Abu Dhabi-based agribusiness company Al Dahra and Abu Dhabi Exports Office (Adex) have secured a $500 million multiyear deal to supply Egypt with wheat.
The five-year agreement, worth $100 million per year, will provide Egypt with imported milling wheat starting this year, Al Dahra said in a statement on Tuesday.
"The low-cost financing package from Adex helps us procure high quality wheat at the lowest cost financing available, with comfortable payment terms.... All three parties have been working hard over the past few months to bring this to fruition," Ali Al Moselhy, Egypt's Minister for Supply and Internal Trade, said.
"This agreement solidifies our commitment in establishing long term supply deals with key producers across the world, so that the people of Egypt have access to essential food supplies and strengthening our food grain supply chain buffer to withstand any unexpected shocks in the global markets."
Africa's total wheat imports are forecast to rise by 5.4 per cent from 2022/2023 to 54.8 million tonnes in 2023/2024 , according to the Food and Agriculture Organisation of the United Nations.
The largest increase is expected in Egypt to meet domestic demand and maintain stock levels.
"Following reduced imports by Egypt in 2022/23, when currency depreciation and high debt levels made importing wheat at high international price levels difficult, expectations of lower international prices could support a rebound in Egypt’s wheat imports in 2023/24 to 12 million tonnes, re-establishing the country as the top wheat importer in the world," the FAO said in its Food Outlook report in June.
International wheat export prices have faced downwards pressure since mid-2022, as supply prospects improved, uncertainty regarding Ukraine’s exports eased and importers diversified their sources, the UN body said.
"Heading into 2023/24 with ample anticipated global supplies, world wheat prices will start the 2023/24 season at lower levels, with prices in May down 35 per cent from May 2022 but 4 per cent above their five-year average value for the same month," it said.
Egypt, Indonesia, Turkey, Algeria and China are the world's top five wheat importers, according to FAO data.
Egypt’s headline inflation rate increased to a record 35.8 per cent in June, as food prices continued to surge in the country. That's up from the 32.7 per cent reported in May, data from the country’s statistics agency Capmas showed.
The deal between Egypt, Al Dahra and Adex is a step in efforts to "help UAE businesses expand their global exports and diversify our economy," Mohamed Saif Al Suwaidi, director general of Abu Dhabi Fund for Development and chairman of the exports executive committee of Adex, said.
Al Dahra farms 28 thousand hectares in Egypt that produce staple crops.
It produces wheat, corn, onions, sugar beet, sesame, citrus, sorghum, as well as forage for livestock.
"Nearly 85 per cent of all produce from Al Dahra's Egyptian farms are supplied locally, helping reduce the import burden for the government," according to the statement.
“This agreement highlights our commitment to food security in the countries we operate in and complements our efforts from our farms in Egypt," said Arnoud van den Berg, group chief executive of Al Dahra.
"Over the past three years, our farms in Egypt have supplied over 180 thousand tons of wheat at the prevailing local market price," he said.