Report Highlights:

Grain traders remain wary of supplying wheat and barley to the Government of Jordan (GoJ), due to a rejection of a shipment of 100,000 MT of Polish wheat by Jordan Food and Drug Administration. The GoJ is trying hard to regain traders' confidence, nonetheless, despite few traders participating in tenders, it has successfully contracted its wheat and barley needs for MY2015/16. In MY2016/17 wheat imports are forecast to reach 1.2MMT, no wheat is expected from the US. US corn imports are forecast at 75,000 MT, and U.S. rice imports are expected at 100,000 MT, making U.S. rice the leading origin in the Jordanian market.

Executive Summary:

The Hashemite Kingdom of Jordan is among the poorest water resources countries on earth. Water scarcity is a real threat to the country's ability to grow crops. As a result, Jordan's domestic production of cereals is negligible.

In MY2016/17, Jordan's wheat consumption is forecast to reach 1.2 million metric tons (MMT); none is expected to be imported from the U.S. While barley consumption will increase by 3 percent to 925TMT from MY2015/16. The key suppliers of wheat and barley will be Black Sea sources, mainly Romania, Russia, and Ukraine.

In MY 2016/17, corn imports are expected to reach 680,000 MT, with U.S. origin corn expected to supply 75,000 MT. Rice imports will amount to 200,000 MT, of which the US will be the top supplier with 100,000 MT.

Wheat

Production:

Production of wheat is negligible in Jordan. In MY2015/16, due to average rainfall, production remained stable at 20,000 MT, providing close to three weeks of the country's annual consumption needs, and is expected to remain unchanged in MY2016/17.

Consumption:

In MY 2016/17, FAS Amman forecasts consumption at 1,220 MT, a 10 percent increase from MY2015/16. The increase is driven by the influx of Syrian refugees, which began in early 2012. In 2012, Jordan's population was 6.2 million with an annual consumption of 700,000 MT, increasing by approximately 500,000 MT (82 percent) by 2015. This adequately reflects the GoJ's 2015 census, which accounted for a total population of 9.5 million people. Of which, Syrian registered refugees are estimated at 600,000, with an additional 600,000 that are residing legally. The country has also witnessed a significant influx of Egyptian, Libyan and Yemeni nationals.

Trade:

In MY 2016/17, wheat imports are expected to increase by 22 percent to 1,220 TMT from Post's MY 2015/16 forecasted imports of 1,000 TMT, which were revised down from USDA's estimate of 1,150 TMT due to suppliers' wariness to participate in bids after a shipment of 100,000 MT of Polish wheat was rejected on what traders consider to be unsubstantiated grounds. Therefore, it is expected that the GoJ will aggressively purchase wheat to replenish their dwindling inventories. Black Sea wheat will remain more competitive than other sources, especially U.S. wheat, due to its proximity to Jordan.

In MY2015/16, including contracts to be shipped through June of 2016, the top wheat origin is Romania, followed by Russia and Ukraine. U.S. wheat exports account for 100 TMT all of which will be donated under USDA's Food for Progress Program. The slowdown in imports was due to the rejection of Polish wheat in February of 2015 by the Jordanian Food and Drug Administration (JFDA) under the premise that it did not meet the standards for human consumption. A Jordanian court ruled that the shipment needed to be re-exported, leading to a bitter dispute between the supplier and local authorities.

This led to a lull in offers on government tenders, prompting Jordan's Ministry of Industry and Trade to modify its requirement's so that a single bidder could be allotted the tender from the required three bidders. Romanian wheat capitalized on this new requirement, as one of the few companies bidding on tenders was a Romanian newcomer in the business.

The impasse between the Government of Jordan (GoJ) and traders seems to be abating after the MIT and JFDA signed a memorandum of understanding outlining the role of each in the wheat tendering process. This seems to have assuaged traders who have started making offers on MIT's tenders, however, traders are cautious and have stated that trade must flow smoothly over a period of time in order to fully regain trust.

Stocks:

In MY2016/17, Post forecasts ending stocks at 339 TMT. MY2015/16 stocks are revised down to 319 TMT from USDA's official forecast of 539 TMT, as suppliers abstained from submitting offers due to, what they consider to be, an unwarranted rejection of Polish wheat by JFDA.

The GoJ has a project to expand local silo capacity by an extra 225 thousand MT in addition to the 100 TMT that has been tendered out, alleviating the tight storage capacity that affects all commodities.

Policy:

Jordan's wheat bread, known as “unified bread" (in Arabic as mowahad), is fully subsidized by the government and all consumers are entitled to it. The GOJ sets the price of subsidized wheat flour so that bakeries are able to sell bread at US$ 0.22 per kg. To do so, the GOJ provides bakeries wheat flour extracted at a milling rate of 80 percent at US$50 per MT, while the market price attains a price of up to US$300 per MT. Whenever there is an increase in the cost of an input used for making bread, such as fuel, the GOJ lowers the flour price to compensate for the increase. There are no indications that the GOJ has plans to change its policy.

Marketing:

The Ministry of Industry and Trade (MIT) is the sole wheat importer in Jordan, selling its wheat to mills at the government's set price, which is based on a moving average of the inventoried wheat's cost, including purchasing, storage, and transportation costs. The mills subsequently sell the wheat to bakers under MIT's supervision. The flour is sold to bakers at two prices: the all-purpose flour sold at a market price, which is the markup cost on milling fees from the wheat sold by the government (ranging between $250-$350 /MT), and the subsidized price that goes as low as $50/MT. MIT subtracts the cost of subsidy from the subsidized flour upon invoicing the mills. The difference between the two prices accounts for at least $100 million in losses due to the program's mismanagement and abuse, a well-known issue acknowledged by many stakeholders. Subsidized flour accounts for up to 90 percent of the total consumption.

Wheat

2014/2015

2015/2016

2016/2017

Market Begin Year

Jul 2014

Jul 2015

Jul 2016

Jordan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

15

15

15

20

0

20

Beginning Stocks

328

328

489

509

0

319

Production

20

20

25

25

0

25

MY Imports

1161

1188

1150

1000

0

1220

TY Imports

1161

1188

1150

1000

0

1220

TY Imp. from U.S.

0

0

0

100

0

0

Total Supply

1509

1536

1664

1534

0

1564

MY Exports

3

10

10

100

0

10

TY Exports

3

10

10

100

0

10

Feed and Residual

17

17

15

15

0

15

FSI Consumption

1000

1000

1100

1100

0

1200

Total Consumption

1017

1017

1115

1115

0

1215

Ending Stocks

489

509

539

319

0

339

Total Distribution

1509

1536

1664

1534

0

1564

(1000 HA) ,(1000 MT)

Barley

Production:

Production of barley is negligible. Most barley is used for animal feed during its early growth stages.

Consumption:

Post expects barley consumption to increase in MY2016/17 by three percent to 925 TMT from MY2015/16. Most of the barley is used for sheep feed and to a lesser extent in dairy cattle and poultry rations. Although barley use has dropped significantly after the GOJ adopted the animal tag system five years ago, this year it's reversed course as Jordanian herders are increasing their sheep rearing capabilities, due to attractive prices for its meat in the Gulf Region. Each sheepherder receives subsidized barley according to the actual number of tagged animals, for up to 10 heads of sheep per herder. To circumvent this limit farmers split their herd amongst family members to capitalize on the subsidy.

Despite depending heavily on sheep imports to meet the local market's needs, Jordan exported more than 0.6 million head of its sheep to Gulf Cooperation Council (GCC) countries in 2015. The local “awasi" sheep characterizes itself for its exquisite palatability, fetching high prices in the GCC countries that have the purchasing power to pay a premium for it. Consequently, Jordan depends on lower priced imported sheep mainly from Australia, New Zealand and Romania to meet its needs.

Trade:

In MY 2016/17, total imports are expected to be 1,000 TMT. The 150,000 MT increase would be to offset the shortage in MY2015/16 as traders' became reluctant of supplying the government with commodities, due to its rejection of 100,000 MT of Polish wheat.. Barley suppliers are Black Sea countries, with Russia being the top supplier, followed by Romania, and Ukraine. No barley imports from the U.S. have been recorded for a decade. The available country of origin data covers what has been shipped, MIT contracts stipulate that origin of pending shipments can be reported at the time of shipping.

The GOJ is the main importer of barley and sets the selling price, which is usually an average of different origins and delivery dates, plus storage and handling costs, minus the subsidized discount, which is usually in the order of $10-50. The system allows for arbitrage when significant price swings occur, as traders can quickly take advantage and profit by offering a lower price than the government's set price, effectively undercutting the program's goal.

Stocks:

In MY 2016/17, Post expects increased ending stocks of 429,000 MT, as traders resume making offers on the GoJ's tenders. MY 2015/16 stocks are revised down from USDA's official forecast of 379TMT, to 334 TMT, as traders' unwillingness to bid on GoJ's tenders, resulted in lower imports to cover existing stocks.

Barley's inventory amount is less than the GOJ's policy of strategic stocks that requires meeting 10 months of consumption needs, however, Post does not foresee that the GOJ will increase its purchases to make up for the deficit.

Policy:

Only sheep and goat owners receive subsidized barley in the form of a discounted price. This program excludes cattle and poultry farmers from receiving subsidized barley as these two agricultural subsectors are considered industries. The GOJ animal tagging project has created a reliable database on all ruminant animals in Jordan, replacing the questioned animal census.

Marketing:

The Ministry of Industry and Trade (MIT) is the predominant barley importer in Jordan. MIT solicits bids through traders that meet the stipulated standards. Once it purchases the barley, MIT distributes and sells the barley at the subsidized prize to herders on the basis of the number of tagged animals that are recorded in the database up to 10 heads per herder.

Barley

2014/2015

2015/2016

2016/2017

Market Begin Year

Jul 2014

Jul 2015

Jan 2016

Jordan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

30

0

25

0

0

0

Beginning Stocks

439

439

504

504

0

334

Production

25

25

25

30

0

20

MY Imports

890

890

700

700

0

1000

TY Imports

759

759

800

800

0

1000

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

1354

1354

1229

1234

0

1354

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

850

850

850

900

0

925

FSI Consumption

0

0

0

0

0

0

Total Consumption

850

850

850

900

0

925

Ending Stocks

504

504

379

334

0

429

Total Distribution

1354

1354

1229

1234

0

1354

(1000 HA) ,(1000 MT)

Corn

Production:

Jordan's corn production is negligible, with annual production totaling less than 10,000 MT. Corn that is domestically produced is used for human consumption as corn on the cob.

Consumption:

In MY 2016/17, corn consumption is forecast at 655,000 MT. The growth in consumption over the last few years was driven by the dairy and poultry industries' expansion, capitalizing on the shortfall of supply from Syria. Jordan's poultry industry is considered the biggest agri-business sector in Jordan, with an investment value of around $ 3 billion, however, it will not grow as aggressively as the dairy sector, yet it will consume 70 percent of the imported corn.

In addition to the shortfall in Syria, the drop in commodity prices, mainly corn and soy meal, encouraged many large poultry operations to expand their farms. This triggered an oversaturated market that is currently in crisis as it's been unable to deal with its surplus production. In light of this, on March 9, 2016, egg producers and traders agreed to curb production and limit imports by allocating production and import quotas. This is currently impacting U.S. poultry exports as Jordan is implementing all type of non-tariff barriers to limit U.S. poultry form entering the country, in clear violation of Jordan's WTO and Jordan-US FTA commitments.

Local poultry production is around 200 TMT/year with 50-70 TMT of poultry imports, part of which goes to food processing factories. GoJ reports indicate that egg production increased more than 60 percent over the last two years, currently producing almost a billion eggs.

Trade:

In MY 2016/17 imports are expected to be 680 TMT. In MY2015/16, corn imports are being revised down from USDA estimates to 645 TMT. The decrease is in proportion to the current crisis facing the poultry industry, as they scale down production due to oversupply.

In MY2016/17, U.S. origin corn imports are expected to be at the same level as in MY2015/16, 40,000 MT, however, traders have complained of the low quality of U.S. corn, making it less attractive than corn from other origins. The market is still dominated by Argentina and Brazil, supplying 90 percent of all imports, with the US coming in third with 4 percent of the market share. The Jordan-U.S. Free Trade Agreement no longer provides an advantage for U.S. corn, as all imported corn is exempt from tariffs. Additionally, Argentinean and Brazilian importers are more versatile, accommodating shipments of 10,000-15,000 MT that the market requires.

Stocks:

Only a nominal amount of corn, not exceeding 15 TMT, is stored on-farm by poultry farmers to meet their monthly needs, as no adequate storage system has been developed in Jordan. The latter is the reason why traders prefer to source small shipments of 10,000-15,000 MT.

Policy:

There are no restrictions on corn trade in Jordan, and specifications for corn are similar to U.S. standards. Issues that have arisen in the past are excessive broken kernels -no consignment above 7.5 percent is allowed to enter the country- and corn that exceeds the established maximum residue limits for aflatoxins, which are equivalent to USFDA standards.

Marketing:

Corn in Jordan is imported and distributed through private sector traders, which is usually unloaded directly to trucks that deliver it immediately to dairy and poultry farms.

Corn

2014/2015

2015/2016

2016/2017

Market Begin Year

Oct 2014

Oct 2015

Oct 2016

Jordan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1

0

1

1

0

1

Beginning Stocks

61

61

61

56

0

11

Production

10

10

10

10

0

10

MY Imports

700

659

675

645

0

680

TY Imports

700

659

675

645

0

680

TY Imp. from U.S.

80

40

0

24

0

75

Total Supply

771

730

746

711

0

701

MY Exports

25

24

25

40

0

36

TY Exports

25

24

25

40

0

36

Feed and Residual

675

640

650

650

0

650

FSI Consumption

10

10

10

10

0

5

Total Consumption

685

650

660

660

0

655

Ending Stocks

61

56

61

11

0

10

Total Distribution

771

730

746

711

0

701

(1000 HA) ,(1000 MT)

Rice, Milled

Production:

Being one of the driest countries in the world, Jordan does not produce rice at all due to the crop's high water demands.

Consumption:

MY2016/17 consumption is expected to be 200,000 MT. Rice is a staple of the Jordanian diet widely used in one of their traditional dishes called “mansef", with an average annual consumption of about 24 kg per person, consumption increases in line with the country's population growth. The preferred variety is medium grain (camolino), which constitutes 90 percent of imports. The consumption of rice usually goes up during parliamentary elections; contestants tend to hand out big feasts of mansef to lure their constituents.

Trade:

In MY 2016/17, imports are expected to reach 210,000 MT. U.S. market share for rice is expected to remain steady at nearly 50 percent, close to 100,000 MT. Although the price is relatively higher than other origins, the U.S. industry's market development efforts have paid off, generating loyalty among Jordanian consumers who have developed a strong preference for U.S. origin rice.

Other major rice suppliers include the EU, Thailand, India and Australia. Most Asian rice is long grain that is a bit higher in price than the medium and less preferred in the local recipes, the long grain's market share has grown from less than 25 to almost 30 percent of the market share over the last 5 years.

Stocks:

Since rice trade is done by the private sector and there is no government policy on strategic stocks for this commodity, therefore minimal stocks are maintained for this commodity.

Policy:

There are no restrictions on rice trade in Jordan, and specifications are similar to U.S. standards.

Since the tariff duty on rice is zero for all origins, there are no any advantages offered by the Free Trade Agreement with the US.

Marketing:

Rice in Jordan is imported and distributed through private sector traders that package and provides a continuous supply to retailers as soon as it is discharged from the vessels.

The rice in food aid is usually bought by individuals, companies, institutions and international organization from the local market and then given to refugees; the UN agencies provide refugees with food stamps used to buy basic food from the private outlets.

Rice, Milled

2014/2015

2015/2016

2016/2017

Market Begin Year

Jan 2015

Jan 2016

Jan 2016

Jordan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

0

0

0

0

0

0

Beginning Stocks

11

11

11

12

0

15

Milled Production

0

0

0

0

0

0

Rough Production

0

0

0

0

0

0

Milling Rate (.9999)

0

0

0

0

0

0

MY Imports

200

196

200

209

0

210

TY Imports

200

196

200

209

0

210

TY Imp. from U.S.

0

96

0

96

0

100

Total Supply

211

207

211

221

0

225

MY Exports

0

5

0

1

0

1

TY Exports

0

5

0

1

0

0

Consumption and Residual

200

190

200

205

0

208

Ending Stocks

11

12

11

15

0

16

Total Distribution

211

207

211

221

0

225

(1000 HA) ,(1000 MT)