The Ministry of Supply is expected to receive five million tons of homegrown wheat from farmers during the harvest season that will start in April and extend to August.

The news comes as the cabinet approves increasing the price paid to farmers for wheat to LE2,000 per ardeb (LE13,000 per ton).

This year’s wheat harvest season comes in tandem with a global decline in food prices. In February, the UN Food and Agriculture Organisation (FAO) reported that prices were regressing to pre-Covid levels. Russian wheat prices have also decreased owing to Russia’s increased exports of this strategic crop in March.

FAO expert Nader Noureldin, a former Ministry of Supply official, said that for the first time the government will purchase wheat from farmers at prices closely aligned with those on the global commodities exchanges.

He noted, however, that imported wheat is subject to additional expenses, such as transportation, insurance, and offloading costs. Noureldin stressed the need to provide incentives for farmers to encourage them to increase their supply so that Egypt relies less on costlier imported wheat.

He said that every additional ton of wheat local farmers supply relieves the government of a burden, since it can buy the wheat in pounds instead of dollars and save the additional expenses it incurs when it buys imported wheat.

Noureldin said caution should be exercised to avoid last year’s events, when private-sector companies offered farmers a higher price than the government to buy their wheat.

The dollar crunch led the private sector to purchase the crop directly from farmers, saving additional costs paid in dollars and removing transportation costs from the farmers’ shoulders.

Egypt imports six million tons of wheat a year and buys three million tons from local farmers, the FAO expert said. The private sector imports an additional six million tons to make pastries, pasta, and white bread.

Last year, the government bought wheat from farmers for LE1,600 per ardeb, increasing the price this year by 30 per cent. Russian wheat dropped in price from $360 per ton in 2022 to $270 in 2023 and $200 this year.

Hussein Abu Saddam, head of the Farmers Syndicate, estimated that the procurement price of a ton of homegrown wheat is LE3,000 more than that of Russian wheat, standing at around $260.

Egypt’s wheat is classified as top-tier on global commodities exchanges, with Russian wheat coming in second place in terms of quality, Abu Saddam said.

While he said that the wheat price offered by the government to farmers this year is fair, he noted that it should also put a cap on prices.

With 70 per cent of the population, including farmers, relying on subsidised bread throughout the year, if the cost of wheat goes beyond international prices, this will lead to an increase in bread prices and constitute an indirect burden on the people.

Now that the government has positively responded to the Farmers Syndicate’s demand to align local wheat prices with international ones, Abu Saddam said there should also be a reduction in the prices of agricultural inputs.

This would provide direct support to farmers and indirect support to people who buy subsidised bread.

Wagdi Al-Mashad, a member of the Grain Chamber at the Federation of Egyptian Industries, dismissed the likelihood of a wheat shortage in 2024. The market will avoid the dollar crisis of last year and achieve stability, he added.

The minister of agriculture had earlier said that the area cultivated with wheat in Egypt has increased from providing 3.2 million tons in 2023 to 3.8 million tons in 2024.

While the Ministry of Supply expects to receive five million tons of wheat from farmers this year, Abu Saddam anticipates the quantity to stand at four million tons.

* A version of this article appears in print in the 21 March, 2024 edition of Al-Ahram Weekly