Improving Market Access and Regulations
Agriculture in Middle East and North Africa (MENA) countries has the potential to become competitive in both export and domestic markets, helping diversify the sources of employment and reducing poverty. With the possible exception of Libya, all Partnership countries have a comparative advantage in producing fruits and vegetables—provided that market access, domestic institutions, and regulation, including in the area of water management and SPS standards, allow for efficient marketing chains. Across the region, the modern horticulture sector is becoming a key force for market-oriented reforms. In Morocco’s El Guerdane project, for example, export farmers are driving private participation in development and management of an irrigation scheme, following a public-private partnership investment in a new desalination and irrigation plant to improve water supply to a vital agricultural region. Farming efficiency needs to improve beyond these market niches, and rural populations need to move toward higher productivity and higher-wage activities. This could be achieved by creating the conditions for competitive agriculture and the emergence of nonfarm income activities to diversify the rural economy, and by providing rural people with critical supports, such as education, health, and information, that can help them take advantage of the economic opportunities available. The recent rise in food prices has brought the issue of food security and the possibility of “Arab” self-sufficiency to the forefront of the policy debate. Agricultural production, especially of cereals, faces significant water constraints in the MENA region. This is particularly so in Partnership countries. With the exception of Morocco, they are net food importers and import a large share of their most important food staples, such as soft wheat. Nonetheless, many countries continue to encourage farmers to produce basic staples through a combination of tariffs and price supports. Over time, agricultural trade liberalization will lead to higher prices for some commodities, and through substitution effects will likely lead to an increase in prices for most other agricultural commodities. Allowing farmers to respond to such price increases may be the best way to address food staple scarcity over the long term. For short-term concerns, governments need to optimize their food security strategies by removing policy and infrastructure bottlenecks, improving the management of inventories, and using financial instruments to reduce exposure to price volatility.
An Untapped Agricultural Potential The agricultural sector in the MENA region is more significant than its share in gross domestic product (GDP) would suggest. The production of crops and livestock in MENA is relatively small, ranging from 3 per-
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