November 20, 2013

 

Egypt may achieve self-sufficiency in wheat by 2019

 

 

In case silo storage capacity is raised by one million tonnes annually, Egypt, the world's biggest wheat importer, can achieve self-sufficiency in wheat for its bread subsidy programme by 2019.

 

Agriculture Minister Ayman Abou Hadid for the first time provided explicit details despite the fact that self-sufficiency has been cited by successive governments as a goal.

 

"What I mean by self-sufficiency is self-sufficiency in the wheat used to make the subsidised loaves of bread. This is nine million tonnes," Abou Hadid told Reuters in an interview.

 

"We can achieve it six years from now on condition that every year we can build silos adding one million tonnes capacity at least."

 

The former Islamist President Mohamed Morsy's government had targeted wheat self-sufficiency by 2016 without explicitly stating whether this meant self-sufficiency for the subsidy programme or the country's entire needs.

 

Since the army ousted Morsy in July in response to mass protests against his rule, Gulf Arab allies have pledged billions of dollars to help shore up Egypt's fragile finances.

 

Egypt's current silo storage capacity is 1.5 million tonnes but the United Arab Emirates pledged part of its $4.9 billion aid package to Egypt to build 25 new wheat silos, each with a capacity of 60,000 tonnes. This would bring the country's storage capacity to three million tonnes by mid-2014.

 

"We are aiming and working hard for construction to end within six months," Abou Hadid said.

 

Egypt imports around 10 million tonnes of wheat a year through the state and private buyers. The state produces subsidised saucer-sized flat loaves of bread sold for less than US$0.01 to millions of Egyptians. The programme costs EGP21 billion (US$3 billion) a year.

 

Abou Hadid said he expected current annual state wheat imports of 5-5.5 million tonnes to remain the same for several years due to 2-% annual population growth in the nation of 85 million people and urban sprawl eating into farmland.

 

Egypt reduced imports in the past year as Morsy's government bet on a bigger domestic crop. However, industry experts said the policy left the country at least 900,000 tonnes short of the wheat needed for its subsidy programme.

 

Abou Hadid said Morsy's plan was based on one devised in 2009 by local agricultural research centres but that his administration revived it without devising ways to achieve it.

 

Egypt is targeting state wheat imports of five million to 5.5 million tonnes in the year to June 30, 2014.

 

Since the start of the 2013-14 fiscal year on July 1, the main state wheat buyer, the General Authority for Supply Commodities (GASC), has bought over two million tonnes of wheat mainly from Romania, Ukraine and Russia. It also purchased from France in its last international tender.

 

Abou Hadid said the self-sufficiency plan was aimed at cushioning Egypt's food security against shrinkage in global wheat supplies and fluctuations in international grain prices.

 

"India and China are entering the global (wheat) market... If this continues, the 25 million tonnes available in the global market will no longer be available. This will either raise prices beyond our ability to buy or else we will not find quantities to buy. India and China are closer in proximity to the Black Sea Region. It's easier and closer for countries like Russia to supply them," he said.

 

Abou Hadid said wheat in Egypt is grown across three million feddans of land annually, producing around 2.7 tonnes per feddan - a total of 8.1 million tonnes.

 

GASC procures around 3.6 million tonnes of wheat annually from farmers. The state cannot procure the entire amount in one harvest season partly because of shortage in storage capacity. Farmers also keep some of the crop for their own consumption, to use as livestock feed or sometimes stockpiling for cash later.

 

Egypt is targeting an increase in productivity per feddan to 3-3.2 tonnes through improved wheat strains, Abou Hadid said.

 

Abou Hadid said he expected local production to remain at around 8.1-8.3 million tonnes in the 2014 and 2015 harvest seasons. He said the state can get around 3.6-3.7 tonnes from farmers in 2014 and can get five million tonnes in 2015.