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Wheat supplies in jeopardy
Published in The Egyptian Gazette on 05 - 03 - 2013

Despite soothing official assurances that Egypt's reserves of wheat are enough to cover local consumption until the end of the year, analysts warn against a bread crisis in the coming months, due to a shortage of hard currency.
The country's foreign reserves stood at $13.6 billion at the end of January, according to the Central Bank of Egypt (CBE). Falling reserves of hard currency raises default risks, one analyst says.
Annual wheat consumption in Egypt, the world's top importer of this grain, stands at 180kg per capita per annum, according to the Ministry of Supply and Home Trade.
"Egypt's international payments may take a blow as foreign reserves fall. Its imports of fuel, wheat and other food staples are seen to be negatively affected," Nashaat Sabry, a Cairo-based economic analyst, told the Egyptian Mail.
The most populous Arab country of 92 million people imports more than half of its annual needs of grain. Egypt consumes around 17 million tonnes of wheat annually, according to official reports.
Supply Minister Bassem Auda has revealed that the country's wheat output may reach 4.5-5 million tonnes, in addition to 3 million tonnes of imported grain. The total will "last until the end of 2013", according to Auda.
One feddan (acre) produces 18 ardeb (one ardeb equals 150kg) of wheat in Egypt, according to the Ministry of Agriculture. The Hisham Qandil Government has pledged to raise the yield to 22 ardeb per feddan in three years.
"There is still a 10-million tonne gap. How can the Government bridge it?" wondered Sabry, stressing the need to either slash demand or look for cash to buy grain.
Egypt needs around $12 billion to fix its cash-strapped economy, which has taken the brunt after a revolution that toppled Hosni Mubarak in early 2011.
"Even if the Government gets a loan from the International Monetary Fund (IMF) and other world agencies, the ongoing political unrest will hamper any development plans. Egypt remains stuck at square one," Sabry explained.
The Government seeks a $4.8 billion loan from the IMF to bridge the gap in its budget, which is forecast to incur a deficit of LE200 billion ($29 billion) by the end of year.
Minister Auda said maize will not be added to wheat flour in bread production. In a bid to make ends meet, successive governments during Mubarak's rule mixed maize with wheat to produce bread from the 1990s onwards.
There are now plans to stop maize being used, although this will make bread production more expensive.
Subsidised bread is expected to absorb around LE16 billion ($2.6 billion) of the country's budget in 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 international payment situation may worsen if global grain prices shoot up. In 2008, a food crisis hit the world due to skyrocketing oil prices. Egyptians fought one another in long queues outside bakeries to get subsidised bread.
Early prospects for 2013 point to increased global wheat output, according to the Food and Agricultural Organisation (FAO).
"Contributing largely to this outlook is an estimated 4 to 5 per cent increase in the winter wheat area in the EU where, additionally, winter weather conditions have been generally favourable so far," the UN agency said in statement on its website.
"In Europe, prospects are satisfactory in the Russian Federation and Ukraine, where winter plantings remain similar to last year's levels and moisture conditions are somewhat improved, except in those southern parts of Russia worst affected by drought last year," it added.
Russia and Ukraine are among Egypt's top suppliers of wheat.


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