TWN
Info Service on Sustainable Agriculture
9 March 2022
Third World Network
https://www.ipsnews.net/2022/03/egypt-rushes-find-alternative-wheat-suppliers-following-russian-invasion-ukraine/
Egypt Rushes to Find Alternative Wheat Suppliers Following Ukraine
Crisis
By Hisham Allam
CAIRO, Mar 3 2022 (IPS) - Egypt is scrambling to find alternate sources
of wheat after the Russian invasion of Ukraine has put supply to the
country in jeopardy. This is especially urgent because the price of
bread in Egypt has in the past sparked protests in the country.
Russia and Ukraine are key players in the global grain market, with
their wheat exports accounting for 23% of international trade in 2021-22,
according to the US Department of Agriculture.
Egypt, Lebanon, and Libya are among the MENA region’s top wheat importers
from Ukraine.
In 2021, Egypt imported 6.1 million tonnes of wheat; 4.2 million came
from Russia, worth $1.2 billion, representing 69.4% of total Egyptian
wheat imports. Imports from Ukraine amounted to 651,400 tonnes, worth
$649.4 million, accounting for 10.7% of total imports.
Over the last 50 years, the price of bread has been a politically
controversial topic in Egypt, triggering various protests. A subsidised
flat loaf costs 0.05 Egyptian pounds, less than one US cent.
Naguib Sawiris, the Egyptian tycoon, appealed to Egypt’s Minister
of Supply on February 22 to acquire and store large quantities of
wheat.
“We must purchase and stockpile wheat as quickly as possible before
the Ukraine-Russia war breaks out, “Sawiris Tweeted.
Mohamed Elhady, who runs a family-owned bakery at Menoufia Governorate,
80 km north Cairo, is deeply concerned about the business he has been
running for 20 years.
“The government-subsidised bread diminishes the bakery’s profit margin
since we are required to sell a loaf of bread at the government-set
price. But we get the cost difference through banks after calculating
the number of loaves produced by each bakery using a smart ration
card system,” Elhady told IPS.
“Some bakeries gather cards from ordinary residents and report fictitious
sales to gain the value of subsidised bread for themselves, increasing
their earnings considerably while reselling raw wheat on the informal
market,” he explains.
In August 2021, Egyptian President Abdel Fattah al-Sisi said it was
time to increase the country’s subsidised bread price, revisiting
the issue for the first time since 1977, when then-president Anwar
Sadat reversed a price rise in the face of riots.
“It is time for the five-piece loaf to increase in price,” Sisi said.
Elhady believes that the government will turn the president’s words
into action soon, expecting that the new increase in subsidised bread
will take place by April, the anticipated time for receiving wheat
from the new suppliers. This will decrease daily production rates
and, therefore, his profits.
“Once the wheat prices increase, the government will reduce the number
of subsidised loaves from five a day to three or increase the price
of the 5-piaster loaf,” Elhady says.
The president is also expected to exclude more citizens from the subsidy
programme covering more than 60 million Egyptians.
“People will have to choose; to eat less or to pay more,” Elhady adds.
Egypt’s main state buying agency, the General Authority for Supply
Commodities (GASC), has issued a second international wheat tender
to import wheat from April 13 to 26. The tender was issued 48 hours
after it was cancelled because it only received a single offer of
French wheat. A least two offers are required before a purchase can
go ahead.
The Egyptian GASC set the end of February as a deadline to receive
offers for the new tender. In addition to Russia and Ukraine, the
GASC sought bids from the United States, Canada, France, Bulgaria,
Australia, Poland, Germany, the United Kingdom, Romania, Serbia, Hungary,
Paraguay, and Kazakhstan. The delivery needs to take place before
April 1, 2022.
Despite the ongoing Russian-Ukrainian military escalation, an Egyptian
ship carrying 60 tons of Ukrainian wheat has left the Ukrainian ports
and is en route to Egypt, a grain consultant at the Ministry of Supply,
Salah Hamza, told IPS.
“This shipment was contracted with Ukraine for $361 per ton in an
international tender in December 2021. The consignment is part of
a 300 000-ton wheat shipment that will arrive by March 2022.”
“Egypt produces 275 million loaves of bread per day, consumes 900,000
tonnes of wheat per month, and the strategic stock is enough for the
next five months, in addition to 4 million tons expected from the
domestic harvest by mid-April, “Hamza adds.
Egypt has a strategic reserve of wheat, enough to cover the local
market’s needs for nine months, the Cabinet’s spokesman, Nader Saad
said.
The strategic wheat stock is approximately five million tonnes, according
to Saad, and will be augmented when the local wheat harvest season
begins on April 15.
In February of this year, the price of an ardeb of wheat climbed by
65 percent compared with February of last year.
The US Foreign Agricultural Service expected Egypt’s wheat consumption
in 2021-22 would exceed 21.3 million tonnes, up about 2.4 % from 2020-21.
IPS UN Bureau Report
IPS UN Bureau Report
