Arezki Daoud of MEA Risk and The North Africa Journal visits Tunisia this November and is bringing better understanding on the challenges facing the Tunisians in their day-to-day living. Below is the transcript.
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Today, I am in the Sidi Bou Said district of the Tunisian capital Tunis, an upper scale neighborhood dotted with beautiful villas overlooking the Mediterranean. It takes about 50 minutes to reach Tunis from Rome, and so there is clearly a European feel here even though, linguistically, Tunisia is probably the most Arabized country in the Maghreb region. In Sidi Bou Said things seem normal, until the owner of the apartment I rented, a visibly wealthy Tunisian, apologized for not supplying milk, which she could not find in Local markets.
The shortage of milk in Tunisia is pretty widespread and it is symptomatic of a nation whose leaders face major difficulties in bringing political stability and economic growth for the time being. Blame the Russian war on Ukraine as much as you want, that does not absolve the country’s political and governance system of any wrongdoing. Political leaders here are always reminded over and over again that the cost of milk production is higher than the prices imposed through price control and regulation. The government decides what price to impose on milk and other products in an effort to prevent social unrest.
On the shelves of supermarkets, each customer is only allowed two units of milk. A unit consists of one liter. But the shortages have gone beyond milk, affecting many foodstuffs, such as white sugar, coffee, rice, butter and even soft drinks and bottled mineral water. Most of these products are sold in limited quantities.
Once a thriving business, cattle breeding is now in big trouble. Cows are no no longer looking healthy and animals with protruding bones produce half the milk they did a few months ago, forcing many breeders to look for ways to sell them. The breeders have been struggling with the rise in the world price of animal feed, based on imported corn and soybeans. An increase that has reached 30% to 40% this year due to the war in Ukraine, a major grain producer. As a result, the livestock population in Tunisia fell by 20 to 30% in recent months.
As I stated a moment ago, the selling price of milk in Tunisia is set by the State, which partly subsidizes the sector to support consumers. But, in recent years, the cost of production has been much higher at an estimated 1.35 dinars versus an estimated cost of 1.80 dinars. Obviously If you are a milk producer, then you are losing money. and so many farmers, if not most,are working at a loss.
This risk of the sector collapsing is just one example of structural dysfunctions of the Tunisian economy, as evidenced by the shortages of recent weeks. Many are due to problems in importing certain products, while Tunisia lacks the budget and foreign exchange to cope with the global increase in food prices, a consequence of the war in Ukraine.
Beside Russia’s war on Ukraine, economic management has been a big problem for Tunisia, essentially highlighting the lack of skills and consensus on how to solve these problems. Take the example of white sugar, which is mostly purchased abroad. The product has not been seen in markets for several weeks. The Trade Office of Tunisia (OCT), responsible for its importing, justified the disruption by evoking the cancellation of a contract by one of its suppliers, without mentioning payment problems. Tunisia ordered, at the beginning of September, 47,000 tonnes of sugar to secure its stocks, and 20,000 tonnes have already been flowing in from Algeria. But experts will tell you that the authorities have failed to set up a strategic stock of sugar and other food products and have been facing dwindling financial resources. Before the summer, the question of cereal imports had also posed a problem for the State’s finances and the Cereals Office had had to seek help from donors such as the World Bank to secure its stocks.
While the authorities are struggling to keep supplies going, the political leaders have been doing what politicians do best and that is to blame others. President Kaïs Saïed says it is the “speculators” to blame without providing any tangible evidence.
Some analysts however do insist that the war in Ukraine has been used by individuals and businesses to speculate on products and markets, creating disruptions to their benefit. In the face of growing speculative practices, the authorities have been powerless, paving the way for more price hikes and higher inflation.
Still, the Tunisian people remain patient and have not engaged in any visible social protest. This is largely because president Saied remains popular. Many even believe that the shortages have been engineered by lobby groups that are looking to hurt the president’s popularity.
Regardless, Tunisia is still an interesting experimentation and I encourage the country,s friends and partners to increase their help to Tunisia stabilize it. A healthy Tunisia can be used as a model to the rest of the Arab world.