Top wheat importer Egypt looks for sources outside Russia and Ukraine

The invasion has led to concerns about constrained supply and higher food prices in the Arab world’s most populous country

A farmer harvests wheat crop on a field in the El-Menoufia governorate, north of Cairo, Egypt  May 1, 2019. REUTERS/Mohamed Abd El Ghany

Egypt, the world’s top importer of wheat, is looking for new sources after the Russian invasion of Ukraine disrupted crucial supply from the two major exporting countries.

The state’s main state buying agency, the General Authority for Supply Commodities, issued an international tender for Monday to buy 55,000 to 60,000 tonnes of wheat.

Global grain markets are facing turmoil following Russia’s invasion of Ukraine on Thursday, with the two countries accounting for about 30 per cent of the world’s wheat supply. Russia is the world’s largest wheat exporter and Ukraine is among the top five.

“The Middle East and North Africa region is of particular concern and higher food prices will be a major casualty of a prolonged conflict in the area,” Abeer Etefa, Mena regional spokeswoman for the UN World Food Programme, told The National.

“The conflict risks leaving buyers from Asia to Africa and the Middle East vulnerable to more expensive bread if supplies are disrupted. That would add to food commodity costs that are already the highest in a decade.”

Wheat prices reached a record high of €344 ($387) a tonne in European trading on Thursday.

Egypt had cancelled a tender last Thursday after receiving only one offer of French wheat, as at least two offers are required for a purchase to go ahead.

The GASC cast a wider net in its latest tender, calling for offers from the US, Canada, France, Bulgaria, Australia, Poland, Germany, the UK, Romania, Serbia, Hungary, Paraguay and Kazakhstan, in addition to Russia and Ukraine. The delivery would be scheduled for April.

Wheat is fundamental to the Egyptian diet, with about 70 per cent of the population relying on subsidised bread to feed their families.

The Arab world’s most populous country, with more than 100 million people, Egypt is expected to need about 13 million tonnes of wheat this year, said Lamy Hamed, associate professor in the soil and water department at Cairo University’s Faculty of Agriculture.

“Egypt has wheat reserves for at least four months, so we won’t have a problem for now, but there may be a problem after that,” Mr Hamed told The National.

About 50 per cent of Egypt's wheat imports come from Russia and 30 per cent from Ukraine, because wheat from other sources costs far more, he said.

In 2021, Egypt imported 11.6 million tonnes of wheat and produced 9.8 million tonnes, of which 3.4 million tonnes were procured by the government, according to the UN Food and Agricultural Organisation.

“Despite the fact that Egypt imports a significant amount of its wheat, which is ranging between 50 and 60 per cent depending on one year to the other, Egypt remains a major producer of wheat,” Nasredin Elamin, the Egypt representative for FAO, told The National.

Egypt also increased its stockpiling capacity from 1.4 million tonnes nearly a decade ago to above three million tonnes today, he said.

Egyptian Cabinet spokesman Nader Saad said Egypt’s wheat reserves and domestically produced wheat would be sufficient for nine months, but noted that higher prices are inevitable.

The government met with the central bank on Thursday to discuss securing financing to purchase food and oil supplies that could be affected by the crisis.

“Libya, Lebanon and Egypt, among a few other countries, are dependent on wheat imports and an increase in wheat prices will put pressure on their fiscal budgets,” said Ms Etefa of the WFP.

Rising food prices in Egypt had already pushed up urban inflation, which increased from 5.9 per cent in December to 7.3 per cent in January, its highest rate since August 2019.

The price of bread has been a politically sensitive issue in Egypt, sparking several protests over the past 50 years. A subsidised flat loaf costs 0.05 Egyptian pounds, less than one US cent. But President Abdel Fattah El Sisi announced last year that rising import costs would soon lead to a necessary price increase.

Mr Hamed said increasing Egypt’s local wheat production would help offset the crisis, but there are challenges, such as limited water resources.

“I don’t want to lose hope, but we still have a long way,” he said. “It’s important because we will eventually need to rely on ourselves.”

Updated: February 28, 2022, 10:37 AM