As Ukraine war rages, Egypt races to secure wheat imports amid global food crisis

Egypt is paying the price of disruption to vital wheat imports and sharply rising import costs due to Russia’s invasion of Ukraine, prompting Cairo to take new measures to secure adequate reserves.

The disruption has raised fears that Egypt could face a shortage of flour needed for the subsidised bread that is available to more than 70 million of the country’s 103 million population.

Russia and Ukraine have long been the main suppliers of wheat to Egypt, the world’s largest importer of the substance.

“The immediate food security impacts of the Ukraine war are particularly pronounced on countries heavily dependent on Ukrainian and Russian grain imports,” a World Bank document said.

“As the largest importer of wheat in the world, the Ukraine war has delivered a major shock to Egypt.

“Wheat is a key staple food commodity in Egypt. It represents 35 per cent to 39 per cent of per capita caloric consumption. Wheat imports account for nearly 62 per cent of total use in the country.”

Egypt imports up to 85 per cent of its wheat from Russia, although this can drop as low as 60 per cent in some years, and from Ukraine up to 25 per cent, depending on consumption, harvests and tenders.

Egypt’s Central Agency for Public Mobilisation and Statistics says 88.5 per cent of families benefit from the country’s food subsidy system.

A total of EGP 84.5 billion ($4.5bn) has been allocated to subsidies for food and bread in the fiscal year 2020/21 budget.

This comes alongside EGP 36.5bn to support ration card goods for the 63.5 million beneficiaries, covering EGP 50 per month for each of the four people registered on the card, and EGP 25 per person per month if more than four are registered.

The bread subsidy programme requires about 9 million tonnes of wheat annually — about half of the total consumption in Egypt and three quarters of Egypt’s imports.

Before the Ukraine war, Egypt’s wheat imports in the 2021/2022 marketing year were estimated at 12 million tonnes, the World Bank said.

In May, Egypt’s Finance Minister Mohamed Maiit said that higher global prices and pressure on the Egyptian pound would burden the government with an additional $3bn import bill.

Egypt has been suffering from a shortage of foreign currency due to the coronavirus pandemic which froze the tourism industry, a main source of foreign currency.

Egypt seeks to import 5 million to 5.5 million tonnes of wheat for the 2022/23 fiscal year, starting next month, for its subsidised bread system, its supply minister has said.

Shortly after the war erupted, Egypt imposed a three-month ban on the export of several essential food items, including wheat, from March 11. The ban was later extended by the authorities.

Egypt’s Cabinet agreed in March to increase the procurement price of local wheat by 65 Egyptian pounds per ardeb (150 kilograms) as an incentive for farmers to sell more of the local crop to the government before harvest.

The government now pays 865 to 885 Egyptian pounds per ardeb depending on purity levels.

Egypt has procured 4.1 million tonnes of local wheat so far during the current procurement season, Kamal Hashim, chairman of the state-run General Silos and Storage Company said this month.

Mr Hashim said the amount of wheat available in Egypt was sufficient to last for the rest of the year.

The Egyptian government has also sought to address the crisis by diversifying the origin of its wheat imports.

Supply Minister Ali Moselhy told a press conference on Sunday that the government has signed a contract to buy 180,000 tonnes from India.

Originally, the country had agreed to buy 500,000 tonnes but the supplier said availability was on condition that the wheat had to be at the ports.

“It turns out [the supplier] has 180,000 tonnes in the port,” Mr Moselhy said.

He announced that Egypt was also in talks with Russian suppliers to strike a new deal.

Egypt has added Portugal as another source, the minister said.

The Egyptian government is seeking to apply new approaches to increase the quantities of flour extracted from home-grown and imported wheat.

A new method being tested is supplementing wheat flour with potatoes. “We are looking at the technology now,” the supply minister told a press conference in Cairo last week.

“Using potatoes in producing bread could save up to 1 million tonnes of wheat,” Mr Moselhy said, noting that Egypt has self-sufficiency in potatoes and is studying the technology required for the process.

Abdul Moneim El Gendy, a researcher at the country’s Ministry of Agriculture who proposed the method, said that potatoes can be boiled and mixed with wheat in a 50-50 mixture.

“The method was tested and was successful in producing highly nutritious bread,” Mr El Gendy said in recent televised statements.

Egypt also studied producing bread from barley but stocks were insufficient as the crop is already used extensively in beverages.

The country is examining ways to obtain more flour from grain, raising the extraction percentage for flour used for subsidised bread to 87.5 per cent from 82 per cent, the supply minister said.

That could save about 500,000 tonnes of imported wheat.

The Egyptian government has asked the World Bank to obtain $500m to finance an Emergency Food Security and Resilience Support Project, World Bank documents said.

The aim of the project is “to ensure the short-term supply of wheat for uninterrupted access to bread for vulnerable households and to strengthen Egypt’s resilience to food crises”, the bank said.

The country’s fragile agricultural resource base is under pressure — including water and land resources, from both climate change and increased population growth, the bank says.

The project would support the development of resilient and adapted crop varieties, as well as increasing the adoption of “climate smart” agricultural practices, such as technology for more efficient irrigation and energy use in farming.

Tags: Russia, Egypt, price, wheat, flour, imports, harvests, procurement, shortage, Ukraine