Tuesday,18 June, 2019
Current issue | Issue 1354, (27 July - 2 August 2017)
Tuesday,18 June, 2019
Issue 1354, (27 July - 2 August 2017)

Ahram Weekly

Wheat crop woes

The government has twice increased the wheat delivery price for this year’s harvest, but the problems of this strategic crop persist, reports Mona El-Fiqi


gyptian wheat farmers
gyptian wheat farmers

The increase in price the government represented by the General Authority of Supply and Commodities (GASC) pays to Egyptian wheat farmers has neither encouraged farmers to increase the areas under cultivation nor discouraged traders from importing more wheat.

The wheat harvest season started on 15 April and ended on 30 June, except for six governorates where it lasted until mid-July to give farmers late in delivering their harvest enough time to sell it.

The price of the strategic crop delivered to GASC this year is divided into three categories:  LE555 per ardeb (roughly 150kg) for the lowest quality followed by LE565 for a higher quality and LE575 for the finest.

Last year, the wheat delivery price was LE420 per ardeb. This was raised to LE450 in November 2016 to support farmers after the floatation of the local currency and the increase in fuel prices.

In March, the wheat delivery price increased for the second time to LE575 per ardeb, which was described by Minister of Supply Ali Moselhi as fair because it provided farmers with an acceptable profit margin that would encourage them to cultivate the crop next year.

The minister explained that the government took the international price of wheat, as well as the difference in foreign exchange rates, into consideration when determining the price to purchase wheat from farmers.

The total amount of wheat delivered this season was 3.4 million tons, compared to a targeted four to 4.5 million tons for 2017. Locally produced wheat is not enough for domestic consumption, however, and imports of wheat are necessary to fill the gap between production and consumption.

Egypt’s annual needs of wheat to produce subsidised bread come in at 9.5 million tons.

Mamdouh Ramadan, spokesperson of the Ministry of supply and internal trade, said that the GASC had imported 5.5 million tons of wheat in 2016/2017, compared to 4.4 million in the previous year. Egypt is the world’s largest importer of wheat, and GASC’s import target for 2017/2018 is 6.3 million tons.

“Egypt’s total consumption of wheat for both the state and private sectors is some 20 million tons annually, and it is expected to increase due to the hikes in the prices of other food products obliging people to eat more bread,” Ali Abdel-Rahman, a professor of economics at the Agriculture Research Institute in Cairo, said.

The current average individual consumption of wheat is 180 to 200 kilogramme a year, which is expected to increase in 2017/2018, according to Abdel-Rahman.

Moreover, the increase in wheat consumption has gone hand-in-hand with the fast annual growth of population. An increase of one million people means an additional 0.75 million tons of wheat have to be imported annually, according to Abdel-Rahman.

Though wheat is a strategic crop for Egypt, “the government has failed to increase production or control consumption. The three million feddans of lands cultivated with wheat have remained the same over the past 10 years, producing around 7.5 to 8 million tons,” Abdel-Rahman added.

What will make things worse is the fact that the agricultural sector is being threatened by a 30 to 50 per cent decrease in the water available for irrigation because of the building of the controversial Grand Renaissance Dam in Ethiopia.

Abdel-Rahman said the delivery price paid to farmers for wheat was not enough. “The production costs of a feddan of land are estimated at between LE15,000 and LE18,000, and one feddan produces around 17 ardebs of wheat, meaning that an acceptable price should not be less than LE1,000 per ardeb,” he explained.

This price would permit a satisfactory profit margin to farmers, encouraging them to increase areas cultivated with wheat.

Mohamed Abdel-Moneim, a farmer in the Daqahleya governorate, told Al-Ahram Weekly that the increase in the wheat delivery price was not enough to cover increases in costs. He explained that expenses had almost doubled over the past year as the price of fertilisers, seeds and transportation had gone up due to the hike in diesel prices.

If the government kept the same wheat delivery price next season, Abdel-Moneim said that farmers would definitely cultivate other crops.

Abdel-Rahman explained that the government’s low delivery price made farmers reluctant to deliver their harvest to the state, preferring to sell it to the private sector at higher prices. Private sector bakeries and pasta factories buy wheat at around LE800 per ardeb.

“Intermediate traders are the only gainers, as they stand to profit when they collect the grain from farmers and sell it to the private sector at higher prices. They also realise high profits through importing low-quality wheat early before the delivery season starts at a low price of around LE400 per ardeb and delivering it to the state as locally produced wheat at LE565,” he said.

Abdel-Rahman said he believed that the actual amount of locally produced wheat in the current season came in at only 2.5 million tons and the rest was imported.

Egypt’s strategic reserves of wheat usually cover the upcoming six months, but in March or April, just before the start of a new wheat season, this declines to cover only four months.

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