The Food Situation in Lebanon
Lebanese consumers of food products, whether basic or processed, are faced with the arbitrary pricing policies of food distributors and supermarkets, with a total absence of governmental Intervention and control.
In most countries, the consumer price index (CPI) is measured in relative values, and hence includes any mild volatility in the local currency depreciation. This is not the case in Lebanon, where the CPI, and in particular the food price index, is calculated based on the daily market price of the food basket.
With the absence of any serious governmental control on the super markets as well as the food distribution chain as a whole, the food market place is experiencing a pricing Ratchet effect. The Price Ratchet Effect occurs when prices decrease is absent or very slow after an inflationary pressure is removed. In Lebanon, the escalation in prices tends to self-perpetuate even when inflation rates or LBP depreciation rates decrease.
The Ratchet effect is caused by the following:
- Lack of governmental control, particularly by the Ministry of Economy and Trade: supermarkets and food distributors are not bound by any pricing policy that the government is supposed to impose, especially in such times of crisis.
- Insufficient locally produced food as substitute to imports. The increased prices are mainly due to the fact most of the foods consumed in Lebanon is imported rather than locally produced.
- Absence of bank credit. Food distributors' current modus operandi is to collect their receivables at proceeds on a daily basis (mostly in LBP) and exchange it for US$ to pay for their next imports. Importers are exerting a pulling force on the LBP/US$ exchange rate and hence are forced to price their goods at their own expectation of the future value of the exchange rate, hence creating an upwards and irreversible spiraling inflationary spree, which determines the price Ratchet.
- Depreciation of the local currency. Following the trend of the local currency over the past three years, one can hardly expect the stabilization of the US$/LBP exchange rate. This depreciation outlook exacerbates the inflation rates in the market, especially those related to food supplies. It has been observed that the retail outlets exaggerate the exchange rate in order to smooth out the price variations at least throughout the day. For example, a super market might price its goods at an exchange rate of LBP100,000/US$ even if the opening rate is at LBP94,000/US$, so as to cater for any abrupt changes during the day. This assumed future exchange rate is never revised the next day but rather is either kept at the same level or increased.
- Food insecurity in Lebanon is mainly caused by price inflation as a consequence of a depreciated local currency. The lack of governmental plans and social support, as well as the absence of any remedial actions to slow down the upwards inflationary spiral is increasing the number of poor people in Lebanon, exposing them to the cruelty of food insecurity.
Divers of food insecurity
HR Committee
Divers of food insecurity
Food insecurity reached serious levels in Lebanon since the beginning of the economic crisis in October 2019. A fragile situation has been significantly exacerbated in the last three years, with a rising proportion of the population feeling the pressure to provide nourishment for their families. There are many drivers of food insecurity, which can be outlined are as follows:
• Poverty: in Lebanon, with the total absence of subsidies and restricted health care and educational systems, the lack of money becomes a life-threatening condition. There is a strong correlation between poverty and malnutrition across the globe. There is a vital relationship between nutrition status and economic standing.
• Inflation: in Lebanon, food prices have increased by 20x since the beginning of the crisis due to the depreciation of the LBP. Families’ purchasing power is depleted drastically, eventually affecting, not only health care and education access, but also access to food.
• Volatile livelihood: the Lebanese economic crisis does not offer serious job opportunities or continuity, let alone inflation adjusted salaries. Strikes and political deadlock worsen the capacity of workers to secure basic food needs.
• Stagnating household income: with the lack of indexation of salaries to the real exchange rate, household income and hence its purchasing power is handicapped with basic priorities along food. Families are indeed torn between choosing between a sufficient meal or staying in the dark, as they are not able to afford both necessities. This has left primary needs such as healthcare, education, sanitary living, all unattended.
•Lack of governmental subsidies and food security targeted plans.
• Lack of timely supplies due to FX volatility: foreign currency reserves have been depleted, with the only inflow of FX coming from the diaspora.
• Disruption of food supply due to Ukraine-Russian war. The effect of this disruption is moderate on the Lebanese society but it has created an uncertainty in some basic commodities such as wheat. Furthermore, food supply lines and logistics have become more expensive.
• Global food and energy prices inflation. This has had a significant effect on Lebanon, as it has raised the Survival Minimum Expenditure Basket (SMEB) from US$20 per month to US$29 per month in 2022.
• Total absence of social assistance. The increase of the SMEB was not met by any government social assistance. This had a devastating effect on the food insecurity situation.
• Poverty: in Lebanon, with the total absence of subsidies and restricted health care and educational systems, the lack of money becomes a life-threatening condition. There is a strong correlation between poverty and malnutrition across the globe. There is a vital relationship between nutrition status and economic standing.
• Inflation: in Lebanon, food prices have increased by 20x since the beginning of the crisis due to the depreciation of the LBP. Families’ purchasing power is depleted drastically, eventually affecting, not only health care and education access, but also access to food.
• Volatile livelihood: the Lebanese economic crisis does not offer serious job opportunities or continuity, let alone inflation adjusted salaries. Strikes and political deadlock worsen the capacity of workers to secure basic food needs.
• Stagnating household income: with the lack of indexation of salaries to the real exchange rate, household income and hence its purchasing power is handicapped with basic priorities along food. Families are indeed torn between choosing between a sufficient meal or staying in the dark, as they are not able to afford both necessities. This has left primary needs such as healthcare, education, sanitary living, all unattended.
•Lack of governmental subsidies and food security targeted plans.
• Lack of timely supplies due to FX volatility: foreign currency reserves have been depleted, with the only inflow of FX coming from the diaspora.
• Disruption of food supply due to Ukraine-Russian war. The effect of this disruption is moderate on the Lebanese society but it has created an uncertainty in some basic commodities such as wheat. Furthermore, food supply lines and logistics have become more expensive.
• Global food and energy prices inflation. This has had a significant effect on Lebanon, as it has raised the Survival Minimum Expenditure Basket (SMEB) from US$20 per month to US$29 per month in 2022.
• Total absence of social assistance. The increase of the SMEB was not met by any government social assistance. This had a devastating effect on the food insecurity situation.
HR Committee
HR Committee
1. Create and/or monitoring value-based systems and policies to ensure that LTS is following local labor law and certain best practices relating to its employees.
2. Create an attractive environment for current and prospective employees.
3. Evaluate the annual performance of the company’s staff.
4. Follow up on the work of the HR department.
1. Create and/or monitoring value-based systems and policies to ensure that LTS is following local labor law and certain best practices relating to its employees.
2. Create an attractive environment for current and prospective employees.
3. Evaluate the annual performance of the company’s staff.
4. Follow up on the work of the HR department.
