Egypt annually consumes about 9.5 million tons of wheat. photo: reuters
“Egypt’s reserves of staple food commodities are sufficient and secure,” the cabinet said this week, reassuring the public about the country’s food security amid the Covid-19 crisis and with the approach of the Muslim holy month of Ramadan.
However, some observers warned that there could be increases in food prices. According to Gamal Siyam, a professor of agricultural economics in Cairo, there could be rises in food prices due to shipping difficulties and increases in insurance costs on cargoes. He cited the partial halt in exports from Brazil as a result of work stoppages in the country’s ports as an example.
Meanwhile, Reuters said this week that “traders said on Sunday the country’s state grain buyer, the General Authority for Supply Commodities (GASC), could ask suppliers to offer prices on a cost and freight (C&F) basis instead of free-on-board (FOB),” in a report on Egyptian market sentiment.
“GASC normally asks for wheat prices from suppliers on a FOB basis with freight offered in a separate tender,” it added.
Siyam also said that some countries had hinted they could halt the export of staple goods, which may encourage other countries to toe the same line.
According to press reports, Kazakhstan, one of the world’s leading wheat exporters, has stopped its wheat, carrot, sugar and potatoes exports. Serbia is no longer exporting sunflower oil, among other items. Russia said it was following the situation on a weekly basis to decide whether it would stop exporting certain items.
President Abdel-Fattah Al-Sisi called on the government to make sure supplies of strategic goods were available at a time when global fears are rising about the availability of food supplies amid the coronavirus pandemic.
This led to the cabinet announcement on Friday that Egypt’s strategic reserves of wheat were sufficient for four months, even before harvesting the new crop in mid-April.
According to Siyam, the government should increase the price of wheat to encourage farmers to provide more to the Egyptian market and reduce exports. An ardeb of wheat is currently priced between LE800 and LE850, whereas last year’s delivery prices ranged between LE650 and LE700.
GASC had prepared an international tender to buy wheat on 1 April but then cancelled it in a move that confused some traders.
For Hussein Al-Boudi, a member of the Chamber of Food Industries at the Egyptian Federation of Industries, there could be problems on the international wheat market should China announce it will buy large quantities of wheat, affecting the amount available.
Egypt annually consumes about 9.5 million tons of wheat, of which only three million tons are locally harvested, to produce its subsidised baladi bread. The country imports two-thirds of its wheat consumption from Kazakhstan, Ukraine, Russia, and France, and it also imports six million tons of more refined wheat, used in making pastries and not used for baladi bread.
Egypt’s wheat imports go down in April and May when the local crop is harvested, Al-Boudi added.
According to agricultural expert Nader Noureddin, global food markets could see drastic changes and skyrocketing prices reminiscent of what was seen in 2008 and 2010. Farmers in Egypt who had previously exported to Europe and the US had then had to send their produce to local markets at reduced prices as a result of the halting of exports, he said.
Kazakhstan has stopped its wheat exports, and other countries have halted food exports temporarily or permanently, including India and Vietnam, along with Malaysia which is also no longer exporting wheat. Noureddin said export bans could be adopted by other countries, despite the fact that this year wheat and rice were produced in record-breaking amounts, exceeding the world’s needs by 40 per cent.
In Egypt, wheat, fava beans, and lentils are harvested in April, providing the country with a six-month reserve of wheat and a two-month reserve of fava beans and providing a breathing space until quiet returns to world food markets.
Last year, Egypt imported 8.6 million tons of yellow corn, which represents about 70 per cent of animal, poultry and fish feed. The country also cultivates around three million tons of yellow corn to meet its consumption of between 10 and 14 million tons a year.
According to a study by the Institute of Field Crops, Egypt imports 5.7 million tons of oil and oil seeds annually, more than 85 per cent of which is from the US, France, Ukraine, and Malaysia. Its local sunflower crop also provides some security in food oils.
For Noureddin, at the present time it would be better for developing countries that import foodstuffs to rely on themselves in planting staple and strategic crops to reduce their food imports and save foreign currency.
Meanwhile, Egypt’s sugar reserves are sufficient until August, said Hassan Sl-Fendi, head of the Sugar Division at the Egyptian Federation of Industries.
Egypt consumes three million tons of sugar and produces about two million tons a year. It normally imports a third of its sugar consumption from Brazil, the world’s largest producer of raw sugar, and India and also imports refined sugar from Europe.
*A version of this article appears in print in the 9 April, 2020 edition of Al-Ahram Weekly