Jordan seeing surge in wheat consumption

18.11.2016

Influx of Syrian refugees is one factor driving consumption of grain.
 
An economic slowdown in Jordan that has consumers substituting subsidized “baladi” bread for more expensive staples, coupled with an influx of Syrian refugees, is driving an uptick in consumption of wheat in the country.

According to a Nov. 8 report from the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service, wheat consumption in Jordan is projected at 1.315 million tonnes in 2016-17, up 8% from 2015-16.

Production of wheat in Jordan is negligible, so the nation must turn to imports to meet demand. In 2016-17, wheat imports are expected to increase by 2% to 1.4 million tonnes, the FAS said.

“The surge in imports is driven by the Government of Jordan’s increased purchases of wheat to replenish their inventories and to meet the country’s increasing consumption needs,” the FAS noted in the report. “Black Sea wheat, mainly of Romanian origin, remains more competitive than other sources, especially U.S. wheat, due to its proximity to Jordan.”

During the 2015-16 marketing year, Romania was the top wheat import market for Jordan, followed by Russia and Ukraine. U.S. imports accounted for only 95,000 tonnes, all of which were donated under the USDA’s Food for Progress program.

The Ministry of Industry and Trade (MIT) is the sole wheat importer in Jordan. The agency sells its wheat to mills at the government’s set price, which the FAS said is based on a moving average of the inventoried wheat’s cost, including purchasing, storage and transportation costs. The mills then sell the wheat to bakers under MIT’s supervision.

Flour in Jordan is sold to bakers at one of two prices: all-purpose flour is sold at a market price (which is the markup cost on milling fees from the wheat sold by the government — ranging from $250 to $350 per tonne), or a subsidized price that goes as low as $50 per tonne.

“MIT subtracts the cost of subsidy from the subsidized flour upon invoicing the mills,” the FAS noted. “The difference between the two prices accounts for at least $100 million in losses due to the program’s mismanagement and abuse, a well-known issue acknowledged by many stakeholders. Subsidized flour accounts for up to 90% of the total consumption.


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