Cairo -
Egypt has signed several huge international agreements worth billions of dollars - between loans, grants and aid - with many international institutions and banks in recent days, in order to finance the purchase of basic commodities such as wheat, grains and petroleum products, in light of the continuing Russian war on Ukraine. Is Egypt facing a crisis? In providing basic commodities?
import invoice
On June 3, the Egyptian government, the largest buyer of wheat in the world, announced the signing of the amended framework agreement with the International Islamic Trade Finance Corporation on the supply of basic commodities with a credit limit of $6 billion.
Meanwhile, Egypt is preparing to obtain more than $600 million (US$497.5 million from the World Bank, and $107 million from the European Union) to support wheat imports and improve the storage silos system, according to Reuters.
The Egyptian government expects a big jump in the wheat import bill by more than $4 billion;
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, which is spent on ration cards to produce nearly 270 million loaves per day.
Russia and Ukraine together provide about a third of the world’s wheat supplies, and about 50% of Egypt’s wheat imports came from Russia last year, while about 30% came from Ukraine, meaning that wheat imports from these two countries constitute about 80% of Egypt’s total imports. of wheat.
The following is the ranking of the countries that import the highest wheat in the world:
Egypt is the largest importer of wheat in the world, with an import volume of 12.1 million tons annually
Next is Indonesia, with a volume of 10.4 million tons
Then Algeria, with a volume of 7.7 million tons
Bangladesh has a volume of 7.2 million tons
A document of the World Bank showing its intention to approve financial support for Egypt worth 380 million dollars to import 700,000 tons of wheat to support bread, in addition to 117.5 million dollars to increase the capacity of silos, develop high-yield varieties and improve the ability to adapt to the climate, according to "Reuters" pic.twitter.com/cvQabAwFjJ
- Al Jazeera Egypt (@AJA_Egypt) June 3, 2022
baking disorders
What the Egyptian authorities fear most is a crisis in the provision of subsidized bread to more than 70 million beneficiaries, thus causing social unrest in light of the high price and scarcity of goods, similar to the bread uprising or the so-called “revolution of the hungry” in 1977.
The Food and Agriculture Organization of the United Nations (FAO) warns that the war in Ukraine is particularly threatening food security in Egypt, which is the largest importer of wheat in the world.
"More than 40% of Egypt's imports of wheat and sunflower oil" come from Russia and Ukraine, FAO economic researcher Ekaterina Krivonos said during the annual conference of the European Bank for Reconstruction and Development in Marrakesh, Morocco, last May.
The determined attempts to provide loans and grants to secure the purchase of strategic goods come in conjunction with the country's suffering from a decline in dollar resources, with the expected deficit rising to 30 billion dollars in the budget for the fiscal year that begins next July.
The Central Bank of Egypt said that the country's foreign exchange reserves fell to 35.5 billion dollars at the end of last May from 37.1 billion dollars last April, a decrease of 4.4%.
Financing to purchase basic commodities, import wheat and support to enhance food security.. Huge loans and grants to Egypt in a few days pic.twitter.com/JR8frx5jiR
- Al Jazeera Egypt (@AJA_Egypt) June 3, 2022
The bank added - in a statement - that the decline came due to the repayment of debts of about two billion dollars in May, including payments of international government bonds issued by the Ministry of Finance and dues to the International Monetary Fund, and other external obligations.
The bank announced - last April - that the balance of its foreign exchange reserves amounted to 37.08 billion dollars at the end of last March, compared to about 41 billion dollars at the end of last February, a decrease of 10%.
At the time, the bank attributed the decline to compensating foreign outflows, paying debt service and buying strategic goods, and said that it "mobilized excess foreign exchange reserves to calm markets during periods of exceptional pressure."
The Egyptian government expects to harvest 10 million tons of wheat during the 2022 season (Al-Jazeera)
One on the import and another on the local
Despite the assertion by the Egyptian Minister of Supply, Ali Moselhi, that Egypt will not import wheat during this period due to the local wheat supply season, the Supply Commodities Authority (the government importer of wheat) contracted to import 8 wheat shipments totaling 465,000 tons - Romanian, Russian and Bulgarian origin - at a price of 480 dollars per ton including shipping price.
And the Minister of Supply said - more than 3 weeks ago - "We will not import wheat now because we are in the local wheat supply season, and we have enough for us now, and for the first time we have 4.5 million tons, enough for the end of the year (6 months as a reserve), provided that another 4.5 million tons are imported when needed. ".
The Egyptian government was counting on buying 6 million tons of local wheat - before reducing it to 5.5 million tons - from farmers after obliging them to supply about 60% of the crop at a price of 5800 pounds per ton ($312), in return for the price of imported wheat reaching 8950 pounds ( 480 dollars), and threatened to impose heavy financial penalties on violators.
The total cultivated area of the wheat crop in Egypt is about 3 million and 659 thousand feddans, and the total productivity of the crop this season is expected to reach about 10 million tons, according to the Ministry of Agriculture.
Urgent |
The Egyptian Prime Minister: We
will deal decisively with citizens keeping wheat in their homes and refraining from importing it within the framework of the official
system
- Al Jazeera Mubasher Now (@ajmurgent) May 31, 2022
Heavy penalties for violating farmers
A few days ago, Prime Minister Mostafa Madbouly announced - during a meeting of the Board of Governors - banning the circulation of local wheat until the end of next August, and warned farmers not to keep it inside their homes, and to confiscate wheat that is imported outside the official framework.
According to the Ministry of Supply, the quantity supplied of local wheat has reached about 3.5 million tons since the start of the current supply season in early April, noting that the current season will continue until next August.
The return of the Egyptian government to importing wheat during the local harvest season raised many questions about the solidity of the country’s reserves of basic commodities, foremost of which is wheat, and its inability to collect the target of the wheat crop, or its desire to benefit from the expansion of building modern silos and increasing its area to double to 3.4 Millions of tons of grain.
Abdel Ghaffar El Salamouni, Vice President of the Chamber of Grain Industry in the Federation of Egyptian Industries, says that the government's expansion in increasing the storage capacity of silos is continuing with the aim of providing and securing a strategic stock of wheat at all times, according to the Chamber's statement.
Is it rosy?
The Egyptian academic and former assistant professor at the Agricultural Research Center, Dr. Abdel Tawab Barakat, describes the government’s statements regarding the reserves of strategic commodities as “pink, and some of them reach the end of the year, about 6 months, contrary to the truth.”
He explained - in statements to Al Jazeera Net - that although Egypt imports about 7 million tons of wheat designated for subsidized bread, 5 million for the manufacture of pasta and sweets, imports 9 million tons of yellow corn, and imports almost all edible oils, the government did not disclose during 8 years For a clear plan for self-sufficiency of these commodities.
Barakat said that the Egyptian authorities are most concerned about falling into a crisis of bread shortages for millions of Egyptians. He said I do not expect that they will be able to collect the required quantities of local wheat, so they resorted to opening the door to importing wheat again.
He added that there are real fears among international institutions that millions of Egyptian families will be affected by the food shortage crisis.