Supply ministry accelerates delivery timetables, while CAPMAS reports a declining trend in year-on-year imports
By Ahmed Mansour
Minister of Supply Khaled Hanafy announced on May 16 that the government is purchasing 60,000 tons of Ukrainian wheat for subsidized bread, with the shipments expected to arrived during the last 10 days of June. This is an accelerated timeline from Hanafy’s May 11 statements, when he stated that Egypt would not start importing wheat until July.
According to the minister, since mid-April the government has purchased 2.5 million tons from local sources, accounting for 60% from the target of 4 million tons. The local purchases are expected to last until mid-July.
In April, the General Authority for Supply Commodities (GASC) purchased 295,000 tons of wheat in deals worth a total of $86.28 million. Romania supplied 60,000 tons at $292.54 per ton, while Russia supplied the bulk of the order at $292.50 per ton.
Egypt consumes 15 million tons of wheat per year, according to Supply Ministry figures, much of it going to subsidized bread which sells for 5 piastres a loaf. Subsidized bread accounts for LE 22 billion of the state’s budget. In an effort to rationalize consumption, the government is rolling out a smart-card bread subsidy system, which provides a maximum of 150 loaves for each eligible citizen per month. Piloted in Port Said in April, the program is being implemented in 500 Cairo bakeries serving 2.7 million citizens by the end of May. According to the supply minister, “These bakeries will serve the best quality at the lowest prices.”
Containing wheat imports is yet another issue the incoming government will have to tackle. “Our agricultural lands are considered to be the best for growing wheat. Wheat requires very moist soil to grow and we sure do have that by the plenty. The government has to take an advantage of that and grow, to export, as much wheat as possible,” says Radi Khalaf, economics professor at the American University in Cairo to Egypt Today. “The fact that we have become an importing country of wheat is devastating. First the natural gas then the wheat, but perhaps this is the price that we had to pay in order to have a democratic country.”
Subsidized bread has long been a politically sensitive issue, and former President Anwar Sadat’s government was faced with riots in 1977 when it tried to raise the price of bread. Khalaf acknowledges that the government must import wheat to meet local demands, but adds,“I hope they are planning to work on becoming, once more, a lead exporting country of wheat.”
The government has been pushing to increase local production in recent years. A trade deficit report from state statistics agency CAPMAS released earlier this month indicated that Egypt imported 55,000 tons of wheat in January 2014, compared to 115,000 tons in January 2013 and 450,000 tons in January 2012. According to CAPMAS, 3.5 million feddans have been planted with wheat this year, an increase of 100,00 feddans over 2013 land allocations.