Last Update 17:4

Egypt to improve wheat storage, crack down on smuggling

World's largest wheat importer aims to build new silos over next 3-4 years, improve targeting of subsidies and reduce waste

Reuters, Ahram Online, Wednesday 17 Oct 2012
Views: 617
Egypt provides poor citizens significant bread subsidies (Photo: Reuters)

Egypt wants to double the capacity of its wheat silos in the next three or four years and is considering changing a bread subsidy mechanism to prevent smuggling or illegal trade in subsidised grain, the state's main wheat buyer said on Wednesday.

Egypt's new government has been looking at ways to better target subsidies and reduce waste as it seeks to plug a big budget deficit that ballooned as investors fled in the wake of the uprising that toppled Hosni Mubarak last year.

However, while the government is seeking to cut back on at least some energy subsidies, there is no talk of cutting supplies of subsidised bread, a politically sensitive issue, even if the mechanism for keeping loaves cheap could be changed.

Bread subsidies are planned to reach to a record high in the 2012/13 financial year, climbing to LE16.2 billion ($2.7 billion), a hearty 49.5 per cent increase over the 2011/12 financial year.

The amount subsidised per loaf of bread will reach 24.08 piasters (around a quarter of LE1). This is up from 19.8 piasters per loaf in 2011 and even higher than the 23.3 piaster figure seen in 2007/2008. 

A loaf is eventually sold at 5 piasters to the end consumer.

Egypt now has 25 wheat silos each with capacity for 30,000 tonnes and aims to double that number, Nomani Nomani, vice chairman of the General Authority for Supply Commodities, said at a grain conference in the Red Sea resort of Sharm El-Sheikh.

That would suggest boosting storage capacity to 1.5 million tonnes from 750,000 tonnes now.

"We are ... concerned with storage especially as local wheat supplies increased this year," he said. "We have a project to raise the number of silos to 50 from the 25 we have this year."

Egypt, the world's biggest wheat importer, bought 3.7 million tonnes of wheat from local farmers this year, Nomani said.

On wheat subsidies, Nomani said the authorities were considering changing how the subsidy was applied to halt smuggling of wheat from Egypt to neighbours like Sudan and Libya, or leakage of subsidised wheat on to the local market where illegal traders pocketed the difference in price.

Many Egyptians depend on the subsidised saucer-sized flat loaves selling for just 5 piasters (less than 1 US cent).

Nomani said that instead of selling subsidised wheat, the subsidy would be applied at the final stage of the process when it was sold as loaves, which would curb smuggling.

"So the price of bread would still be 5 piasters and the difference would be covered by the state as a final subsidy, so it's a subsidy in the final stage," he said, speaking on the conference sidelines.



Short link:


Comment's Title
Ahram Online welcomes readers' comments on all issues covered by the site, along with any criticisms and/or corrections. Readers are asked to limit their feedback to a maximum of 1000 characters (roughly 50 words). All comments/criticisms will, however, be subject to the following code
  • We will not publish comments which contain rude or abusive language, libelous statements, slander and personal attacks against any person/s.
  • We will not publish comments which contain racist remarks or any kind of racial or religious incitement against any group of people, in Egypt or outside it.
  • We welcome criticism of our reports and articles but we will not publish personal attacks, slander or fabrications directed against our reporters and contributing writers.
  • We reserve the right to correct, when at all possible, obvious errors in spelling and grammar. However, due to time and staffing constraints such corrections will not be made across the board or on a regular basis.

Aladdin, egypt
17-10-2012 09:07pm
Good News
Hi-tech and good farm managment, finances, etc. are behind this success. It has nothing to do with Old, invalid traditions. Allah AKber.
Comment's Title

17-10-2012 05:47pm
A blessing in disguise
This sounds like a problem, but it is a blessing in disguise. This story shows that Egypt is making gains on increasing its domestic production of wheat. I hope that this continues until Egypt becomes a breadbasket for Africa and the Middle East. If Egypt can achieve this, then they will see their power increase tremendously.
Comment's Title

© 2010 Ahram Online. Advertising