As wheat prices shoot up worldwide, Egypt, the world's top grain importer, is squeezed between price hikes and growing demand. There are 2.9 million tonnes of grain reserves, enough to cover 117 days, Abu Zeid Mohamed Abu Zeid, Minister of Supply and Home Trade, was quoted by local media as saying when commenting on the possibility that Ukraine could ban grain exports. But Egypt's grain reserves may last as long as 187 days, given that 1.73 million tonnes of shipments will be delivered by year-end, according to Minister Abu Zeid. Global wheat prices have been on the rise due to less-than-expected supplies; dry weather has been reducing crops from Australia to Eastern Europe, while demand is increasing in North Africa. Russia, Ukraine and Kazakhstan were hit by droughts this year, which reduced their grain harvest by a third. The Black Sea region countries normally produce about 10 per cent of the world's wheat, according to the Food and Agriculture Organisation (FAO). "The government will face a tough challenge to find cheap grain supplies in other countries. Other options include the US, Argentina and Canada," said Abdalla el-Tohamy, an agricultural expert. Global wheat production is expected to fall by 6.1 per cent to 653.1 million tonnes this year, according to the USDA. The decline is forecast to reduce stockpiles by 13 per cent to 173 million tonnes, the lowest since 2009. The London-based International Grains Council has said that the combined grain stockpiles of the largest exporters will drop to a 17-year low. "There should be a strategy to turn Egypt into a wheat self-sufficient country. This is the ultimate solution. In the 1960s, Egypt was 80 per cent self-sufficient," el-Tohamy said. Egypt's population stood at around 30 million in the 1960s. It has now reached 90 million. "Of course, rising wheat prices will affect the Egyptian economy as grain imports will get more expensive," he stated. Subsidised bread is expected to absorb around LE16 billion ($2.6 billion) of the country's budget in the fiscal year 2012/2013, according to the Finance Ministry. Susidised (baladi) bread sells for LE0.05 a piece, while it costs the State budget LE0.35, according to data released by the Ministry of Social Security. From a social perspective, subsidised bread is a must as roughly 40 per cent of Egyptians live on less than $2 a day, according to the World Bank. "The government should work on raising production vertically and horizontally. Vertically, productivity should be increased by using better methods, saving water and maximising the benefits of fertilisers," el-Tohamy explained. One feddan (acre) produces 18 ardeb (one ardeb equals 150kg) of wheat in Egypt, according to the Ministry of Agriculture. Officials have pledged to raise it to 22 ardeb in three years. Wheat consumption in Egypt stands at around 84kg per capita, according to the Ministry of Agriculture. The Ministry of Supply and Home Trade estimates consumption at 180kg as much is used as fodder. In a bid to make ends meet, the government has begun mixing maize with wheat to produce bread since the 1990s. "Developing the agricultural sector will create more jobs. Food imports will gradually decline. Self-sufficiency should be the target," el-Tohamy added. Agriculture accounts for 35 per cent of labour in the North African country, where unemployment is estimated at 12 per cent of its workforce, according to the Central Agency for Public Mobilisation and Statistics (CAPMAS). Egypt's grain output is expected to hit 9.5 million tonnes this year on some 3.5 million feddans. The country's wheat imports are seen to total 7 million tonnes by the end of December. Wheat has been traded at $8.6 a bushel (a tonne equals 36.7 bushels) on the Chicago Board of Trade, and averaged about $7.41 this year. Futures may climb 7.6 per cent to $9.30 by the end of 2012, according to the Chicago Board of Trade. In 2008, US wheat rose above $13 a bushel, fuelling food inflation all over the globe. The FAO has said that the Cereal Price Index is 7 per cent higher than in the corresponding period last year, but still 4 per cent below the peak of 274 points registered in April 2008. Global agricultural output is projected annually at 1.7 per cent over the next ten years, a decline from the 2 per cent rate in the previous decade, according to FAO. "Following two months of stability, the Index rose slightly, mostly on strengthening dairy and meat prices and more contained increases in cereals," the Rome-based agency said in a statement.
