Grain of Hope and Loaf of Neglect: Lebanon’s Renewed Bread Crisis

People in Lebanon are hungry for bread. For weeks, they have been queueing up outside bakeries across the country in the blazing summer heat, fearing shortages, and hoping to be able to buy Arabic bread — a staple food everyone could once afford.

In a pattern all too familiar in the cash-strapped country, as millions struggle to cope with compounding economic woes since late 2019, the government continues to respond with inadequate quick fixes to quell panic. First it was people’s savings at the bank, then it was fuel and medicine, and now it’s food.

What’s more, Lebanon’s successive governments could have prevented the country’s bread crisis. Instead, over the years, they have neglected local production and decentralized storage facilities, cultivating a precarious situation in which any unexpected event could spiral into a crisis.

Lebanon’s Vulnerability to Food Shocks

Lebanon imports 80 percent of its wheat from war-torn Ukraine — the rest coming from Russia, Moldova, and Romania — and what little it produces locally is not used domestically.

Economy Minister Amin Salam told The Public Source in an interview on June 24 that, in an effort to find other suppliers, the ministry was in talks with the United States, Argentina, Canada, India, and Germany. He said options are limited due to high shipping costs and lengthy delivery times.

Yet even before the Russian invasion of Ukraine, the sharp global rise in prices of basic food products, such as wheat and oil, due to supply chain bottlenecks was already squeezing Lebanon’s import-dependent economy.

Before June 2020, bread millers used to exchange their Lebanese pounds for U.S. dollars at the Central Bank, which gave them the foreign currency at the pegged rate of L.L. 1,500. Bread prices were stable and affordable.

But with the Lebanese pound having lost over 90 percent of its value against the dollar, and amid dwindling foreign reserves at the Central Bank, Lebanon can no longer afford to maintain its expensive subsidy program for importing primary goods — which once cost $6 billion annually — including wheat, which Salam says costs $25 million on average per month or $300 million annually.

Since June 2020, the Economy Ministry has gradually hiked the price of bread. Today, an 875-gram bundle of the local staple costs L.L. 16,000 — a more than 1,000 percent increase over the past two years.

The UN’s World Food Programme (WFP) estimates that the price of an essential food basket was 844,000 L.L. in June — having skyrocketed by almost 1,500 percent since October 2019, leaving the country with one of the highest food inflation rates in the world. 

Already in 2021, with over three-quarters of Lebanon’s population living in poverty, half of all Syrian refugees and just under half of all Lebanese were “food insecure.”

When Lebanon’s grain importers announced in April that they did not have funding to import subsidized wheat, people stormed their nearest bakeries fearing bread shortages. The government, in response, disbursed credit to the importers, but only enough for a few weeks of wheat.

In recent months, importers have been restocking their supply as frequently as every week, Salam told The Public Source.

Lebanon is not in a stable enough position to withstand market shocks, due to its “import-as-you-need policy” for wheat coupled with the economic crisis.
Lebanon is not in a stable enough position to withstand market shocks, due to its “import-as-you-need policy” for wheat coupled with the economic crisis, food security analyst Zeina el-Khatib explained.

Also known as “just-in-time inventory management,” the “import-as-you-need” policy means management, companies, or governments will import just enough product to fulfill orders as soon as they need them to reduce warehouse and inventory costs and ultimately save money.

“The problem with this is that it leaves us highly vulnerable to market shocks with no reserves to fall back on,” she told The Public Source. “Proper storage and contingency planning definitely could have softened the blow.”

What the Beirut Port Silos Revealed 

The Beirut port blast on August 4, 2020 demolished Lebanon’s key grain silos — the main storage space for the country’s national grain reserves. The day after, then-Economy Minister Raoul Nehme said the country had less than a month’s worth of grain reserves left, emphasizing that the immediate challenge for the government was to find alternative storage facilities. 

Yet, according to Dr. Mohammad Abiad, chair of the Economy Ministry’s Scientific Committee on Grains at the Port, the silos were holding only 45,000 tons of grain at the time of the explosion, including 15,000 tons of wheat — far below their capacity of 120,000 tons of grain and only eight and a half days’ worth of Lebanon’s wheat consumption. 

The silos were holding only 45,000 tons of grain at the time of the explosion, including 15,000 tons of wheat — far below their capacity of 120,000 tons of grain and only eight and a half days’ worth of Lebanon’s wheat consumption. 
Abiad explained to The Public Source that the absence of reserve-worthy quantities was because the silos were being emptied out for use. Private sector mills had been renting out storage space in the Beirut port silos for immediate access to and regular use of their stocks of wheat.

The port silos — Lebanon’s largest storage space and the country’s best chance at a strategic grain reserve — were not being used to stockpile grain for emergencies.

The Case of the Empty Warehouses

In March 2022, as Russia deepened its invasion of Ukraine and global wheat prices soared, Agriculture Minister Abbas Al Hajj Hassan informed the Ministerial Food Security Committee of the “discovery” of eight 10-meter-tall empty government warehouses in the Beqaa.

The warehouses sit in the town of Tal al-Amara, on facilities of the Lebanese Agricultural Research Institute (LARI), which belongs to the Ministry of Agriculture.

On March 16, 2022, LARI’s Director General Michel Afram told Sawt Beirut International (SBI) that he had pleaded with the government to use these warehouses for years, including in the wake of the Beirut Port explosion.

Until then, the public had only heard about existing small warehouses near the ports of Tripoli and Saida, and in other port towns — all in the context of different government representatives, like Nehme, insisting the country had a storage problem.

Michel Afram, director general of the governmental Lebanese Agricultural Research Institute, says he had pleaded with the government to use these warehouses for years, including in the wake of the Beirut Port explosion.
According to Afram, the Ministry of Agriculture built the warehouses in 2012 to store wheat bought from local farmers, as part of a subsidy program to support local agriculture. But Afram says the warehouses have been sitting empty since the government stopped allowing LARI to buy local wheat; the government ended subsidies to local wheat in 2019, while introducing a plan to bolster import subsidies, including wheat. The Public Source was unable to reach Afram for comment.

In an interview with Al Manar in April, MP and former Agriculture Minister Hussein al-Hajj Hassan publicly confirmed there were LARI warehouses in Tal al-Amara, as well as in other areas such as Kafardan in Baalbek, but that the latter were undergoing maintenance.

According to media reports, the warehouses have a total area of 10,000 square meters and can hold up to 400,000 tons of bulk or unpacked wheat — 280,000 more tons than the grain silos at the Port of Beirut and at least seven times Lebanon’s average monthly consumption of wheat.

But Geryes Berbari, the director general of Cereals and Sugar Beets at the Ministry of Economy, told The Public Source in May that he assessed the Tal al-Amara warehouses in April and found they can only hold up to 66,000 tons of grain. He added that the ministry has a smaller storage facility in that same village that can hold up to 16,000 tons of tightly-packed grain.

Based on Berbari’s figures, the total capacity for reserve storage would be 82,000 tons — still well over Lebanon’s average monthly consumption of about 54,000 tons.

When asked if the Tal al-Amara government silos were going to be used moving forward, Berbari replied: “No. Maybe in case of an emergency, in case there is a necessity, we’ll use them.”

Contrary to Afram’s comments in the SBI interview, however, Berbari claimed the forgotten warehouses are unusable — despite being only 10 years old.

“They have cracks and leakages,” he said. “If water seeps in, it will be infested with mold and rats.”

While its high-capacity warehouses sat vacant — only a few years after being built — the government was spending on rental of private warehouses in the same area. 
In response to an access to information request, the Directorate General of Cereals and Sugar Beets disclosed to The Public Source that the Ministry of Economy rented private warehouses in the Beqaa in 2017 and 2018 to store wheat quantities of 27,000 tons on average. While its high-capacity warehouses sat vacant — only a few years after being built — the government was spending on rental of private warehouses in the same area. 

Berbari observed that the government can no longer afford this approach. “Rent costs money, and you have to pay for transportation to the Beqaa and back to Beirut,” Berbari said. “There is no money.”

The Power of Importers

“In the 1990s [any remaining productive sectors] were deliberately destroyed in favor of the importing cartels,” explains Karim Merhej, The Public Source contributor and non-resident fellow at the Tahrir Institute for Middle East Policy.

Lebanon’s fuel importers are a case in point. According to energy policy researcher Marc Ayoub, in the 1990s the Lebanese government stopped storing fuel in its own containers, and allowed fuel importer cartels — a handful of private companies with close ties to Lebanon’s ruling sectarian parties — to store the fuel themselves, a practice that continues to this day.

Just prior to the lifting of fuel subsidies in the summer of 2021, fuel importers continued to buy fuel from the global market at the subsidized rate. They proceeded to hoard their stock, to be sold at at a higher price later, turning a larger profit.

This year could see a similar situation with the country’s licensed wheat importers.

The government has been relying on private sector mills for storage. “Mills are the ones bringing in the wheat, and they store it at their mills to work with it,” Berbari explained. “Once their supply is done, they will buy more, and so on and so forth... That’s how we’ve been doing it, taking it day by day and buying at that rate.”

In April, Economy Minister Salam visited private sector mills’ storage facilities to get clarity about their stock and whether they were hoarding wheat. At the time, he said that security agencies were trying investigate cross-border smuggling of subsidized wheat.

Salam reiterated to The Public Source that “there is a black market taking the subsidized wheat and selling it [for a profit].” 

“I Assure the Lebanese People That There Is No Crisis”

The Lebanese government has repeatedly insisted there is no food security crisis (in a progression that parallels General Security’s denial of a passport shortage).

A day after the Beirut Port explosion, then-Economy Minister Nehme claimed that there was “no bread or flour crisis” and that the country could meet its flour needs “in the long term.”

On March 27, Agriculture Minister Abbas al-Hajj Hassan insisted: “There is no [food security] crisis today in Lebanon.” He promised that “products will be imported from abroad in “double quantities””.

On April 26, Salam declared: “I assure the Lebanese people that there is no crisis... There is no crisis and no lifting of subsidies.”

At the same time, the government is pursuing avenues to continue subsidizing the price of bread, namely a World Bank loan of $150 million — an amount that will fund imports for only six to nine months at most, according to Salam. 

While the World Bank has already approved this loan, it is not without requirements — including, Berbari griped, requiring reports and research “for every little thing you do.”

Berbari also explained that, while the Council of Ministers has approved the loan and the government is in the final stages of closing the deal, importers cannot receive any of the money without Parliament’s approval.

Researchers warn these short-term fixes are not a sustainable solution. “In three years, we’ll have to start paying the loan with interest. How are we going to pay for it? We’re going to have to take out another loan to pay off that loan. And that’s the whole system,” researcher Merhej explains. “The post-war system is built on indebtedness.”

“Lebanon has for so long been relying on band-aid solutions to its many crises,” says el-Khatib. “For the past few decades, our country’s leaders have been nonchalant and irresponsible towards food security by not having a concrete strategy.”

“Many of the country’s food security issues could have been avoided if the economy focused more on manufacturing and agricultural production and less on banking and tourism.” —Zeina el-Khatib, food security analyst
“There is promise in the area of supporting local production and farmers,” el-Khatib argues. “Many of the country’s food security issues could have been avoided if the economy focused more on manufacturing and agricultural production and less on banking and tourism.”

Minister Salam told The Public Source of the Food Security Committee’s desire to support farmers and develop irrigation programs in order to increase local production of wheat so that it makes up 50 percent of Lebanon’s total supply. But, he clarified, “according to studies done by the Ministry of Agriculture, we can only have a 10 to 15 percent increase every year” — meaning it could take five to six years to reach that goal.

And this will also require heavy external funding. Farming machinery, seeds, and materials are all imported and therefore priced in U.S. dollars. 

As for storage plans, Salam told The Public Source on June 24 that the Ministerial Food Security Committee hopes to rebuild Lebanon’s national grain reserve by reconstructing the Beirut port silos and building two new storage sites — which will cost $100 million — creating six months’ worth of reserves at any given time. He insisted that international donors are ready to help.

Yet plans to rebuild the port silos seem particularly improbable, as the crumbling building has witnessed a series of fires over the summer and has begun to collapse two years after the explosion.

It would seem that a much less costly option is to turn to the Ministry of Agriculture’s large and rent-free warehouses in the Beqaa. 

But as Afram told SBI in March: “If it’s free, that means there’s no money being paid. There’s no commission [to be made] on it.”