size of the food gap between domestic production and national consumption of those goods and declining self - sufficiency rate of those goods. Therefore, they rely on foreign sources to fill the deficit. The Arab food integration is one of the most important reasons for achieving the Arab food security strategy. As this integration will bring significant economic advantages of the Arab world, it might increase the volume of trade exchange between Arab countries, on the one hand, and between the Arab world and foreign markets, on the other. Keywords: food security, food gap, self-sufficiency rates, Arab countries JEL Classification: Q18, Q21 1 Introduction "Food Security" is one of the major elements of development and poverty alleviation and has been the goal of many international and national public organizations. The issue is so important that according to the state of food insecurity in the world 2012 published by FAO around 870 million people (out of which 852 million from developing countries) are estimated to have been undernourished in the period (Food and Environment.2013). A recent study confirms that the increased demand for agricultural commodity's rates with no compatibility with the growth of agricultural production. This will lead to a widening food gap in the Arab world in the most food commodities and produces the Arab world is less than 70% of its food needs (Said.2010). it is increasingly being 907

2 recognized that, due to a confluence of factors, international food commodity prices are likely to exhibit a rising and more volatile medium-term trend. This trend is of particular concern for Arab countries because of their rapidly growing populations, limited water and arable land resources, and significant dependence on international food commodity markets. Arab countries want and need to act urgently to improve food security. Projections of the region s food balance indicate that depend on imports will increase by almost 64% over the next twenty years. Going forward, we need to deploy together our efforts to help offset vulnerability to future food price shocks in the region by focusing on investment in three key areas: (i) Strengthening safety nets; (ii) Enhancing food supply; and (iii) Reducing exposure to international commodity market volatility (Akhtar.2011). The dramatic rise in food prices, the growing disparity between production and population. The latest in the Arab world, especially big gap size was in 2010, nearly 40 billion dollars, in light of the continued rise in the number of residents at an annual rate of up to about 2.5 per cent of the total population of nearly 400 million people. All this latest bitter reality casts a shadow over the poor (Shaheen.et al 2014). 2 Material and methods Based on some standard methods. we will use equations of general time trend. Where we will show the relationship between Commodity balance variables of selected commodities, with time. By using Eveiws 6 program. The primary purpose of time-series analysis is to find suitable to measure changes and thus the study of their relationship to the different circumstances of the way (Alloush.2013). So we use the time as an independent variable X and Y values of the series as the dependent variable. The equation is: yˆ = aˆ + bˆx (1) Where: aˆ: the lump is part of the vertical axis, bˆ: mi trend line, yˆ: the value of the phenomenon directivity, x: time guide (start the One for the first time and then two second period and so on...). And: bˆ = xy nxy x 2 nx 2 (2) aˆ = y - bˆx...(3) Expectation size of future food gap of selected commodities. By measuring the general trend of the time series can be identified in the behavior of this series in the past, present, and then it can be used as a basis to predict the future (Shorbaj.1994). This method produces a mathematical equation by equation represents the general trend, which may be linear, or exponential (Fadel.1984). As in the equation (1), (2). yt = m * t + c (4) yt = m * c t.... (5) Where: yt : the amount of time series in time t; c, m: numerical constants. Here we try to formulate a model for food gap and appreciate its features and predict its path in the future gradient manner, and will use a computer package (Eviews 6). In addition, we will use the regression model multi-phased in multiple forms. therefore, we aim to reach the equation similar to the following equation: 908

3 Yi = β0 + β1xi1 + β2xi2 + + βkxik + εi (6) K Yi= β0 + J=1 βjxij + εi.(7) i = 1, 2 3,.,n. Where y: dependent variable, x: independent variables, (β0, β1, β2,, βk ) : Express regression parameters, εi : Random error to watch. In this the paper, we relyed on statistical data from publications and periodicals published by the World Bank, IMF, FAO, AOAD and the economic literature on the phenomenon of food security. 3 Results and discussion 3.1 Food and Nutrition Security (FNS) : The Case of Arab Countries Economic growth and development constraints in Arab countries In 2013, the average real GDP growth rate of the region is projected at 4.4%. The GDP growth rate on average is likely to taper off due to the decline in energy export revenues which marked a historic high in At the same time, net energy importing countries in the region is struggling to stabilize their economies amid worsening foreign exchange constraint. Table 1 : Real GDP growth rate and consumer price inflation (Annual percentage change) Area GCC countries Arab Mashreq Arab Maghreb Real GDP growth Consumer price inflation Arab LDCs Total Arab region Source; UN ( United Nations) Survey Of Economic And Social Developments In The Arab Region, New York. The Arab world has the highest unemployment rate in the world. It is estimated that this rate has deteriorated from 14% before the events of the Arab spring in 2011 to no less than 16% currently. This happens while sectors like tourism, information technology, banking and construction are booming in many countries, but employers face difficulties in finding the necessary technical skills. high population growth leads to large numbers of young people entering the workforce every year, while growth in the Region has not been sufficient to create an appropriate number of jobs. The major reason for this is the low level of economic integration between the member countries of the Region 909

4 bilion dollar Table 2: The change in unemployment rates in selected Arab Countries. (% of Labor force) Country Algeria Egypt Morocco Tunisia Jordan Saudi Arabia Developed countries Source: (GUCCIAAC) The General Union of Chambers of Commerce, Industry & Agriculture for Arab Countries The Arab Economy- a Private Sector s Perspective For a Better Business Climate Constraints of agricultural sector in Arab countries Agriculture accounts for most important economic sectors in the Arab countries. In terms of the weakness of the technical level of the Arab cultivation (80%) of them were traditional cultivation depends on the cultivation of rain. One of the most important obstacles facing the Arab agriculture is a set of utmost importance and economic gaps in economic development, including: technical gap, the food gap, the institutional gap, reflected by the low level of agricultural services of guidance and research, marketing and other financing gap, resulting from deficiencies in the investment in infrastructure, and refrain from investments in joint agricultural projects. Figure 1 : Agricultural trade balance of agricultural sector in the Arab countries (2000, ) Agricultural trade deficit Agricultural exports Agricultural imports Source : IMF (International Monetary Fund) Unified Economic Report: agriculture and water sector, Chapter III, p Features Of The Food Crisis In The Arab Countries The contribution of agricultural output in GDP for the Arab countries The GDP growth rate on average is likely to taper off due to the decline in energy export revenues, which marked a historic high in The data indicate development programs and policies during the current decade to the decline in the relative importance of the agricultural output in the GDP of the Arab countries as a group. With the corresponding figure of 7.8 % in 2000 and 5.6 % in 2011 (AMF.2012). In 2012 total agricultural GDP value about (139.1) billion dollars (5.4%) of the Arab GDP and in 2013 AGDP was (136,251) billion dollars 910

5 (5.0%) of the Arab GDP (AOAD.2013). See Figure % 6.1% 5.1% 6.6% 6.2% 5.6% 5.4% 5% 0 Figure 2: The contribution of Arab agricultural output in GDP Source: Arab Monetary Fund, Unified Arab Economic Report. Arab Organization for Agricultural Development. 2011,2013. Arab food security situation The relative importance of selected food commodities Operates grain crops (65.6%) of cultivated food crops in the area of Arab States in 2013, with a total production (55.5) million tonnes. Tops the production of wheat in the grain group by about (50%), then maize, rice and barley by (15.8%), (12%), (11.9%) respectively. contribute red and white meat by (37.5%), (62.5%), respectively, of the total meat production in a concentrated food gap in certain commodities the most important grain group that contributes only about (53.62%) of the value of the gap, while meat contributes by (16.45%), and varying the Arab states in the amount of their contribution to the value of the Arab food gap according to the consumption patterns of the population, and income levels and Agricultural available capacity. Figure 3: The relative importance of Figure 4: the relative importance of meat cereal crops of the total production in 2013 of the total meat production in 2013 other crops barley Rice maie wheat 10,30% 11,90% 12% 15,80% Source: Arab Organization for Agricultural Development Arab food security situation. Figure 5: The contribution of selected commodities in the value of the food import 50% 0% 20% 40% 60% White meat Red meat 37.5% 62.5% 0% 20% 40% 60% 80% Figure 6:The contribution of selected commodities in the value of the food gap wheat & flour white meat 15,60% 30,80% Meat 16,45% Red meat cereal crops 24,10% 32,50% cereal crops 53,62% 0,00% 10,00%20,00%30,00%40,00% 0,00% 20,00% 40,00% 60,00% Source: Arab Organization for Agricultural Development Arab food security situation. 911

6 Economic analysis of the evolution of commodity balance variables of the Arab selected food commodities in the world ( ) In spite of increased domestic production of major food commodities, but the rapid and steady increase in population has led to increased domestic consumption of major food commodities at rates much higher than the domestic production growth rates. Table 3: The equations of the general trend of commodity balance variables of the most important food commodities in the Arab world during the period Commodity balance variables Fixed formula (a) Regression coefficient (ß) No Equation The coefficient of determination (R 2 ) T- calculated Test F- Test Wheat & flour (1) 0.20 ( ) he amount of production (a thousand tons) Maize (2) * Rice (3) 0.01 ( ) Red meat (4) ** White Meat (5) ** Wheat & flour (6) ** Available for consumption (a thousand tons) Maize (7) ** Rice (8) * Red meat (9) ** White Meat (10) ** Wheat & flour (11) ** The amount of imports (a thousand tons) Maize (12) ** Rice (13) ** Red meat (14) ** White Meat (15) ** T h e a 912

7 Wheat & flour (16) ** Maize (17) ** Rice (18) ** Red meat (19) ** White Meat (20) ** Wheat & flour (21) 0.26 ( ) Self-sufficiency % Maize (22) 0.32 ( ) Rice (23) ** Red meat (24) ** White Meat (25) ** Note: * Significant at the 0.05 level, ** Significant at 0.01 level, ( ) Is not moral. Source: Collected and calculated from (AOAD) Arab Organization for Agricultural Development. ( ). Yearbook of agricultural statistics, the Arab League, various issues. 3.3 Food Security and Trade in The Arab Countries Agricultural exports accounted 2% of the total exports in the Arab world in While the food exports of the agricultural export's ratio 79.2%, and the agricultural imports in the same year were the increase of 8.37% of the total imports. Food imports accounted for 83.25% of agricultural imports. The foreign trade of food commodities worth around (99.9) billion dollars in 2013, where exports contributed around (19.41) billion dollars represented about (19.44%) of the total foreign trade of food commodities, and the coverage ratio of the value of imports about (24.13%). Figure 7; Total exports and import value In Arab countries billion dollars Source: Arab Organization for Agricultural Development The Arab Agricultural Yearbook of Statistics, Vol. (33). Figure 8: Food exports and import value In the Arab world Total exports Total imports 913

8 billion dollars ,411 19,492 20,828 Food imports billion 80 dollars 90 Source: Arab Organization for Agricultural Development The Arab Agricultural Yearbook of Statistics, Vol. (33). We can say that the reason for the growing reliance on external sources is due to a decline in the contribution of the agricultural sector in GDP and the per capita agricultural output. This has led to a shortfall in food balance, as the value of imports exceeded the value of food exports in the Arab countries, (figure 9). Figure 9: Food Deficit in Arab countries Food exports 68,013 80,441 76, ,185 57,208 61, food deficit Note; Food Deficit = Food Exports Food Imports Source: Arab Organization for Agricultural Development The Arab Agricultural Yearbook of Statistics, Vol. (33) The expectation of the future quantities of food gap in Arab countries The results in (Table 4) show that the food gap will increase due to increased demand for food commodities and the food production deficit in the Arab countries. This leads to increased food imports and exacerbated the food gap. And to alleviate the worsening gap requires the targeting of Arab economic policies to achieve the following objectives: 1 - The adoption of an integrated Arab strategy to bridge the food gap, rationalizing the consumption of food and build strategic stocks. 2- Confirmation of the Arab cooperation and integration in the field of self-sufficiency where they can do marketing activities for agricultural products in order to deepen Arab cooperation in the field of food trade. Table 4: Future expectations for the amount of the food gap of the most important food commodities, during the years 2020, 2025 in the Arab world Goods The amount of the expected gap Wheat & flour 441, , Maize 206, , Rice 42, , Red Meat 7, , White Meat 8, ,

9 billion dollars Note; Collected and calculated from the equations of the general direction of the gap amount of goods under study in Table Trends of The Arab Food Gap The Arab food gap is Characterized by fluctuating from year to year due to changes in agricultural production and the volume of consumption and fluctuations in international prices of food commodities. That the value of the Arab food gap tended towards stability between 2011 and 2013, and perhaps mainly due to the efforts of Arab states to improve and increase the production of food commodities through programs and projects related to food security, Arab countries vary in the amount of their contribution to the value of the Arab food gap, according to population and consumer patterns and income levels.(aoad 2013). Figure 10: the value of the Arab food gap ( ) food GAP 235,6 35,25 35, Source: Arab Organization for Agricultural Development The Arab Agricultural Yearbook of Statistics, Vol. (33). Note; Food Gap = domestic production - net imports of various food commodities The main determinants of food gap of selected commodities ( ) From the analysis in (Table 5) we found that the local production of the wheat is the most important factor affecting the amount of the gap, where local production is unable to meet the growing demand of the population, thus leading to resort to Import and causes the expansion of the food gap. As for maize, rice that the increase in imported quantities led to the worsening of the food gap of these crops. parameters values of red and white meat show that Arab countries import quantities of meat to cover the shortfall in domestic production and meet the needs of the population, and this leads to the growing food gap of meat. Table 5: The main determinants of the amount of the food gap of the most important food commodities in the Arab world ( ) Goods The estimated models Equation No. (R 2 ) F- test Wheat & flour Log Y1 = Log X Log X4 T-test ( ) ( ) ( **) (26) Maize LogY2 = LogX Log X LogX3 T-test ( ) ( ) ( ) ( **) (27) Rice Log Y3 = Log X Log X4 T-test ( ) ( **) ( ) (28)

10 Red meat LogY4 = LogX LogX3 T-test ( ) ( ) ( **) (29) White Meat Linear Y5 = X X3 T-test ( ) ( ) ( **) (30) Note: Log; Expression of the logarithm, * Significant at the 0.05 level, ** Significant at 0.01 level, ( ) Is not moral. Source: Collected and calculated from (AOAD) Arab Organization for Agricultural Development. ( ). Yearbook of agricultural statistics, the Arab League, various issues. Where; Y 1; Gap amount of wheat and flour (a thousand tons), Y 2; Gap amount of maize (a thousand tons). Y 3; Gap amount of rice (a thousand tons), Y 4; Gap amount of red meat (a thousand tons), Y 5; Gap amount of white meat (a thousand tons), X 1; production quantity (a thousand tons), X 2; population (million inhabitants), X 3; The amount of imports (a thousand tons), X 4; the average per capita agricultural GDP (US dollar) Self-sufficiency rates of major food commodities in the Arab countries The deterioration of Self-sufficiency rates in Arab countries constitutes a threat to food security, Food commodities can be classified into three groups, according to the rates of selfsufficiency during the period ; 1- Self-sustaining high rates of groups: its in potatoes, vegetables, fish, fruit, and eggs, where the self-sufficiency rate in excess of (96.24%). 2- Self-sufficiency rates of medium groups; include red meat, dairy products, poultry meat, and legumes where self-sufficiency rates ranging from (54.26%) and (81.09%). 3- Self-sufficiency rates are low groups; include grain, vegetable oil, sugar, ranging Selfsufficiency rates between (30.82%), (43.76%). Figure 11: Self-sufficiency ratio of selected food commodities 100 wheat 50 maize Rice 90 Red Meat

11 80 White Meat Source: Arab Organization for Agricultural Development. ( ). The Arab Agricultural Yearbook of Statistics The main determinants of the proportion of self-sufficiency of the selected commodities in the Arab world ( ) The Arab countries face serious challenges in their quest to promote food self-sufficiency; including drought and limited arable land and scarce water resources, population growth, in addition to the serious implications of climate change, and to achieve food self-sufficiency in the Arab region requires a focus on regional cooperation, based on the great disparity between countries in the region on ecosystems and natural resources and income levels and consumption patterns, paving the way for a reduction of the adoption of the countries in the region on food imports, particularly cereals. Table 6: The main determinants of the Self-sufficiency ratio of the most important food commodities in the Arab world ( ): Goods The estimated models Equation No. (R 2 ) F- test Wheat & flour LogY6 = LogX LogX LogX4 T-test ( ) ( **) (-1,289212) ( *) (31) Maize LogY7 = LogX LogX LogX3 T-test ( ) ( **) ( ) ( **) (32) Rice LogY8 = LogX LogX LogX4 T-test ( ) ( **) ( **) ( ) (33) Red meat LogY9 = LogX LogX3 T-test ( ) ( **) ( **) (34) White Meat LogY10 = LogX LogX3 T-test ( ) ( **) ( **) (35) Note: Log; Expression of the logarithm, * Significant at the 0.05 level, ** Significant at 0.01 level, ( ) Is not moral. Source: Collected and calculated from (AOAD) Arab Organization for Agricultural Development. ( ). Yearbook of agricultural statistics, the Arab League, various issues. Where; Y 6; Self-sufficiency ratio of wheat and flour, Y 7; Self-sufficiency ratio of maize, Y 8; Self-sufficiency ratio of rice, Y 9; Self-sufficiency ratio of red meat, Y 10; Self-sufficiency ratio of white meat, X 1; production quantity (a 917

12 thousand tons), X 2; population (million inhabitants), X 3; The amount of imports (a thousand tons), X 4; the average per capita agricultural GDP (US dollar). 4 Conclusions There are several factors that led to the limited food production in the Arab world, thus widening the food gap. In contrast. Increase demographic growth rates, The low proportion of cultivated land actually, Asymmetric distribution of agricultural resources in the Arab world, Water scarcity and misuse of disposable ones, Low agricultural productivity and the failure of agricultural policies. Domestic and foreign reports indicate that the Arab countries have the resources and experience, enough to achieve Arab food security, the requirement to take measures to protect and develop the use of those resources and to ensure the rational use and employ good arrangements. The results that have been reached in the case of Arab countries were showing that Agriculture and Food in the Arab world since the mid-seventies the situation has entered a critical stage, and was the growing demand for general food and agricultural products, in particular. As a result of high population growth rates and a qualitative jump in per-capita incomes in some Arab countries (oil), in addition to rising food prices in global markets and shrinking the relative importance of the agricultural sector in the Arab economic structures. This has resulted to worsen food shortages and therefore, resort to foreign sources to fill the deficit. So, In this the paper, we have set up methodological framework that includes estimating equations of general time trend of some food commodities during the period An expectation of future quantities of the food gap of the most important food commodities, and Identify the most important factors affecting the amount of the gap and the proportion of self-sufficiency of goods under study. therefore, we can say that integration will bring significant economic advantages of the Arab world, and this calls us to work to achieve Arab economic integration and the creation of agricultural investment environment that encourages more investment in the agricultural sector and the political decision-making and administrative procedures applicable, and the diversification of Arab agricultural patterns, taking into account the principles of specialization and comparative and competitive advantages. References [1] ARAB MONETARY FUND (AMF) Unified Arab Economic Report, Agriculture and water sector. Chapter III, p [2] ARAB ORGANIZATION FOR AGRICULTURAL DEVELOPMENT(AOAD) Arab food security situation. [3] ARAB ORGANIZATION FOR AGRICULTURAL DEVELOPMENT The Arab Agricultural Yearbook of Statistics, Vol. (33). [4] ALLOUSH, Qais "Time Series Analysis", College of Education for Human Sciences, UOB. [5] AKHTAR, Shamshad First Arab Development Symposium, Food and Water Security in the Arab World, Kuwait, March agepk:34370~pipk:42770~thesitepk:4607,00.html [6] FADEL, Ahmed Ali Introduction to Applied Econometrics, the General Establishment for publication and distribution, advertising, Tripoli, Libya. [7] FOOD AND ENVIRONMENT Basic Concepts of Food Security: Definition, Dimensions and Integrated Phase Classification

13 [8] SHORBAJI, Magdi Theory and Practice of Econometrics, Lebanese, Egyptian house. [9] SHAHEEN, Nabi- IRAQ, Ahmed BLACK, Beloved RYAN, Abdullah Arab food security gap between the mouths density and atrophy production: [10] SAID, Rim Arab food gap and ways to address them. * Online full-text paper availability: doi: 919

14 Years APPENDIX Appendix 1: The main determinants of the amount of the food gap and the proportion of selfsufficiency of wheat and flour in the Arab world ( ) The size of the gap (000 tons) Selfsufficiency ratio Production quantity (000 tons) The amount of imports (000 tons) The average per capita agricultural GDP (US dollar) Population (million inhabitants) Available for consumption Source: (AOAD) Arab Organization for Agricultural Development. ( ). Yearbook of agricultural statistics, the Arab League, various issues. Years Appendix 2: The main determinants of the amount of the food gap and the proportion of selfsufficiency of maize in the Arab world ( ) The size of the gap Selfsufficiency ratio Production quantity The amount of imports The average per capita agricultural GDP (US dollar) Population (million inhabitants) Available for consumption Source: (AOAD) Arab Organization for Agricultural Development. ( ). Yearbook of agricultural statistics, the Arab League, various issues. 920

15 Appendix 3: The main determinants of the amount of the food gap and the proportion of selfsufficiency of Rice in the Arab world ( ) Years The size of the gap Selfsufficiency ratio Production quantity The amount of imports (000 tons) The average per capita agricultural GDP (US dollar) Population (million inhabitants) Available for consumption Source: (AOAD) Arab Organization for Agricultural Development. ( ). Yearbook of agricultural statistics, the Arab League, various issues. Appendix 4: The main determinants of the amount of the food gap and the proportion of selfsufficiency of Red Meat in the Arab world ( ) Years The size of the gap Selfsufficiency ratio Production quantity The amount of imports The average per capita agricultural GDP (US dollar) Population (million inhabitants) Available for consumption Source: (AOAD) Arab Organization for Agricultural Development. ( ). Yearbook of agricultural statistics, the Arab League, various issues. 921

16 Appendix 5: The main determinants of the amount of the food gap and the proportion of selfsufficiency of White Meat in the Arab world ( ) Years The size of the gap Selfsufficiency ratio Production quantity (000 tons) The amount of imports The average per capita agricultural GDP (US dollar) Population (million inhabitants) Available for consumption Source: (AOAD) Arab Organization for Agricultural Development. ( ). Yearbook of agricultural statistics, the Arab League, various issues. 922