TOP NEWS

Egypt faces soaring wheat prices

A baker in Mokattam district in southeastern Cairo on March 16, 2022, after Russia's invasion of Ukraine pushed up commodity prices in Egypt.

Since the beginning of the invasion of Ukraine by Russia, on February 24, the Egyptian authorities have multiplied reassuring messages about their wheat supplies, as well as measures to prevent shortages. The world’s largest wheat importer, with the Black Sea as its main source, Egypt is particularly exposed to this commodity which constitutes the basis of the diet of its 105 million inhabitants.

Between its strategic reserves and the local harvest which should begin in mid-April, Cairo says it has sufficient stocks until the end of 2022. But the country is already suffering the brunt of soaring prices for food and energy products. Heavily indebted and weakened by the Covid-19 pandemic, Egypt has again requested assistance from the International Monetary Fund (IMF), the institution confirmed on Wednesday March 23.

“Egyptians consuming twice the world average of bread, and the government already subsidizing the price of wheat for this bread to the tune of $3.3 billion [3 milliards d’euros] per year before the Russian-Ukrainian war, the threat of soaring wheat prices for the Egyptian budget is real”, analyzes Michaël Tanchum, associate researcher at the European Council on International Relations and the Middle East Institute (MEI) in Washington. Egypt needs about 10 million tons of wheat a year to supply subsidized bread to 72 million people.

Temporary ban on exports

In 2021, the State imported more than 6 million tons, and the private sector more than 12 million. More than 80% of these imports come from Russia and Ukraine. Before the war, the price of wheat was already moving at a record level. In the second half of 2021, prices increased by 25% due to global supply chain disruptions, low crop yields and hoarding of wheat and other grains by some countries, notably China.

“That storm turned into a tsunami with Russia’s invasion of Ukraine, which sent wheat prices up 75% in just two weeks”, continues Mr. Tanchum. On March 6, Finance Minister Mohamed Maeit reported that the state’s wheat bill had already increased by 15 billion Egyptian pounds (LE), or 744 million euros. Cairo plans to diversify its supplies, particularly in Europe and America, and above all to increase the local share.

The objective of the Ministry of Agriculture is to buy 6 million tons locally in 2022, against 3.5 million in 2021. A temporary ban on exports of wheat, and other staple crops, has been decreed. In mid-March, the authorities also forced local producers to sell part of their harvest to the three state companies. Violators face a five-year prison sentence. As an incentive, the Ministry of Agriculture increased the purchase price per ton of wheat to LE 5,900.

You have 47.3% of this article left to read. The following is for subscribers only.

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button