Jordan Exports Wheat to Russia: $16 Million
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Jordan’s Ministry of Industry, Trade, and Supply (MIT) is the sole customer of Wheat from international suppliers through a competitive process by the local representatives of international companies. The process includes purchasing the lowest price within the preset specifications. On many occasions, MIT would turn down the purchase process whenever the technical staff is convinced the offered price is higher than the average market or that near future prices would be better.
Jordan’s Wheat bread, known as “unified bread” (in Arabic as mowahad), is now minimally subsidized by the Government; the subsidy is directed toward eligible Jordanian citizens rather than toward the product (bread). The Government of Jordan (GoJ) has reformed the subsidy system to target benefits to low-income families by providing direct cash subsidies. According to the GoJ, the policy enabled the Government to improve the efficiency of the subsidy program and eliminate 90 percent of waste in consumption and subsidy abuse by placing the responsibility of the subsidy on specifically targeting low-income families to make their own bread-buying decisions with their cash payments.
MIT sets the price to sell the Unified (mowahad) bread at $.45 per kg (compared to $.22 per kg before the subsidy reforms). Whenever there is an increase in the cost of an input used for making bread, such as fuel, electricity tariffs, or the minimum employee payment, the GoJ lowers the flour price to compensate for the increase. The Hashemite Kingdom of Jordan is among the poorest water-resourced countries on earth. Water scarcity is the limiting factor of the country’s ability to grow crops.
MIT sells Wheat to mills at the Government’s preset price, based on a moving average of the inventoried Wheat’s cost, including purchasing, storage, and transportation costs. The mills subsequently sell the flour to bakers under MIT’s supervision. The reforms in the subsidy system closed gaps where bakers previously benefited by channeling the subsidized flour into other unsubsidized purposes. The reform has narrowed the gaps so that this practice is not feasible anymore. Many businesses abusing and dependent on the subsidy system were phased out.
A total of 11 million people consume Wheat-based products. The flour is sold to bakers at two prices: the all-purpose flour is sold at a market price, which is the markup cost on milling fees from the Wheat sold by the Government (at the beginning of 2022 at a market price of Wheat is $212 per MT), and the subsidized flour is sold at $261-282 per MT. MIT lowers the price of the subsidized flour (for subsidized bread) when there is an increase in the fuel price at a proportional rate (to make up on bakers for the average fuel price increase used in baking. Fluctuations in the price of oil do not affect the subsidized price.
Jordan’s Wheat Trade Pattern
In 2021, Jordan imported Wheat worth $454 million, becoming the world’s 36th largest importer of Wheat. In the same year, Wheat was Jordan’s 10th most imported product. Jordan imports Wheat primarily from: Romania ($351 million), Bulgaria ($46.3 million), Russia ($40.8 million), Ukraine ($14 million), and India ($1.25 million). According to the AgFlow data, Jordan imported 0.4 million tons of Wheat from Romania in Jan-Apr 2023. The Constanta port shipped all Wheat.
In 2021, Jordan exported Wheat worth $15.8 million, making it the world’s 44th largest exporter of Wheat. In the same year, Wheat was Jordan’s 99th most exported product. The leading destination of Wheat exports from Jordan is Russia ($15.8 million), the United States ($33.1k), Kuwait ($11.1k), and the Netherlands ($9.93k).
Other sources: USDA
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