I just read an article about how Yemen’s wheat production has increased by over 30% this year. Keep in mind that Yemen imports over 90% of its wheat, it’s relatively easy to get a big percentage jump if you start from a low level. What caught my eye was the fact that the article said that the increase was due to the implementation of the new “food security” program instituted by the government. As usual, there were no details as to what that might mean, but I have some guesses, and as usual, I have a feeling that the program misguided.
Yemen imports 90% of its wheat. Bread is a staple here, the Yemenis eat an amazing amount of it every day. My last teacher told me that he eats about 14 to 15 pieces of “Cadam” (a type of bread) every day. I would say that’s about a loaf and a half of bread back home every day. Wheat prices have gone up all over the world and that has caused the price of bread to go up as well. The people here are poor, and they put up with all sorts of shenanigans by the government, but if you raise the price of bread too much, there will be riots. There have been before, and I’m sure there will be in the not so distant future. I assume that this is what the “food security” program is all about, keeping the price of wheat low to keep civil unrest under control.
But how are you going to keep the price of wheat low? There are several ways a government can do this, and there are problems with all of them. The government could try to force the farmers to sell wheat at below the market price. There are some obvious problems with that. If you aren’t allowed to get the market price, you either don’t grow it to begin with or you sell on the black market. That program isn’t going to work, and I think even this government knows that. The government can pay subsidies directly to the farmers to grow wheat. Subsidies are headaches. Once you give subsidies, it’s very difficult to get rid of them. Just look at the US’ farm subsidy bloat for proof. Subsidies are hidden taxes, in other words they raise the price which is the opposite of what you’re trying to do. The much more popular approach is to raise the price of imported wheat (through a tariff) in order to make the local stuff seem like a bargain. It wouldn’t surprise me if the government already imposes an import tax on wheat, they tend to grasp at any money they see. Raising prices on food in a really poor country is pretty evil, but I’m sure that’s what’s going on here.
The big problem is that Yemen will never grow as much wheat as their booming population wants. I’m sure the idea is that with an import tax, the locals would be protected from foreign competition until Yemen can become a player in world wheat production. There are several problems with this. First, Yemen just doesn’t have the geography for large scale wheat production. There are few places here that have the flat, open fields that are best suited for growing and automatic harvesting of wheat. Even if they used every available acre, they would never produce enough to have any impact on worldwide wheat prices. The wheat fields in central Canada are several times the size of all of Yemen…
The big problem is water. Yemen is running out of water, they are running out of it at an alarming pace. It is estimated that Sana’a will be out of water in 10 years. Other parts may run out sooner. The papers here always talk about the booming population as the culprit but agriculture uses 90% of the water supply. A lot of that is due to qat and inefficient irrigation techniques. The government has gone to great lengths to stimulate the agriculture sector here. Since water is “free,” it seems like the ideal way to put people to work. Of course it also means that everyone will keep using it until it’s gone. As it turns out, the Saudi peninsula is not well suited for large scale agriculture production, who knew?
If Yemen gave up on agriculture, there would be more than enough water for the people here. “But what would they eat?” You can import all types of food relatively easily, water not so much. I’m pretty sure that the “food security” program more or less equals a water scarcity program. Yemen’s food security “program” should be similar to The UAE’s, Qatar’s, Taiwan’s , and Hong Kong’s, i.e. make enough money that you can import whatever you want. If the economy is working well, you can buy food from places that are better suited for it. Instead of doing that, the Yemeni government is giving people incentives to stay on the farm. This not only stunts the economy, it will ultimately lead to a full blown water crisis. Trade is good, why don’t they use it?