June 18, 2015

 

 

Egypt bought about 50% of its wheat supply domestically, a trend that rose from around 36% in the last fiscal year, and a sign that the country's efforts to cut down its dependence on foreign purchases are bearing fruits.   

 

Eventually, Egyptian farmers could, in the next few years, supply up to 70% of wheat which will be invested into the country's subsidised bread programme. "I believe this percentage could happen, possibly in the coming year," said Khaled Hanafi, the Minister of Supply and Internal Trade, although adding that it might take "two to three years" to reach the percentage.

 

Meeting the needs of three-quarters of Egypt's 89 million population, the bread programme has been ongoing for more than five decades and used 8.3 million tonnes of wheat in the fiscal year ending June 30. According to Hanafi, the volume is a decline from the 10 million tonnes usually involved.

 

Food subsidies, together with those for energy, constituted one quarter of public spending.

 

In the meantime, Egypt is expected to step up its reduction of imports in the next fiscal year commencing in July.

 

Following years of political unrest and a growing budget deficit, the Egyptian government has been attempting to reduce cost, specifically by dealing with supply and demand of wheat. Acquisition of locally-produced wheat rose, along with tighter controls on foreign exchange requirements.

 

In addition, adjustments were made to the subsidy programme in order to pare down waste and demand. Citizens could trade part of their monthly bread provision for other subsidised commodities, thus developing a "learning curve" of moderating bread consumption, Hanafi explained.

 

To rouse up selling, farmers were paid by the government a fixed rate of US$55.06 per ardeb (5.62 bushels). Those most affected by poverty will received subsidised bread so that they are able to sell off wheat stocks to the government instead of keeping for their own consumption.

 

New electronic systems were also installed to deter wheat smuggling and waste worth US$65.52 million monthly, Hanafi revealed.

 

The minster is hopeful that more cuts in wheat consumption will follow in 2016.

 

As the world's biggest wheat importer, Egypt exerts a potent effect on world prices. In fact, the country's concerns that US wheat were too costly had to led to traders lowering prices, the Wall Street Journal reported.

 

In the meantime, the country's wheat output continues to stabilise at about eight million to nine million tonnes yearly.

 

Egypt had also signed a US$28 million deal with food storage specialist, Blumberg Grain, paving the way for the modernisation of local wheat storage sites as well as a saving of US$200 million upon completion of the first phase due to better waste reduction.