Egypt is not only Africa's biggest producer of wheat, but also the world's largest wheat importer. The country's growing population consumes far more wheat than it can produce. Limited water supplies and a shortage of arable land appropriate for the crop mean that this situation will not change in the foreseeable future. As Egypt may consider focusing on agricultural products that use the country's natural resources more efficiently and generate more value than grain, especially on export markets, the country is likely to continue importing massive quantities of cereals. In all scenarios, boosting the efficiency of Egypt's grain import supply chain is therefore of paramount importance. While cereals imports cost over $3 billion annually ¾ or two per cent of the country's GDP ¾ the poor quality of storage facilities, port handling and transportation infrastructure results in high levels of losses, pushing up the cost of the remaining grain. It is estimated that up to 10 to 20 per cent of Egypt's overall wheat supply might be going to waste. If improving grain infrastructure and logistics is critical for Egypt, the process will not be without cost. The European Bank for Reconstruction and Development (EBRD) and the Food and Agriculture Organisation of the United Nations (FAO) believe that a greater involvement of private investors would help make rapid progress in this area without weighing on Egypt's budget. Private investors will naturally expect a return on their investments and will carefully ponder their risks. For the moment, uncertainties related to the policy and regulatory context, and structural inefficiencies, are disincentives for national and international private sector investors alike. Whereas obsolete port, storage and transportation facilities are a large part of the problem, other elements such as the “regulatory infrastructure” also raise the cost of wheat for Egypt's consumers and limit investor interest. The costs associated with delivery inspections, for example, are much higher than in other markets because of uncertainties regarding the standards applied to imports of wheat. Combined with the complexity of tendering procedures applied to grain purchases, strict phytosanitary standards and uncertainty related to their application significantly increases Egypt's staple food import bill. Where can gains be made? Import costs could be reduced should Egypt's phytosanitary measures be aligned with international standards, and consistently applied. The Egyptian government and the private sector could work together on a trade environment based on clarity and predictability, thereby reducing transaction costs estimated at over $40 million a year. The quality of domestic wheat storage facilities is another area where progress could be made through more engagement of the private sector. Post-harvest grain losses of 10 per cent or more are commonly reported in traditional, open-air shona storage facilities. If improved, more than $400 million worth of waste over 10 years could be avoided. One also has to look at the demand side. Egypt is a large country and its per capita consumption of wheat is among the highest in the world. Bread remains a vitally important foodstuff for most of the population, a quarter of whom live below the poverty line, and unsurprisingly wheat is a commodity that has generated a lot of attention from Egyptian policymakers. The government has put in place a popular programme that provides baladi flat bread to 65 million citizens (or three quarters of the population) at a highly subsidised price. Recent changes implemented by the government in the consumer food subsidies system (such as the introduction of the smart card) are very positive developments and have already contributed to a better targeting of those most in need, as well as improving the availability and quality of baladi bread. In addition to pursuing these positive reforms, more remains to be done to increase the efficiency of the wheat value chain: stimulating greater private sector participation; simplifying import requirements and tender rules; improving domestic storage; reducing the artificially high domestic price of wheat; enhancing market transparency through improved availability, quality and dissemination of grain market information; as well as encouraging the cultivation of export-oriented crops are all avenues to consider. At a time when the Egyptian government has ambitious plans for the agricultural sector, such as reclaiming large amounts of land under the 1.5 million feddans project, it is important to convene the know-how and investment backup of the private sector. The EBRD, FAO and the Egyptian Ministry of Supply and Internal Trade have agreed to work on increasing the efficiency of the wheat value chain together with leading agribusiness players. This alliance paves the way for important gains for Egypt's food security, its national budget, and also for the welfare of all Egyptian families. Gilles Mettetal is director of the Agribusiness Team at the EBRD; Emmanuel Hidier is senior economist at the FAO.