Since the invasion, ports on the Black Sea have stopped almost all forms of commercial activity, leading to a historic rise in wheat prices, exceeding even prices hit during the global food crisis in 2007-08. Rising inflation and a reduction in global GDP growth are expected by most economic institutions. The IMF is anticipating the level of inflation to reach 5.7 percent this year in advanced economies and 8.7 percent in the emerging markets, 1.8 and 2.8 percentage points higher respectively than projected as recently as January.
Globally, the economy is expected to grow at 3.6 percent, down 0.8 percent from January’s forecast. The World Bank’s latest Commodity Markets Outlook stated that “the war in Ukraine has dealt a major shock to commodity markets, altering global patterns of trade, production, and consumption in ways that will keep prices at historically high levels through the end of 2024.”2https://openknowledge.worldbank.org/bitstream/handle/10986/37223/CMO-April-2022.pdf This, they concluded, represents “overall the largest commodity shock we’ve experienced since the 1970s.”
The report adds that “energy prices are expected to rise more than 50 percent in 2022 before easing in 2023 and 2024. Non-energy prices, including agriculture and metals, are projected to increase almost 20 percent in 2022 and will also moderate in the following years. Nevertheless, commodity prices are expected to remain well above the most recent five-year average. In the event of a prolonged war, or additional sanctions on Russia, prices could be even higher and more volatile than currently projected.”
These global developments will exacerbate all the developmental problems produced by the neoliberalization of the MENA region’s economy. Several MENA countries rely on Ukraine and/or Russia for their food imports, particularly for wheat and cereals. Egypt is for instance the world’s largest wheat importer, with between 70 and 80 percent of its supply coming from Russia and Ukraine.
The prices of wheat flour and vegetable oil have increased throughout the region. In mid April, cooking oil was up 36 percent in Yemen and 39 percent in Syria, while wheat flour was up 47 percent in Lebanon, 15 percent in Libya and 14 percent in Palestine. Even prior to the war in Ukraine, inflation and rising prices were severely limiting access to food for the most impoverished. Food prices reached an all-time high in February 2022, according to the UN Food and Agriculture Organization’s (FAO) Food Price Index.
The United Nations’ World Food Program warned that war in Ukraine could drive millions of people in the MENA region into food poverty and lead to food insecurity globally. The MENA region already accounted for 20 percent of the world’s acutely food insecure people in 2020, while it represents only 6 percent of the world’s population. This is at least partly the case because the MENA region is the largest food importing region in the world, with around 53 percent of its consumed food imported from abroad, according to the World Bank. Yet, how did the region become so susceptible to radical price changes in imported food?
The region’s dependency grew in direct proportion to the neoliberal domination of agriculture. Several decades ago, a large number of MENA countries did not rely on such levels of imported grain and other staples. Egypt for instance had a self-sufficiency ratio (domestic production in relation to consumption) for wheat of approximately 70 percent in 1960. This dropped to 23 percent by 1980 as imports increased massively. Similar processes occurred in other countries throughout the MENA region.
Neoliberalization of Agriculture
In order to understand the scope of the problem today, we must situate the current short-term disruptions in light of a much longer-term project of intentionally engineering economies to be less resilient and self-sufficient. This food dependency and therefore vulnerability to the interruption of grain from Russia and Ukraine was a direct result of the adoption of neoliberalism by most of the MENA states over the past several decades. The states opened their markets to the world economy and engaged in speculative investment in search of short-term profits in the unproductive sectors of the economy, especially in real estate, finance, and trade. They also opened their economies to foreign direct investment, developing the export and service sector, especially tourism.
In collaboration with the International Financial Institutions (IFIs), they also privatized state industry, cut welfare, and removed subsidies to basic necessities like food, lowering the standard of living of the popular classes. At the same time, the states have kept taxes on both foreign and domestic companies low and guaranteed them cheap labor.
As a result, all the region’s countries are characterized by extreme class inequality, high rates of poverty, and casualized labor and unemployment, especially among youth. Over the last few decades, millions of people left the countryside to find work in urban areas or even abroad because of higher levels of poverty and a severe deterioration of the conditions of life in rural areas. Migrant laborers abroad sent part of their earnings back home to subsidize their relatives they had left behind. Egypt and Morocco experienced this pattern dramatically. Between 1970s and 2008, they were respectively the first and third largest recipients of remittances from workers abroad of all the countries in the MENA region. And in the case of the Gulf monarchies, their economies rely on temporary migrant workers who make up the majority of the laboring population and are deprived of all political, labor, and civil rights.
The outbreak of the popular uprisings in the MENA region in 2011 was therefore not just the result of the global economic crisis of 2008. Certainly, the Great Recession helped trigger the protest movements, but the region has suffered from deep structural problems compared to the rest of the world. These problems have only deepened over the last decade. The World Inequality Report 2022 declared the MENA region as the world’s most unequal area. The report stated that the wealthiest 10 percent of the region’s population holds 58 percent of income compared to 36 percent in Europe.
This inequality is, in large part, driven by long-term neoliberal restructuring of agriculture, and it has had devastating consequences on the popular classes. It has dispossessed peasants of their land, fundamentally changing rural life, and made countries dependent on food imports. The IFIs and states suppressed collective property rights, dismantled subsidies and support for peasant farmers, commodified land, and sold it to private conglomerates.
In the process, the agricultural sector was transformed from smaller farms producing for the domestic market to industrial-sized farms exporting for the world market. These concentrate on producing the most profitable crops such as fruits and vegetables to the detriment of staples. Large-scale farmers reaped rewards in this new system, while most farmers and peasants suffered impoverishment.
The most significant example may be that of Egypt. In 1992, the Egyptian government passed Law 96, which permitted landlords to sell land without informing or negotiating with tenants. It also removed longstanding caps on rural rents, driving them up by 300 to 400 percent in some areas. More than a third of all tenant families in rural areas (approximately 1 million households) lost their rights to land. Law 96 was enthusiastically backed by the World Bank and IMF as part of their general policy to establish private property rights in agriculture.
Yet Egypt is far from alone. As a whole, the MENA region is the second most unequal region for landownership in the world, just after Latin America. A staggering 20 percent of farms, most of them large agribusinesses, own 80 percent of cultivated land in the MENA region, while the remaining 80 percent of mostly small farms hold a mere 20 percent. In 2008, the top 28 percent of big farmers in Syria controlled 75 percent of the irrigated land, while the bottom 49 percent controlled only 10 percent. A Syrian satirical newspaper put it well in 2006: “After 43 years of socialism, feudalism returns.”
With this land concentration, employment in the region’s agricultural sector dropped from 35.2 percent of total employment in 1991 to 18.7 percent in 2019, and the share of rural population in the total population decreased from 68.8 percent of the total in 1960 to 40.8 percent in 2019. This was the general trend, with some variations in each country.