Egypt will not raise local wheat prices or cut bread subsidies after a Russian wheat export ban sent world prices soaring, a government minister was quoted as saying by a state newspaper on Sunday. Egypt said on Sunday it had sent a letter to the Russian trade minister requesting rescheduling delivery of 540,000 tons of wheat Egypt purchased before the export ban. "These contracts were agreed upon before the Russian government made the decision to halt exports," a statement from the trade ministry said. It also said it was suggesting forming a joint committee with its Russian counterpart to discuss the rescheduling of the agreed-upon amounts after the lifting of the export ban and was requesting agreed-upon prices be upheld. Egypt consumes around 14 million tons of wheat annually and relies on foreign supplies for about half of its requirement, making it the world's largest wheat importer. Hefty state subsidies keep bread affordable in Egypt, where one fifth of the population lives on less than $1 per day according to UN figures. "The subsidy program will not be affected as a result of this sudden price hike," Social Solidarity Minister Ali Moselhi was quoted as saying by Al-Ahram newspaper. "We have no intention of raising the prices of subsidized commodities." Finance Minister Youssef Boutros-Ghali said in June he aimed to cut subsidies, which make up around a quarter of state spending, in order to raise spending on education, health and other social services in the 2010-2011 fiscal year without increasing the deficit. The government's subsidy budget assumes an average wheat price of $200 per ton compared to a recent market price of $240, according to a CI Capital research note. Russia imposed the temporary wheat export ban after the worst heatwave on record ravaged crops, pushing wheat prices to their highest in almost two years. Egypt has signed contracts for the purchase of 540,000 tons of wheat from Russia for delivery between Aug. 1 and Sept. 10 and is now seeking an additional 60,000 tons of wheat per month to make up for the shortfall. Egyptians traditionally increase their consumption of wheat during the Muslim holy month of Ramadan, which begins this week. Egyptian authorities are scheduled to hold an emergency meeting later on Sunday to draft a plan to ease the effect of the Russian export ban, the trade ministry said on Sunday. Nomani Nomani, chairman of Egypt's General Authority for Supply Commodities (GASC), said on Thursday Egypt had more than four months' wheat supply for the local market, but that GASC was "continuously present" in the international market.
