Egypt turns to local farmers as grain market tightens
In late May, in Nubaria, an agricultural area reclaimed from Egypt’s northern desert, farmers and officials watch as a combine harvester roars through a field of wheat gobbling up the tight golden stalks, then spitting out a stream of greasy grain.
A ‘model field’, this was used by the Ministry of Agriculture to showcase modern techniques to maximize yields and reduce water consumption.
“I expect a good harvest of 3.75 tons of wheat from each feddan [slightly larger than an acre]said Mohamed Abdallah, the farmer who owns the land. The traditional style of irrigation produced up to a third less grain, he said.
Farmers and officials say soaring grain prices following the Russian invasion of Ukraine underscored the importance of the local wheat market in Egypt, the world’s largest grain importer. As global supplies tighten, the Egyptian government is determined to get its hands on as much of this year’s crop as possible, and it has relied on farmers to sell 60% of their crop. In the longer term, the state is working to increase production by promoting techniques such as those used in Nubaria, hoping that by 2025 local cultivation could cover up to 65% of its needs, compared to 45 % previously.
The key for the government is its subsidized bread program, which uses about 9 million tons of wheat a year and serves about 70 million people, or just over two-thirds of the population. Five subsidized loaves of bread cost 1.5 US cents, compared to 4 cents for an unsubsidized loaf. In a country where more than half the population fits definitions of poverty, the provision of cheaper bread has been seen by successive regimes as crucial to staving off hunger and ensuring social stability.
Egypt spent an average of $3 billion a year on wheat imports before the war, but rising prices mean that could reach $5.7 billion, the International Food Policy Research Institute said. adding to the pressure on a heavily indebted country. Cairo devalued its currency in March and is now seeking an IMF loan. Gulf countries, aware of the potential destabilizing impact on the most populous Arab nation, are channeling some $22 billion in deposits and investments to support the economy.
Usually much of the grain for subsidized bread is imported, although the government increasingly wants to use more of the local harvest. Thanks to “ideal weather”, Reda Mohamed Ali, who leads the government’s national campaign for improved wheat harvest, forecasts a national harvest of 10 million tonnes or more this year, 10% more than the last year.
The government wants to buy at least half for the subsidized bread program, up from a third last year. He decreed that farmers must hand over 60% of the wheat harvested this season and that grain cannot be transported without a permit. Violations can result in fines and jail time. As an incentive, the government raised its purchase price for local wheat by 22% to around $320, still $160 less than the price on the international market, a difference that caused some grumbling among producers .
With local stocks, Egyptian officials said they will have enough wheat reserves until December or January. But this month, as the harvest drew to a close, wheat delivered to the state had only reached 3.5 million tonnes. In an apparent attempt to keep grain flowing to state elevators and out of the hands of private traders who might offer more money, the cabinet last week banned wheat sales to anyone other than than state buyers until the end of August.
In Nubaria, farmers said they sold more than their quota to the state because it paid quickly. They are also aware of the risks associated with breaking laws.
“Cars transporting grain need permits and letters from the local agricultural cooperative,” said Nour Attia, a farmer. “The army keeps an eye on the vehicles and no car can go through the toll booths if they don’t have permission.”
Some have complained about the price. A small farmer noted that it was cheaper to save grain to feed his livestock than to buy maize. “Everything is expensive now,” he said. “We have to use fertilizers like potassium which are not subsidized.”
His complaints were echoed by Hamada Salama, a farmer from another part of Nubaria who sold his entire wheat crop of 100 feddans to the state. “The price is not good compared to the costs,” he said. “But the state was able to control the whole process, from the land to the silo.”
Highlighting the importance of their production for the country, Ali told farmers at the Nubaria Agriculture Ministry event, “You should not negotiate with your country for a higher price during a crisis. The wheat you hand over now comes back to you in the form of a [cheap] Loaf.”