Sunday, November 23, 2008

Note to self

I write this as a note to myself for further analysis.

Case 1. Burghul.

International wheat prices were at around $300 per ton last summer. This is when the Lebanese small farmers harvested and threshed their local "baladi" wheat (my cousin Ali is one of them, he told me this story). They sold it between $500 and $800 per ton. They were not displeased, but not very happy: One hectare of land cost $200 to prepare, $200 to harvest and $200 to fertilize. Because of the low rainfall, one hectare gave on average a bit more than a ton: their profit was marginal, especially if they counted land rent and their own labor. They made a bit of money on selling the hay. So basically, wheat planting in the rainfed hilly lands Lebanon is a marginal business, even when international wheat prices are at their highest. Today the international wheat prices are closer to $130 per ton. And Lebanese farmers are still looking to sell it at $800 per ton. Two reasons for that: one, the price of fertilizers and agrochemicals has not declined, and two, there is demand on local wheat. It is used in small percentage with foreign wheat flour to make Arabic bread (requested by the state) and, more importantly, it is used to make burghul (parboiled crushed wheat).

Burghul is an important part of the local diet. It is used to make tabbouleh and kibbeh, 2 mainstays of the Lebanese diet. It is also cooked alone, boiled as rice and eaten next to other foods. This is a good rice substitute. Many references indicates it is healthier than most white rices because it is richer in protein and the carbs are more complex. It is also very tasty, and it is locally produced and it is part of local culture and traditions. It contributes to the local economy: the best burghul is made exclusively from local baladi wheat, and imported wheat makes a bad burghul. So most if not all of the Lebanese burghul is made from locally grown wheat. But it is usually more expensive than rice. It is also less available, due to the limited production of wheat in Lebanon.

This year, however, prices of burghul were expected to be very high, reflecting the high prices of local wheat. So the semi-industrial burghul mills started to produce it from imported wheat. They sold it to restaurants and to the supermarkets in the city. Purists and rural people who make their own burghul continued to use the real stuff, but most people in the city consumed the industrial type. I dont think anyone could tell the difference.

So the use of imported wheat to make burghul kept the prices relatively low and affordable to most. Yet, the profit margin for those who made it from imported wheat were close to 400%, while it was barely 20% for those who made it from local baladi wheat. But if it wasn't for the burghul made from imported wheat, then only the rich would have been able to afford it. And we are talking here about the most rustic peasant food. What irony: imagine a situation where only the rich can afford the food of the poor.

Case 2. Freekeh

Freekeh or freek is smoked wheat. It is delicious, cooked and eaten like rice, either whole grain or coarsely crushed. Freek is made by harvesting the wheat when still green but after it has filled, and burning it very rapidly. Only a few villages still make it in Lebanon, and a lot of the freekeh in supermarkets in the city is imported from Syria. Apparently, Syrian freekeh available on the Lebanese market is of very poor quality. The price of Lebanese freekeh this year was $8000 a ton. Yes you have read well: eight thousand US dollars. This is when the price of local wheat was $600 per ton and of imported wheat $300 per ton. So harvesting the wheat earlier and burning it and then threshing it increases its price by 1200%! The price of the Syrian freekeh is $250 per ton.

But even at $8000 per ton, all the freekeh disappeared from the market. Apparently (and I am partly to blame for that) the rich Beirutis rediscovered this peasant food and are now cooking it to replace rice. So in South Lebanon, you cannot find one grain of freekeh anymore, and the demand is very high. It is slowly dropping out of the peasant's table onto the richer people's tables. In my village they now buy the cheaper Syrian freekeh.

But the buyers are starting to complain: the prices are too high they say. The farmers answer: this is the free market, the law of supply and demand. As long as there is demand, and supply is limited, we will keep increasing the prices. If you are not happy, why not buy low quality Syrian freekeh?

So at the end of the day, here too, demand by the rich caused another class irony: the rural poor have to make do with an imported lower quality version of their traditional food, because the local producers would rather sell it to those with a higher purchasing power.

I had a long argument with one of the freekeh makers today. I was trying to convince him to keep the prices reasonably low, so that he could make a decent profit and keep the product affordable. He was adamant on selling at the maximum price he could get, $8 per kilo. One of his main clients, a restaurant owner, was present. He told the producer: "I am going to Syria to the villages to get traditionally made freekeh. I will import it and sell it 3 times cheaper than your product. If the price of local wheat is $800 per ton (5 times the international market price) then the price of freekeh should be at most $1,600 per ton, not $8,000!" I will get it from Syria for $1,000 a ton and flood the market and kick you out of it"!

And this may very well happen.

These 2 real cases raise important questions (at least they are important to me):

1. Should we work for the well-being of small rural producers or for that of the poor and middle class who are also net food buyers (they can be urban or rural but usually urban)? Of course the answer should be: for both. But are their interests reconcilable? The net food buyers need cheap, nutritious food and the small (and big) rural producers want high food prices. Cheap imports provide the needs of the poor and middle classes, while they destroy the rural farming systems. Moreover, there are serious questions raised around the nutritional value of imported food and the diets that are imposed de-facto by food imports, and which have shown to be detrimental to the health of people (the whole food sovereignty issue). But remember: the net food buyers outnumber the food producers by at least 12:1. Do we not owe them to implement solutions that are more appropriate to them?

2. Is it acceptable to have farmers produce food that no one in their community can afford, and which is sold to the urban rich? Is it acceptable that the small producers can only survive if they use their endowment (cultural and natural and social) to manufacture luxury items that are sold to a very small class of rich people while they themselves have to purchase lower quality food?

3. If the small producers adopt greed and free market and supply and demand as there credo, should they complain if someone else uses this same credo on them? But can we reasonably expect them to auto-regulate when the whole country lives on laissez-faire?

No comments: