Egypt's El Sisi wants government to procure more locally grown wheat

Egyptian leader says development projects undertaken by his government cement stability

An man works in a wheat field in Banha, Egypt. All photos: EPA

Egypt, the largest importer of wheat in the world, has been forced by the war in Ukraine to rethink its strategy and says it will now rely more on local production of the cereal as a way to reduce its reliance on international purchases in the coming years.

A man holds grains of wheat at the Banha grain silos, in Qalyubia Governorate.

Bread is a staple for most of Egypt's 103 million people.

Workers unload wheat at the Banha grain silos.

Local growers have been barred from selling wheat to anyone other than the government until August.

Previously, growers who failed to deliver 60 per cent of their wheat harvest to authorities faced penalties.

Workers collect wheat at the Banha silos.

About 71 million people in the country rely on cheap bread under a state subsidised food card system.

Egypt has 44 silos with a total capacity of 3. 1 million tonnes, across its governorates

Egyptian President Abdel Fattah El Sisi on Monday said he would like to see the government procure up to 10 million tonnes of locally grown wheat, nearly twice the declared target for this year’s harvest.

The world’s largest wheat importer, Egypt said in March it wanted local growers to sell six million tonnes of their wheat crop to the government as part of a stick-and-carrot scheme that rewards farmers who meet their quota and punishes those who do not with up to five years in prison.

The scheme is designed to make up for higher wheat prices on world markets and the disruption of supplies from warring Russia and Ukraine, who between them met more than half of Egypt’s annual wheat imports — more than 10 million tonnes last year.

Egypt, where bread is a staple for most of its 103 million population, has procured 3.9 million tonnes of locally grown wheat, according to the latest government figures. When the six million tonnes are in the government silos, Egypt will have enough wheat to meet demand for six months.

The wheat harvest continues until August.

“Given the chance, we don’t want just six million tonnes. How about nine or 10? We don’t know where things are headed or how long this thing [the fallout from Ukraine war] will be with us,” President El Sisi said in televised comments made during a ceremony marking the opening of a livestock and dairy project.

It was not immediately clear whether the president’s comments actually meant that farmers will now be required to sell to the government up to 10 million tonnes of wheat from the current harvest. But they appear to reflect a wish to see more local wheat at the state’s disposal at a time when it is paying almost double what is used to on the international market.

A bakery worker in Cairo, Egypt. Bloomberg

Wheat is a strategic and politically sensitive commodity in Egypt, where more than 70 million depend on cheap bread sold at a heavily subsidised price — less than one US cent for a standard flat loaf. Following the outbreak of the war, the government moved to fix the price of bread sold outside the subsidy system after it swiftly rose by 50 per cent.

Successive governments have been reluctant to raise the price of subsidised bread, fearing that such a move would spark unrest as it did in 1977 when deadly riots followed a decision to remove bread subsidies. The government then rescinded its decision.

Last year, President El Sisi said it was time to lift bread subsidies but the government shelved that when faced by a public outrage. However, it has continued to exclude hundreds of thousands who benefited from the subsidised bread system on the grounds that they were found to have a higher income than previously stated or owned an “expensive” car.

On Monday, the president said the major food projects his government is undertaking, including livestock, dairy farms and land reclamation, were meant to cement the country’s stability.

“These are not just investments, they are for stability,” he said, before hastening to add that he meant the stability of the nation, not the regime or his office.

“If people are discontented, we are risking the future of 100 million people. If pressure increases on the citizens, what will they do?” he said, apparently alluding to the 2011 popular uprising that toppled autocratic ruler Hosni Mubarak and mired the country in turmoil.

“We just don’t know how long these circumstances we are living through now will last.”

Egypt has been hit hard by the fallout from the war in the Ukraine.

Besides the disruption in wheat supplies from Russia and Ukraine, higher global energy prices and shipping costs have sent inflation into double digits. Egypt also devalued its currency by 14 per cent against the US dollar in March and has opened talks with the IMF on economic restructuring and a possible loan.

The war also robbed Egypt of visitors from the two warring nations who had combined for 30 per cent of all tourists, dealing a body blow to its vital tourism industry.

An Egyptian woman shops at a green grocery in Cairo. AFP

On Monday, Mr El Sisi said his government remained committed to cushioning Egyptians against higher energy prices. He said 17 million households continued to pay only 50 per cent of the actual cost of their electricity.

Low-grade fuel used for commercial transport, he said, was still available at 50 per cent of its cost.

“Energy costs in Egypt should be so much higher if they were to reflect world prices,” he said. “I am not saying this to mean that the government is being charitable towards the people. No, we are in fact trying to reduce the cost of living.”

He said moving to raise domestic electricity prices have been put off three times due to the economic hardships faced by most Egyptians.

“This is the maximum this government can do to prevent prices from going up,” he said.

Mr El Sisi is the architect and driving force behind an ambitious plan to overhaul the economy and upgrade the country’s infrastructure.

The economic reforms he launched in 2016 led to soaring prices of fuel and services and included new taxes. They won lavish praise from donors and international financial institutions, but hit the middle and working classes hard despite state programmes to support Egyptians with limited incomes.

A former army general elected president in 2014, Mr El Sisi has since embarked on a series of multibillion-dollar projects that included building about 12 new cities, thousands of kilometres of roads, power and water desalination stations and the reclamation of hundreds of thousands of desert land.