Yemen Wheat Traders raise Fears About Staple Import

Written by Staff

Yemen’s humanitarian crisis is set to deepen in the coming months as domestic wheat traders warn that they can no longer afford to import the war-ravaged country’s main staple.

Two of the impoverished state’s main wheat traders have written to the authorities in rebel-held Sana’a to inform them that they can no longer import wheat because local banks cannot convert Yemeni riyals into hard currency, according to letters seen by the Financial Times.

For Yemen’s 25m population, bread is the staple diet and 90 per cent of wheat has to be imported via three ports — Aden, which is controlled by the Saudi-led coalition, and the Red Sea ports of Hodeida and Salif, which are under rebel control.

The deteriorating humanitarian situation and more than 10,000 civilian deaths has intensified criticism of the Saudi-led coalition, which launched a military campaign in March 2015 seeking to restore the elected president, Abd Rabbu Mansour Hadi, who had been ousted by Iran-allied Houthi rebels and military units loyal to former president Ali Abdullah Saleh.

One of the trading companies, owned by the Fahem Group, has been lobbying UK parliamentarians, including Keith Vaz, chairman of the parliamentary group on Yemen, seeking a solution to free up dollar funds so traders can resume shipments and ward off the prospect of famine. “Surely food has to be a neutral issue,” said a Fahem.

The Fahem Group has one 50,000 tonne vessel waiting to discharge at the Red Sea port of Salif and another 30,000 tonne ship at nearby Hodeida. Wheat stocks in the country are estimated to be sufficient for no more than two months. “So these are literally the final shipments of wheat into Yemen for the foreseeable future,” said Fahem.

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Traders, who need $12.5m to fund a single 50,000 tonne shipment, have relied on the central bank to guarantee an exchange rate on staples such as wheat and rice, allowing traders to change riyals into dollars to purchase commodities abroad.

Fahem says it has lodged Yemeni riyals for seven shipments valued at about $100m, or most of its trading capital, but has not received dollars yet.

Khaled al-Abbadi, the central bank’s deputy governor for foreign banking operations, said the inability of commercial banks to transfer money abroad would be resolved “within a week” once procedures were completed to change the SWIFT code from Sana’a to the new headquarters in Aden.

The central bank also aims to continue to subsidise wheat transfers via a guaranteed exchange rate but that would require a “large” foreign exchange grant from outside powers to bolster insufficient reserves, he added. If the bank is unable to subsidise the import of wheat and rice, prices may rise as traders would have to access hard currency at a more expensive rate, but the country would not be cut off, he said.

The central bank’s assets have declined to less than $1bn, and the institution was already struggling to fund food imports before the Hadi government in September announced it was moving the bank to Aden from Sana’a.

“The move seems to have compounded these problems, with traders saying they have no clarity on the availability of foreign exchange and no guarantees on currency stability,” said Peter Salisbury of Chatham House.

The coalition has defended moving the central bank to Aden, saying the Houthi/Saleh alliance has been plundering the bank’s coffers to fund the war.

The non-payment of salaries to more than a million Yemeni civil servants since August has deepened the food crisis, further pressuring a health system that is on the verge of collapse, with fewer than one in three of the population having access to medical care.

The UN says half of all Yemenis already do not have enough food, with almost 18.8m people in need of urgent humanitarian assistance.

Rising prices of food, fuel, water and medicine have combined with the closure of half the country’s medical facilities to trigger a humanitarian crisis. Almost 2.2m children in Yemen are “acutely malnourished” and 462,000 suffer from severe acute malnutrition, a fourfold increase since 2014, according to Unicef.

Hunger is acutest in the rugged northern regions that form the power base of the Houthi movement. In these mountain provinces, stunting — delayed growth in children caused by chronic malnutrition — affects eight in 10 children, he said.

“We are all struggling to bring life-saving supplies to reach all corners of the country,” said Dr Sherin Varkey, Unicef’s deputy representative in Yemen. “The international community needs to recognise the urgency to respond in Yemen.”

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