The wheat harvest is almost here, and the government has announced that wheat prices will be set at around LE550 per ardeb, a traditional unit equalling around 150 kg.
The announcement was a disappointment to some, however. “We were expecting LE650 per ardeb this year,” said farmer Mohamed Mahmoud, explaining that the past year had been difficult for farmers with the price of production inputs increasing.
“We are paying more for the fuel needed for the water pumps, paying more for fertilisers, and more for day labourers,” he said. The floatation of the Egyptian pound in November and cut in subsidies on various fuel items have led to a 30 per cent average increase in prices.
The government is the only major purchaser of domestic wheat. Over the past three years, it has purchased 37 per cent of domestically grown wheat, with the remaining wheat consumed for food, seeds, feed and other purposes, according to a 2015 report from the UN Food and Agriculture Organisation (FAO).
But not everyone is worried about the price. Mohamed Said, who owns a farm in Sharqiya, said it was acceptable. “Farmers will be making a profit, though a small one,” he said, adding that “we have seen lower prices, yet we survived.”
At around 6.6 ardeb per ton, a ton of wheat would bring in around LE3,600, almost equivalent to international wheat prices. According to the FAO, the benchmark US wheat price averaged $210 per ton in February. At an exchange rate of LE17 per dollar this comes to LE3,570.
Said believes the floatation of the pound was the best thing that could have happened for farmers. Before the floatation, and because the pound was kept artificially strong, imported wheat was cheaper than locally cultivated wheat. That had encouraged some to import cheap wheat and sell it as domestic produce at a higher price, he explained.
“The floatation is in favour of local producers,” he said. Farmers might make little profit now, but with the passing of time it would increase, he added.
What Said worries about more are glitches in the delivery process. Last year, the wheat harvest was plagued with mismanagement, he said, and a decision obliging farmers to show deeds of ownership before delivering their crops had hampered those who had rented land from selling their crop to the government, meaning that they had had to sell it at a cheaper price to traders.
“The worst thing for a farmer is not being able to market his produce because agricultural produce is not something that can be stored,” Said explained. When such problems happen, traders take advantage of the situation and buy the crop from farmers at cheap prices, he pointed out.
He had not cultivated wheat this season after having witnessed what had happened last year. The way the government had dealt with the problem had made things worse, Said said. Accountability for the problem was confused between the Ministry of Agriculture and that of Supply, with each denying responsibility.
Mahmoud is also worried about delivery regulations. “We are not sure what will happen this year,” he said, pointing out that wheat was the main cash crop for most farmers and they could not afford delayed payments.
Hajj Hosni, who owns land in Sharkiya, is not optimistic that delivery to government warehouses will be any easier this year. The government’s agricultural cooperatives were not doing their part, he said, and he wanted to see farmers delivering to cooperatives nearer to where they were located, as had happened in the past.
Now farmers have to deliver to warehouses in the nearest city, which is expensive because they have to rent trucks, he explained. Traders take advantage of this and buy the crop from the doorstep of the farmer for cheaper than the regular delivery price. They then deliver it to the government and pocket the difference, he said.
“We need a wheat-collection centre in each locality that is close to farmers,” he added, saying that the government needed to make life easier for farmers if it did not want to see them abandon farming.
Purchasing wheat is important for the government to enable it to provide subsidised baladi bread to the population. Egypt consumes around 19 million tons of wheat annually. Of this, around 8.5 million tons are locally cultivated, while the rest is imported, according to FAO figures.
The government is responsible for 40 per cent of total wheat purchases, both domestic and imported.
Mahmoud said the wheat crop could be good this year. Weather conditions have been favourable, and if there was no major heat wave until mid-April when the harvest begins, all would be well, he said.