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Egypt''s wheat dilemma
Published in Almasry Alyoum on 18 - 08 - 2010

Egypt, the world's second biggest importer of wheat, is seeking alternative suppliers, while agriculture experts say it's about time to revise the country's overall policy.
The search for alternatives comes in conjunction with a Russian ban on wheat exports. Russia, which provides 60 percent of Egypt's wheat imports, decided earlier in August to cancel its wheat exports until December 2010. Russian Prime Minister Vladimir Putin recently announced that the wheat exports ban was a result of a shortfall caused by an outburst of brush fires.
Although Russia has pledged to engage in further negotiations with Egypt over the sudden ban decision, Egypt has been left to worry about 360,000 tons of wheat that were initially scheduled to arrive between August and September.
The Egypt General Authority for Supply Commodities (GASC) has a reserve of three million tons of wheat, enough to produce subsidized bread for around four months.
The Egyptian government recently signed a deal to import 250 tons of wheat from France to alleviate the Russian wheat shortage.
Egypt consumes around 12 million tons of wheat per year, which is twice the amount of its annual domestic production.
In the past, Egypt has compensated for its own wheat shortage by importing from other countries. In 1964, Egypt faced its first noticeable problem with wheat imports when the US made the decision to halt its wheat exports to Egypt in protest of former President Gamal Abdel Nasser's socialist politics.
The problem led Egypt to rely on importing Russian wheat, which has remained a sustainable alternative until the latest ban.
Deciding to import wheat was originally intended as a strategic manoeuver, as agriculturalists found that the production of wheat is significantly less profitable and requires a larger intake of water than other produce.
The decision dates back to the 19th century when the ruler of Egypt, Mohamed Ali, decided to reallocate the wide plantations. This increased the importance of crops such as sugar cane and cotton--which became Egypt's strategic crop until the end of the 20th century. Egypt had as much as three million acres of agricultural land.
Late last century the Ministry of Agriculture began to encourage the production of various alternative crops to provide Egypt with even higher rates of revenue through exporting them mainly to Europe. Egyptian cotton production has since then shrunk to 80,000 acres.
Some agriculture experts say however the more worrying problem is that Egypt is short in producing such a critical crop as wheat, a staple commodity for Egyptians.
“Wheat is crucial to Egypt and it's wrong to substitute it with flowers, strawberries and cantaloupes for the sake of price differences,” said Usama Bdir, a consultant for the Land Center for Human Rights.
Economists, on the other hand, say focusing on cultivating highly profitable crops is the right choice.
"It is much more efficient economically to allocate resources in crops that direct billions of dollars of revenues in exports to Egypt," said Monal Abdel Kader, economics professor at the American University in Cairo.
On the other hand the wheat shortage could be met through outsourcing from other countries with better irrigation sources.
"The Egyptian government could provide incentives for investment in Nile basin countries; this could be cheaper than importing such crops," said Kader, who is carrying out research on boosting food sufficiency.
Agriculture Minister Amin Abaza suggested earlier this week at a press conference that Egyptian investors should consider planting farms in Nile basin countries such as Ethiopia, where there are adequate water resources.
Subsidizing bread, which doesn't effectively target those who need it, contributes to the shortage problem, experts say.
"Providing subsidized bread caused millions who used to bake their own corn bread to now depend on wheat bread…they even feed it to their cattle," said Ahmed Khourshed, a consultant at the Food Technology Research Institute.
In Egypt a hundred pieces of pita bread cost less than US$1, a price Khourshed describes as "unnecessary."
Both Khourshed and Kader believe money used to subsidize bread would be better be spent on developing wheat plantations and storage technology, or as an incentives for investors to outsource in Nile basin countries.
Twenty-eight percent of Egypt's workforce work directly in agricultural production, according a 2009 report by the Central Agency for Statistics, whereas around 70 thousand acres of agricultural land are lost yearly, primarily due to construction.


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