HSA Group: urgent solutions needed to avert food import shortages and further humanitarian crisis in Yemen

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Yemen's largest company and leading wheat importer warns of impending mass famine in Yemen – caused by boom in global wheat prices, significant supply disruptions, and rapidly diminishing stocks across the country

DUBAI, UAE, May 16, 2022 /PRNewswire/ -- HSA Group - Yemen's largest company and the country's leading wheat importer - has issued a stark warning that time is running out to avert a potentially catastrophic famine from spreading across Yemen, as a result of unprecedented disruption to global wheat supplies generated by the fallout from the conflict in Ukraine.

Global wheat prices are set to rise further due to the export ban on Indian wheat that came into effect just two days ago. Without urgent action, the latest developments have the potential to push Yemen's ongoing food security crisis to the point of no return. Yemen needs extraordinary measures to maintain an uninterrupted supply of this daily staple to communities and aid programmes before it is too late for hundreds of thousands of people.

HSA Group has written to leaders in the international community raising alarm that hundreds of thousands of Yemenis across the country are set to experience extreme hunger in a matter of months, in light of escalating global wheat prices, dwindling wheat stocks in the country, and the Yemeni private sector's diminishing purchasing power that is preventing sufficient supplies of essential foodstuffs from entering the country.

The company has called on the international community to put in place emergency mechanisms to stave off a further humanitarian crisis, such as creating a special import finance fund that would enable Yemen's wheat importers to rapidly access finance and working capital to fund wheat purchases on the global market and to cover the significant cost of importing food products into Yemen; and extended payment terms for Yemeni food importers in their dealings with international suppliers, to help secure and fulfil commercial contracts that are critical in ensuring a steady supply of foodstuffs to Yemen.

The conflict in Ukraine has caused huge shockwaves across global commodity markets – most notably impacting wheat supplies. Global wheat prices have recently reached a 14-year high, which is already having massive consequences for suppliers and manufacturers across the world.

Yemen purchases approximately one third of its wheat from Ukraine and Russia. The loss of such a significant proportion of the country's source of wheat, which is relied upon for communities that are already on the brink of famine to produce daily staples, such as bread, will exacerbate the effects of the world's worst humanitarian crisis.

Yemen's private sector plays a vital role in ensuring the country's food security and is responsible for the vast majority of food imports into Yemen, which make up 90% of Yemen's total food supply and are relied on by Yemeni communities. These imports are distributed and sold to consumers across the country and – critically – also supply international humanitarian aid operations, such as those run by the World Food Programme (WFP). Without the Yemeni private sector, these essential programmes, which fed up to 13 million people per month in 2021 (WFP), would not be able to function on the scale required to respond to the current humanitarian disaster.

The wheat crisis is compounding the effects of Yemen's food security crisis – with the minimum food basket price significantly increasing across Yemen over the past year and as much as 119% in parts of the country (WFP). Yemen is facing the prospect of food affordability and global supply chain challenges on a scale not seen before.

HSA Group has therefore called for an immediate international intervention to avert further humanitarian catastrophe in the coming months, proposing that international and regional organisations explore innovative solutions to ensure sufficient wheat supplies reach Yemeni communities, such as:

• Giving Yemen's wheat importers priority access to wheat supplies in the international markets, to ensure that communities at greatest risk of famine or extreme hunger receive sufficient foodstuffs and that international humanitarian programmes can remain functional.
• In light of the significant devaluation of the Yemeni riyal against the US dollar, urgently putting in place a special emergency fund and import financing programme specific to Yemen, which will enable Yemen's wheat importers to rapidly access finance and working capital to fund wheat purchases on the global market and imports into Yemen. This could include an import finance facility for Yemen backed by an international institution, or the use of blended finance solutions supported by first-loss guarantees for Yemeni importers through import finance agreements.
• A new scheme that formally extends payment terms between Yemeni food importers and their international suppliers to a standardised 60-day period, which is guaranteed by an international organisation or financial institution.

Nabil Hayel Saeed Anam, Managing Director of HSA Group, Yemen region said:

"HSA Group has operated across Yemen for 85 years, in which time we have witnessed the tragic consequences of conflict and humanitarian disaster first-hand.

"During this current period of global uncertainty, HSA has taken steps to ensure access to basic commodities so that we can continue to provide affordable food and essential goods to Yemeni people. This includes making use of our $75m loan agreement with the International Finance Corporation, which has allowed us to mobilise working capital rapidly in the face of rising wheat prices to secure sufficient supplies of this daily staple for Yemen.

"However, this is not sustainable and time is running out. Further increases in global wheat prices will leave the private sector's ability to provide essential supplies to the Yemeni people and international humanitarian programmes on a knife edge.

"Without an urgent intervention, there is an immediate and definitive risk that we will not be able to prevent a wave of extreme hunger from engulfing the country and pushing hundreds of thousands into famine.

"Desperate times call for bold action. We stand ready to work hand-in-hand with our international and regional partners to help put in place emergency mechanisms to respond to Yemen's food security crisis that will enable the private sector to access and fund wheat imports in the immediate term. In the meantime, HSA Group will continue to do all we can to support Yemeni people. But, working alone, we cannot guarantee that we will be able to avert catastrophe in the coming months."  

About HSA Group

HSA Group is a family-owned conglomerate established in Yemen in 1938 and today is one of the largest multinational businesses based in the Middle East.

HSA Group is Yemen's largest company and through its 50+ operating companies in Yemen, it manufactures and supplies essential goods and services to multinational organisations and communities, both in Yemen and across the MENA region. The company serves the needs of millions of Yemenis, local and international businesses every day. Its wide-ranging activities include: producing market-leading food and beverage brands, household goods and healthcare essentials; manufacturing a diverse range of industrial and construction materials; supplying automotive vehicles; and providing insurance and financial services to Yemen.

Throughout its nearly 85-year history, HSA Group has adopted a values-led approach to sustainable growth. The company is driven by the philosophy set by its founders: a belief in doing well by doing good. The company's values prize and reward compassion, care for others and a community spirit, guiding how it works with its employees, partners and the societies that it serves across the world.

Additional data and resources

Yemen is suffering a grave food security crisis and the threat of extreme hunger and life-threatening malnutrition in Yemen has deteriorated further this year. According to the latest Integrated Phase Classification data (IPC):

• 17.4 million people are in need of humanitarian assistance now, and 19 million will be in need starting in June, through to the end of 2022.
• 31,000 people facing extreme hunger levels now, and the UN estimates that this will escalate rapidly over the coming month, with 161,000 people facing extreme hunger levels by June.
• Approximately 2.2 million children under the age of five in Yemen are projected to suffer from acute malnutrition and over half a million (538,000) children from severe malnutrition in 2022.
• Around 1.3 million pregnant and lactating women are projected to suffer from acute malnutrition over the course of 2022.

World Food Programme, Food Security Quarterly Review – Q4 2021 (year in review) 

Integrated Food Security Phase Classification, Yemen: Food Security and Nutrition Snapshot, March 2022 

SOURCE HSA Group