Tuesday,12 December, 2017
Current issue | Issue 1301, (23 - 29 June 2016)
Tuesday,12 December, 2017
Issue 1301, (23 - 29 June 2016)

Ahram Weekly

Greater grain efficiency

Experts are calling for a greater role for the private sector in Egyptian grain processing, reports Mai Samih

Economy
Economy
Al-Ahram Weekly

Egypt imports over 10 million tons of wheat per year, making it the world’s largest wheat importer. To store and process such huge quantities of grain efficiently and ensure the country’s food security, a recent conference called for the greater involvement of the private sector.

Entitled “Securing the Future of Baladi Bread,” the conference was organised by the UN Food and Agriculture Organisation (FAO) and the European Bank for Reconstruction and Development (EBRD). It addressed issues such as improving Egyptian cereals production and import infrastructure, international standards of quarantine control, and grain market transparency, among others.

Egypt loses between 10 and 20 per cent of its wheat supplies due to inadequate infrastructure. Investing in modern storage silos and simplifying tenders could lead to potential savings worth $70 million per year, Abdelsalam Ould Ahmed, FAO assistant director-general and regional representative for the Near East, told conference participants.

While acknowledging the efforts made by the Egyptian authorities, he said more work needs to be done. “Fewer than five per cent of Egyptians are food insecure. This is because the Egyptian government has been doing a good job in terms of supplying commodities,” Ould Ahmed said.

“Egypt is aware of the importance of wheat as a strategic food item, and the FAO is doing its part in offering technical expertise to reduce loss and waste in the value chain and in introducing water-saving techniques in irrigation.”

He continued, “Egypt has been historically the wheat silo of the world, and the ambitious project to bring a further 1.5 million acres under cultivation would improve the situation. But the engagement of the private sector and an open dialogue with the public sector are essential to protect Egypt from market shocks or grain shortages.”

Although 47 per cent of the winter cropped area in Egypt is for wheat, making it Africa’s largest grain producer, the country still needs to import over 10 million tons of wheat annually, mainly from Russia, Ukraine, the US and France, to meet its food needs.

Egypt produces 8.5 million tons of wheat a year, said FAO consultant Peter Talks. He said that while yields have been stable, grain consumption has risen by a third and is expected to increase by a further 16 per cent. He estimated that Egypt will need to import a further five million tons of grain, since two-thirds of Egyptians’ food energy comes from cereals.

“The private sector is already responsible for the lion’s share of grain imports,” Talks said. Seventy-five per cent of grain imports are by the private sector, while the other 25 per cent is imported by the government, he added, saying that this is why it is important for the government to co-operate further with the private sector.

Transporting a ton of wheat in some Middle Eastern and North African (MENA) countries costs $11 from farm to mill. The average waiting time is three days. Infrastructure investment could reduce these costs, Talks said, leading to lower prices for the consumer.

“There is an opportunity for the private sector in terms of management and supervision to improve the infrastructure,” David Blumberg, the chief executive officer of Blumberg Grain Middle East and Africa told conference participants. He added that his company has helped the Egyptian government develop 93 new silos for grain storage.

One avid supporter of the private sector has been the EBRD. “We have committed $1.7 billion to Egypt over the last five years, 60 per cent of it to the private sector. We will continue to work to bring Egypt food security,” said Philip ter Woort, EBRD country director for Egypt. He praised government’s efforts to increase efficiency through the smart card system for subsidised bread distribution but said more work needs to be done.

“The government cannot do it alone, and it needs support from the private sector and vice versa,” Mohamed Hamdi, an Egyptian private sector representative, said. He added that “any investor considering investment in Egypt needs clear rules” and said that these are not always in place.

“When you bring grain in you need the approval of many ministries, and there is no laboratory of the Ministry of Health in the ports, but only in Cairo. This means more delay,” Talks said, adding that there is also a need for improvements in the regulatory framework.

“Lack of market transparency and an absence of co-operation between public and private sectors increases prices,” said Philippe Paquotte, a commodity analyst with Agricultural Market Information System (AMIS).

AMIS, launched in 2011 by the G20 group ministers of agriculture, aims to reduce price volatility. But Paquotte said it is difficult to get accurate information about cereals in Egypt, something that “should change so that forecasts are possible,” he said.

“Streamlining tender procedures, greater transparency and consultation in the application of phyto-sanitary measures in line with international practice will greatly contribute to the efficiency of the grain supply chain and could eventually lead to important savings for Egyptian consumers,” added FAO economist Dmitry Prikhodko.

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