Ukraine crisis: Corn crisis in Egypt averted

Safeya Mounir , Friday 11 Mar 2022

Thanks to Egypt’s strategic reserves, the international hike in corn prices will not affect the country in the short term.

Ukrainian corn imports account for 30 per cent of Egypt s
Ukrainian corn imports account for 30 per cent of Egypt s

The prices of many commodities the world over have hiked as a result of the Russian incursion into Ukraine, sending tremors across economies and fears among peoples of an impending crunch.

Corn is one such commodity, with Egypt, which imports 75 per cent of its needs of the crop, preparing to embrace the impact of shortages or rising prices. Besides being an alternative to wheat in some products, corn is also an essential ingredient for protein production, such as poultry, meat, eggs, and dairy products.

Russia and Ukraine produce one fifth of the world’s production of corn, and this has led to a rise in the price of the crop with the beginning of the war between the two countries.

Ukraine is the world’s sixth-largest producer of corn and one of the leading exporters to Egypt thanks to its location on the Black Sea that ensures that cargos can reach Egypt in less than a week. This translates into lower freight costs, rendering Ukrainian corn the best option at the best value.

Abdel-Aziz Al-Sayed, head of the Poultry Division at the Federation of Egyptian Chambers of Commerce, said the price of a ton of corn had increased by LE1,000 and the price of a ton of feed by LE1,500 since the crisis began.

Feed consists of corn (70 per cent) and soy (30 per cent). At present a ton of feed is sold for LE10,500, up from LE9,000, he added.

Al-Sayed, also a member of the Commodities Committee in the cabinet, said Egypt has a seven-month reserve of corn after President Abdel-Fattah Al-Sisi had instructed an increase in the reserves of staple foods in 2020 following the outbreak of the coronavirus pandemic.

He said there was no reason why corn prices should have risen in the domestic market, adding that corn shipments that have yet to arrive in Egypt were contracted at the old price.

Egypt imports the majority of its corn needs from Argentina, Brazil, the US, and Ukraine, he said, adding that Ukrainian corn imports account for 30 per cent of Egypt’s needs. The country also plants a million feddans of corn and produces 3.1 million tons. The domestic market consumes about 15 million tons.

Abdel-Aziz said that Egypt should plant another million feddans with other types of corn that have higher productivity and that can yield six million tons of corn per million feddans. He added that in this case Egypt would be able to produce 12 million tons, or 80 per cent of its consumption.

Minimising the need to import corn would mean that Egypt would not be at the mercy of international price fluctuations, he stated.

Producing two kg of poultry requires 3.5 kg of feed, he noted.

Abdel-Aziz stressed that the market should be closely monitored to prevent unnecessary price hikes, warning that these could result in a crisis with the advent of the holy month of Ramadan.

Egypt has been importing increasing amounts of corn in recent years. In 2014, it imported 4.3 million tons, increasing to 10 million tons in 2021 for more than $2 billion.

The price of corn has been rising since the beginning of the year. A ton of corn was being sold for $231, a 22 per cent increase on last year, even before the war broke out. After the Russian invasion, a ton of corn recorded $294, and it is likely to increase further as fears rise of decreased production in Argentina and Brazil due to lower rain levels.

Mohamed Al-Gammal, a marketing and grain consultant at the UN Food and Agriculture Organisation (FAO), expects an increase in Egypt’s consumption of corn, especially yellow corn, due to the resumption of poultry exports after years of hiatus.

Egypt produces 1.4 billion poultry annually, of which 3.3 million were exported in 2021, Al-Gammal said at the Middle East International Conference on Cereals and Oils held in October.

He added that higher exports of poultry will prompt an increase in the consumption of corn, especially the yellow corn that is used in the manufacture of feed.

Hussein Abdel-Rahman, head of the Farmers Syndicate, said the problem was not that Ukraine is the largest exporter to Egypt, but that there are risks that the other exporting countries are facing with regards to transportation and the increase in freight prices.

He said that the war between Ukraine and Russia had led to an increase in prices by about five per cent, and in Egypt they had risen by about 10 per cent, adding that the war would lead to Egypt’s importing more from more distant countries such as Brazil and Argentina, inevitably leading to an increase in transport costs and thus a higher final price.

Recent efforts to increase the crop will limit corn imports. They include the expansion of other crops that can be used as fodder. Abdel-Rahman gave the example of the cotton crop, since cotton seeds when pressed can be used as fodder.

The expansion of corn cultivation might be difficult in Egypt due to limited land, especially since corn is a summer crop when there is limited water for cultivation.

*A version of this article appears in print in the 10 March, 2022 edition of Al-Ahram Weekly.

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