The scramble of the Lebanese economy took other dimensions as the country is fighting the exponential spread of the Coronavirus and shortage of necessary goods.
Lebanon to face extra strain due to a shortage of wheat and rising food prices
Walking through partially emptied supermarket rows has become a common sight all around the world due to excessive shopping habits fuelled by uncertainties caused by the spread of the Coronavirus and the slowing of the global economy. In Lebanon, the scramble took other dimensions as the country already suffers from a severe shortage of foreign currencies especially the American dollar used to pay for all food, gas and oil imports as well as for manufactured goods sourced from China, Europe and the U.S.
At the turn of the decade, the Middle Eastern nation was going through political turmoil that put a considerable strain on the economy and caused banks to limit cash withdrawals and some service stations to close doors due to a shortage of necessary goods. Things took a turn to the worst following the outbreak of the pandemic as the prices of food rocketed due to the self-oriented approach of major exporting countries to ensure the stocking of local markets amid an accelerating global recession and a dramatic decrease of productivity.
Unprecedented surges of food prices
At the end of last year, the price of rice worldwide reached levels not seen in almost a decade due to drought in Thailand (the world’s second-largest exporter) and strong demand from Asian and African countries. The recent outbreak added more fire to the fuel and pushed the prices to historical levels. Wheat markets followed suit and rose more than 15% in the first quarter due to panic buying and production concerns arising from lockdowns in the major global exporting countries.
Over the past weeks, as countries moved toward more strict lockdowns, several major wheat exporters such as Russia and the U.S. have implemented measures to stabilize domestic prices amidst greater demand and uncertainty. These measures reflected negatively on importing nations such as the cash-strapped Lebanon which is now forced to compete against bigger and richer countries for shrinking market portions.
Will the local production fill the need?
Lebanon does indeed produce and export wheat to neighbouring countries, but it’s also heavily reliant on imports from Europe as the nation only produced 130,000 tonnes of wheat last year and bought more than 1.6 million tonnes via private companies, most of the quantity was sourced from Ukraine and Russia.
On the other hand, the devaluation of the country’s currency by half since the beginning of the economic woes pushed up the prices of locally farmed food. The World Food Programme WFP reports that prices have inflated by up to 47% for some items like sugar and cooking oil as of January 2020, thus deepening the suffering of the 50% of the population currently living under the poverty line. Some analysts insist that these price hikes are arbitrary and should be struck down by the legislators.
In response to these hardships, the government has decided to allocate financial aid for low-income families and those who have lost their jobs due to outbreak in hope of reducing the impact on Lebanese household and stimulating the economy.