Rising wheat prices and global transport threaten Egypt's wheat supplies

Flour prices continued to rise in Egypt - the largest importer of wheat in the world - due to the rise in wheat prices, in conjunction with the energy crisis that cast a shadow on commodity supply chains around the world.

Under the pressure of supply shortages and “unusually high” prices, the Egyptian government was forced to cancel a tender to buy wheat, a few days ago, for the fourth time this year, according to Bloomberg.

The agency added - quoting the General Authority for Supply Commodities in Egypt - that it canceled the tender last Tuesday, as offers came higher than expected, noting that purchases are already significantly behind last year's pace.

The rise in food prices was reflected in inflation rates in Egypt, which imports more than 60% of its needs, amid expectations of an increase in the prices of all food commodities related to wheat, such as bread and baked goods of all kinds, pasta of all kinds, and sweets.

The annual inflation rate for the total of the Republic increased by 8% for the month of last September, compared to 3.3% for the same month of the previous year 2020, according to the Central Agency for Public Mobilization and Statistics.

The (governmental) agency added that the annual inflation rate of consumer prices in Egyptian cities rose to 6.6% in September from 5.7% last August.

The price of flour has risen significantly in conjunction with the start of the school season (Al-Jazeera)

Agents of a number of grain mill companies in Egypt told Al Jazeera Net that flour prices have continued to rise significantly since last August, and have increased in conjunction with the rise in local demand due to the start of the school season.

Prices have jumped since that date by more than 25%, and the price of a ton ranges between 7 thousand pounds and 9 thousand pounds (a dollar equals 15.7 pounds) per ton, up from 5,500 pounds and 7 thousand pounds per ton, according to type and quality.

According to Bloomberg, the average price paid by the Egyptian government since the start of purchases for this season has increased by about a hundred dollars, in addition to the problem of high shipping costs, at a time when the world is facing the worst hunger crisis in 15 years and an energy crisis that threatens to make matters worse.

The wheat import bill is about $3 billion annually, and Egypt imports about 12 million tons annually (governmental and private), and consumes about 20 million tons of wheat annually, including about 9 million tons for the production of subsidized bread that is spent on ration cards to produce approximately 270 million loaf daily.

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government options

Dr. Abdel Tawab Barakat, advisor to the former Egyptian Minister of Supply, says that the rise in wheat prices in the international market coincides with a wave of high prices and a decline in the quantities available for export for a group of basic commodities that the countries of the region buy from abroad, on top of which are bread wheat and edible oils, which Egypt imports by 90%, and yellow corn. Used in the production of animal feed, chicken.

In his speech to Al Jazeera Net, he expected that the rise in wheat prices in the international market would negatively affect the size and price of "fino" (a loaf of bread), as the private sector imports more than 5 million tons in dollars, noting that the government overcomes the problem by purchasing lower quality wheat, But he warned of its negative impact on public health.

Abdel-Tawab, an expert in agricultural economics, did not rule out that the government would work to reduce bread subsidies in twisted and indirect ways, such as depriving newborns and children after two children from not having their families, deleting an additional number of beneficiaries, and reducing the weight of a loaf of bread.

Last August, an article by writer Claire Willio - correspondent of the French newspaper "La Croix" in Cairo - monitored the impact of the high price of a ton of flour - which recorded 6 thousand pounds per ton at the time, after it was 4 thousand pounds - negatively on the Egyptians as a commodity strategy in the country.

double problem

The economic expert, Ahmed Zikrallah, considered that what is happening reveals the disadvantages of relying on imports to cover the basic needs of strategic commodities, and said that "wheat constitutes a significant proportion of Egyptian imports and the expenditures of the state's general budget."

He explained in statements to Al Jazeera Net that the rise in wheat prices came due to the impact of global supply and supply chains on the energy crisis, and the decline in agricultural production in many producing countries such as Russia and the United States as a result of recent climate changes.

He believed that Egypt faces a double problem, the first related to the availability of the product, and the second related to its high price, which puts great pressure on the budget, which suffers from a continuous deficit, and will negatively affect food prices in Egypt and high inflation.

Mohamed Fawzy, a member of the Board of Directors of the Dakahlia Chamber and the head of the owners of municipal and French bakeries, said in press statements that the increase in the prices of a ton of flour since the beginning of this month will negatively affect the method of pricing and weighting of various French products and baked goods, especially “Fino” bread for schools and sandwiches.

The Egyptian government is counting on the reserves it has until prices drop. The Egyptian Minister of Supply Ali Al-Moselhi revealed that the country's strategic reserves of wheat are sufficient for only 5.5 months.