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Food security as a public good
Oman imports nearly 95% of its cereal requirements and is therefore vulnerable to food price volatility. The paper examines prospects for cultivating wheat domestically in Oman to help assure food security. Analysis shows that wheat cultivation would not be viable under current market prices but could be competitive if the gross margin was increased by more than 414 Omani Rials per hectare, such as through subsidies similar to those used successfully in Saudi Arabia. Maintaining domestic wheat production capacity is argued to produce the public good of strategic food security for the nation.
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Food security as a public good
- 1. Food Security asa Public Good: Oman’s Prospects Hemesiri Kotagama, Houcine Boughanmi, Slim Zekri, Shanmugam Prathapar College of Agricultural and Marine Sciences Sultan Qaboos University Hemesiri Kotagama
- 2. Introduction The unprecedentedsurge in food prices experienced during 2007-2008, particularly of the staples wheat and rice, have awakened worldwide interests on food security. Although the food prices have receded, it is expected that the phenomenon of food price volatility would continue (World Bank, 2009). Hemesiri Kotagama
- 3. Oman’s food security Nearly 95% of the cereal requirement of Oman is imported. Hence vulnerable to food price volatility. Strategies to be implemented to assure a realistic degree of food security, within economic and political realities and resource scarcity. Hemesiri Kotagama
- 4. Oman’s potential Omanhas the potential to increase the production of wheat, as it has past experience of wheat cultivation, the right climate and reasonably high average yields, constrained to resource availability, particularly water. Cultivation of wheat domestically may be considered a minimal strategic measure to assure food security. Hemesiri Kotagama
- 5. Scope of thepaper Examines the prospects to cultivate wheat in Oman – using a farming systems and production economic analysis. Hemesiri Kotagama
- 6. Theoretical Basis: Food Securityas a Public Good and Role of Government Economic theory provides the basis to argue, for and against intervention of government in economic management. Where markets fail, the government has a justified role to intervene and direct the market, to manage the economy. Hemesiri Kotagama
- 7. Food security asa public good ‘Food security’ is a public good as every one in society enjoys without rivalry and exclusion the sense and benefit of food security. Food security provides public goods of a healthy, productive and harmonious society. The acceptance of the paradigm that ‘food security is a public good’; justifies government intervention and support in the market to supply it. Hemesiri Kotagama
- 8. Position and Prospectsto Achieve Food Security in the Arab Region A three prong strategy to secure food security has been proposed. These include – (i) strengthening food safety nets such as though improved family planning and education, – (ii) reducing vulnerability to international food market vagaries through adoption of improved supply chain management and use of financial instruments and – (iii) improving and increasing domestic food production despite the constraints of resources such as water. Hemesiri Kotagama
- 9. Response of Arabcountries to address the recent food price shock Hemesiri Kotagama
- 10. Precautionary principle Precautionaryprinciples of maintaining domestic potential to: – produce safe minimum amounts of staple food. Hemesiri Kotagama
- 11. Food security inOman: Cereal production in Oman 0 20 40 60 80 100 120 140 160 180 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 Years Index(BaseYear2000) Total Cereal Production Per Capita Cereal Production Hemesiri Kotagama
- 12. Wheat Cultivation inOman : Extent of wheat cultivation in Oman 0 200 400 600 800 1000 1200 1400 1600 1800 2000 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 Year Area(Ha) Hemesiri Kotagama
- 13. Wheat production inOman 0 500 1000 1500 2000 2500 3000 3500 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 Year Production(Tonnes) Series1 Hemesiri Kotagama
- 14. Wheat yield perha in Oman 0 5000 10000 15000 20000 25000 30000 35000 40000 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 Year Yield(Hg/Ha) Hemesiri Kotagama
- 15. Saudi Arabian experienceson wheat cultivation with government support The wheat support price has been: – 533 US$/ Ton or 190 OR/Ton. The world market price has been: – about 60 OR/Ton. Saudi Arabia had achieved wheat self sufficiency and surplus production by 1984. Hemesiri Kotagama
- 16. Existing farming systemsin Oman As indicated above wheat had been a prominent crop in the farming systems in Oman in the past. However since 1970 the extent of wheat cultivation has dropped from 1700 ha to 500 ha. Recent studies (Al Said et al., 2007) on farming systems in Batinah region indicate a shift towards commercial seasonal crops and do not indicate farmers cultivating wheat. Hemesiri Kotagama
- 17. Analytical Methodology Maximize:π f (Σ Pi .Yi): – where π is gross margin, Pi are gross margins per hectare of land Yi are hectares of land of alternative crops i: Constrainted to Σ Cij.Yi ≤ Xj and Yi ≥ 0; – where Cij are input-output coefficients and Xj are available input level. Hemesiri Kotagama
- 18. Analysis and Discussion Wheat can not compete with the existing crops and be a component crop of the existing farming system with present gross margins at import price of wheat. The present cropping system is constrained in achieving its full potential in terms of use of land and water due to labour constraint. Hemesiri Kotagama
- 19. Subsidy The sensitivityanalysis showed that the ‘Allowable Increase’ of wheat gross margin as 414 OR/Ha. If the gross margin of wheat increased by more than 414 OR/Ha from the present gross margin of wheat (51 OR/Ha) to 466 OR/ Ha, then wheat would become a competitive crop and farmers would cultivate wheat. Hemesiri Kotagama
- 20. Wheat price andyield permutations on viability of wheat cultivation in Oman Wheat Price (OR/T) Wheat Yield (T/Ha) Gross margin (OR/Ha) Viability Comment 100.00 3.00 55.00 No Present yield and world price. 255.00 3.00 466.00 Yes Price support and present yield. World wheat price has not increased beyond 150 OR. 100.00 5.00 255.00 No Present price and world average yield (5 T/Ha). 183.00 5.00 505.00 Yes Support price with world average yield. Hemesiri Kotagama
- 21. Policy Guidelines Wheatcultivation under commercial farming would be viable if a subsidy of more than 414 OR/Ha (138 OR/Ton) is provided. This subsidy can be instrumented as input subsidies and/or price supports as Saudi Arabia had done. If the wheat yield could be increased through technological and managerial means to global potential yield of 5 Tons/Ha then the price support need to be more than 83 OR/Ton of wheat. Hemesiri Kotagama
- 22. Conclusion: Positive Consideringfood security as a public good, the cultivation of wheat in Oman could be achieved, through governmental support. However, the extent of its achievement in terms of extent of land cultivated and total domestic production of wheat, need to be considered in relation to the trade-off of fiscal cost and political choice of the degree of food security deemed as necessary to achieve. The governmental support in the form of a production subsidy need to be also compared with other alternatives; such as the cultivation of wheat in new land (provided resources such as water is available) undertaken by a government organization or outsourced to private companies, considering the fiscal cost and the transaction cost required for the successful implementation of a subsidy program. Hemesiri Kotagama
- 23. Conclusion: Normative Sustainingthe domestic potential to cultivate a staple food crop and produce safe minimum amounts of it, needs to be considered as producing a public good of strategic national importance, which should not be traded-off with other alternatives of producing, sourcing and supplying food through the market. Hemesiri Kotagama