Egypt bans export of wheat and other staples for three months

Export ban to include lentils, pasta, wheat, flour and fava beans from March 11

Umm Abdo prepares bread for the family in her home on the west bank of the Nile, by Egypt's southern city of Aswan. All photos: AFP

Russia's invasion of Ukraine has disrupted wheat imports to many countries, fuelling fears of higher prices and shortages.

With global supply chains already under strain due to the Covid-19 pandemic, a wheat-buying frenzy in Egypt, Libya, Tunisia, Algeria and Morocco – all of which depend heavily on imported wheat to feed their populations – lays bare the magnitude of the challenge governments face amid sharp rises in food prices.

The crisis was highlighted by the UN food agency, which this week predicted that poorer countries in northern Africa, Asia and the Middle East that depend heavily on wheat imports risk suffering significant food insecurity because of the war in Ukraine.

Of the five nations in northern Africa, Egypt’s wheat predicament is perhaps the gravest. The world’s largest wheat importer with a population of 102 million, Egypt relies on Russia and Ukraine for 80 per cent of its supply.

Egypt’s wheat is chiefly used to make the flatbreads provided for about 60 million citizens who are entitled to subsidised food.

Egypt will impose a three-month ban on the export of several essential food items, including wheat, from March 11.

The Ministry of Supply and Domestic Trade order, published in the national gazette, covers lentils, pasta, wheat, flour and fava beans. It coincided with a significant rise in the price of foodstuffs in Egypt that's partially blamed on the adjustment of the supply chain in the aftermath of the worst phase of the Covid-19 epidemic.

Alarm over the impact of the Ukraine war has also been cited for the rising prices since 80 per cent of Egypt's wheat imports - about 13 million tonnes in 2021 - come from Russian and Ukraine.

Egypt is the world's largest wheat importer.

The minsitry gave no specific reason for the ban, which appeared designed to bolster supply of these items in the hope that would check the surge in prices.

The most-populous Arab nation with 102 mllion people, Egypt's wheat imports and local production are chiefly used to make bread, the country's main staple and the cornerstone of a bread-subsidy programme that benefits about 60 million people.

The remainder of the population relies on "free market" bread, which is bigger and more expensive.

Surging food prices have sent the inflation rate in urban parts of Egypt to the highest level since mid-2019, adding to the likelihood of an interest-rate increase this month.

Consumer prices were up 8.8 per cent in February, compared with 7.3 per cent the previous month, the state-run statistics agency Capmas said on Thursday.

A 17.6 per cent increase in food and beverage costs, the biggest single component of the inflation basket, was the main driver. On a monthly basis, inflation was 1.6 per cent.

The steep hike in food prices, including fresh produce, has led to calls for the government to step in to protect consumers, particularly middle-class and poor Egyptians. About 30 per cent of Egyptians live under the poverty line.

Cairo residents are reporting increases in food prices of up to 50 per cent over the past two weeks. Food prices routinely rise in the weeks before the Muslim fasting month of Ramadan, which begins in the first week of April. During that month, many Egyptians treat themselves to elaborate meals at sunset, when they break their daylong fast.

The prices of non-subsidized bread in Egypt increased over the past few days, as the Russian aggression on Ukraine has affected the price of wheat worldwide. EPA

But the current price increases are far higher than they usually are in the run up to Ramadan.

The price of a loaf of bread, outside the state subsidy system, has risen from 0.50 to 1.50 Egyptian pounds (about $1).

And fuel prices, which are adjusted by the government, are widely expected to be raised soon to reflect sharply higher prices on the world market.

The chief prosecutor's office said in a statement on Thursday that 12 people had been detained in eight provinces, including Cairo and the port city of Alexandria, on suspicion of hoarding food items with the intention of selling them later at inflated prices. It said authorities were determined to find and prosecute hoarders.

The surge in food prices and the likely rise in fuel prices will compound the hardship faced by most Egyptians to make ends meet as the government of President Abdel Fattah El Sisi presses on with an ambitiious programme to overhaul and modenize the economy that began in late 2016.

The programme, initially launched as part of a deal to secure a $12 billion IMF loan, has seen the government removing most state subsidies, raising utility charges and intoducing a vast range of taxes. The pound's exchange rate to the US dollar was also floated in 2016 with a devaluation that stripped the local currency half its value.

The reforms hit the poor and middle class hard, but the government has sought to cushion the upheaval with a range of economic support initiatives for the most vulnerable among them.