Highlights

In MY2016/17 wheat imports are forecast to reach 1.4 MMT, no wheat is expected from the U.S. U.S. corn and rice imports are forecast at 100,000 MT each, with U.S. rice as 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 1.3 million metric tons (MMT); none is expected to be imported from the U.S. Barley consumption will increase by 3 percent to 925TMT from MY2015/16. The key suppliers of wheat and barley will be France and Black Sea sources, mainly Romania, Russia, and Ukraine.

In MY 2016/17, corn imports are forecast at 680,000 MT, with U.S. origin corn expected to supply 100,000 MT. Rice imports will amount to 208,000 MT, of which the US will be the top supplier with 100,000 MT.

Commodities:

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 two 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 1.3 MT, an eight percent increase from MY2015/16. The increase is driven by the country's economic slowdown, driving consumers to substitute subsidized “baladi" bread for more expensive staples. Additionally, the influx of Syrian refugees is also driving the increase in consumption.

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 2 percent to 1.4 MMT, the surge in imports is driven by the GoJ increased purchases of wheat to replenish their inventories and to meet the country's increasing consumption needs. Black Sea wheat, mainly of Romanian origin, remains more competitive than other sources, especially U.S. wheat, due to its proximity to Jordan.

In MY2015/16, the top wheat origin was Romania, followed by Russia, and Ukraine. U.S. wheat exports account for 95 TMT all of which were 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.

Stocks:

In MY2016/17, Post forecasts ending stocks at 613 TMT. MY2015/16 stocks are revised down to 693 TMT from official forecast of 775 TMT, due to an increase in consumption.

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, this part of GoJ policies to ensure food security.

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 per MT), and the subsidized price that goes as low as $50 per 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

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

20

20

20

20

Beginning Stocks

335

335

499

516

775

693

Production

20

20

25

25

25

25

MY Imports

1161

1188

1376

1377

1400

1400

TY Imports

1161

1188

1376

1377

1400

1400

TY Imp. from U.S.

0

0

143

95

0

0

Total Supply

1516

1543

1900

1918

2200

2118

MY Exports

0

10

10

10

10

10

TY Exports

0

10

10

10

10

10

Feed and Residual

17

17

15

15

15

15

FSI Consumption

1000

1000

1100

1200

1200

1300

Total Consumption

1017

1017

1115

1215

1215

1315

Ending Stocks

499

516

775

693

975

793

Total Distribution

1516

1543

1900

1918

2200

2118

Commodities:

Barley

Production:

Production of barley is negligible. Most barley is used for animal fodder 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 an 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 at 900 TMT. The 138,000 MT increase is a response to meet the increasing demand of “awasi" sheep form local and foreign markets. .. Barley suppliers are Black Sea basin countries, with Romania being the top supplier, followed by France, and Russia. No barley imports from the U.S. have been recorded for a decade.

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 per MT. 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.

Stocks:

In MY 2016/17, Post expects a decrease in GoJ's inventory ending stocks to 391,000 MT. MY 2015/16 stocks are in line with USDA's official forecast of 435 TMT.

Barley's inventory amount is within the GOJ's policy of strategic stocks that requires meeting 10 months of consumption needs,.

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

Jul 2016

Jordan

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

30

30

25

25

25

25

Beginning Stocks

439

439

505

504

435

396

Production

25

25

30

30

20

20

MY Imports

891

890

800

762

800

900

TY Imports

759

759

850

762

800

900

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

1355

1354

1335

1296

1255

1316

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

850

850

900

900

900

925

FSI Consumption

0

0

0

0

0

0

Total Consumption

850

850

900

900

900

925

Ending Stocks

505

504

435

396

355

391

Total Distribution

1355

1354

1335

1296

1255

1316


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 TMT. The exceptional growth in MY 2015/16 consumption 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 $ 3-4 billion.

In addition to the shortfall in Syria, the drop in commodity prices, mainly corn and soymeal, encouraged many large poultry operations to expand their operations. This triggered an oversupply, which has brought on a hangover as producers are suffering significant losses due to low prices, which, in many cases, are below production costs.

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 were an unprecedented 812 TMT. The increase was due to the decrease in international prices, as traders and producers were trying to hedge against future price increases. Therefore, the reduction in imports in MY2016/17 is a natural market response as it regains its equilibrium.

In MY2016/17, U.S. origin corn imports are expected at 100,000 MT a significant surge from 32,000 MT in MY2015/16. The increase in imports of U.S. corn is due to the tight supplies from South America, as its production is suffering from extreme weather events.

In MY2015/16 the market was 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, Argentinian 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 100 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.

Production, Supply and Demand Data Statistics:

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

1

1

1

1

1

Beginning Stocks

61

61

61

45

36

67

Production

10

10

10

10

10

10

MY Imports

700

659

800

812

675

680

TY Imports

700

659

800

812

675

680

TY Imp. from U.S.

80

60

0

24

0

100

Total Supply

771

730

871

867

721

757

MY Exports

25

25

25

40

25

36

TY Exports

25

25

25

40

25

36

Feed and Residual

675

650

800

750

650

650

FSI Consumption

10

10

10

10

10

5

Total Consumption

685

660

810

760

660

655

Ending Stocks

61

45

36

67

36

66

Total Distribution

771

730

871

867

721

757

Commodities:

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 208,000 MT, a 4 percent increase from MY2015/16 200,00 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 over 50 percent of imports, followed by long grain white rice, and basmati and jasmine rice. The consumption of rice usually goes up during parliamentary elections; contestants tend to sponsor big feasts of mansef to lure their constituents.

Trade:

In MY 2016/17, imports are expected to reach 208,000 MT. U.S. market share for rice is expected to remain steady at nearly 50 percent at 100,000 MT. Although the price is relatively higher, 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 India, Thailand and Australia. Most Asian rice is long grain that lies into two categories; long grain white rice, which is of lower price and constitutes most of the Asian imports. The second category is the aromatic and basmati rice that commands a premium over the medium rice, however its less preferred in the local recipes. The long grain's market share has grown from less than 25 to almost 30 percent over the last five 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.

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

20

20

15

12

15

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

190

196

200

205

210

210

TY Imports

190

196

200

205

210

210

TY Imp. from U.S.

95

96

0

96

0

100

Total Supply

210

216

215

217

225

225

MY Exports

0

5

0

1

0

1

TY Exports

0

5

0

1

0

0

Consumption and Residual

195

199

200

201

210

208

Ending Stocks

15

12

15

15

15

16

Total Distribution

210

216

215

217

225

225