Thursday,19 July, 2018
Current issue | Issue 1158, (25 - 31 July 2013)
Thursday,19 July, 2018
Issue 1158, (25 - 31 July 2013)

Ahram Weekly

Grain stocks sufficient

Despite the country’s economic difficulties, Egypt’s grain reserves are at safe levels, reports Nesma Nowar

Al-Ahram Weekly

In his first press conference as minister last week, the newly-appointed minister of supply, Mohamed Abu Shadi, said that Egypt’s wheat stocks were sufficient to cover local needs until November 2013 and that the government was working on boosting its reserves as it returned to importing grain from abroad.
Some 180,000 tonnes of wheat imported from Ukraine would arrive in the coming days, according to Abu Shadi, who described the previous government’s decision to halt imports as one of its biggest mistakes. Pinning its hopes on a bigger domestic crop, the previous government had halted imports since February, Egypt’s longest absence from the world market in years.
The new minister ordered the purchase of 300,000 tonnes of Romanian, Ukrainian and Russian wheat on Thursday, his second day in office.
The purchase was Abu Shadi’s first step in his plan to boost Egypt’s dwindling stocks of imported wheat, which Bassem Ouda, the former minister of supply and a member of the Muslim Brotherhood group from which the deposed former president, Mohamed Morsi, also came, had told Reuters on 11 July were only enough to last for two months.
Talking only a week after the toppling of Morsi, Ouda said that the state had just 500,000 tonnes of imported wheat in its reserves. The comments contradicted previous reassurances by the ministry in February that the country’s wheat stocks would be sufficient to last out the year and that wheat imports would not start before December.
Nomani Nomani, advisor to the Ministry of Supply and former head of the General Authority for Supply Commodities (GASC), Egypt’s wheat buyer, said that Ouda’s statement had been misleading as it was only focused on imported wheat whereas Egypt’s wheat stocks also comprised domestic wheat.
“Egypt’s current wheat stocks stand at 3.3 million tonnes, sufficient to cover the country until 25 November,” Nomani told Al-Ahram Weekly.
Tarek Hassanein, head of the Cereals Chamber at the Federation of Egyptian Industries, agreed with Nomani, saying that Egypt’s wheat supply was safe and sufficient till the end of the year.
He said that there were no problems surrounding wheat or subsidised bread as each bakery had a three-day stock of wheat and each mill had a three-day stock of flour and no less than a five-day stock of wheat.  
However, the fears over Egypt’s wheat supply did not only stem from Ouda’s statement. The United Nations Food and Agriculture Organisation (FAO) stated in its recent Crop Prospects and Food Situation report that civil unrest and dwindling foreign exchange reserves in the country were raising serious food security concerns.
The report said that cereal import requirements for 2013/14 in Egypt would remain similar to last year, despite the good prospects for the 2013 harvest. The FAO warned that declining foreign exchange reserves might result in increased restrictions on transactions by Egypt’s Central Bank, thus curtailing imports.
With roughly nine to 10 million tonnes of foreign wheat purchased annually, Egypt is the world’s largest importer of wheat, half of which is used to produce the subsidised bread that sustains the country’s 84 million people.
Egypt depends on imports to cover almost 50 per cent of the 18.8 million tonnes of wheat it consumes annually.
Nonetheless, Nomani and Hassanein shrugged off such fears, stressing the state’s continuing ability to import grain. Nomani said that it was a priority for the Ministry of Finance to secure the needed funds for wheat procurement. “People’s food is a priority, and the government is in continuous efforts to get the needed wheat,” he said.
Though the former government had said it would purchase four to five million tonnes of local wheat, Hassanein said that the state had only bought 3.6 million tonnes during the harvest season which ended last month. He added that local wheat procurement would last until the end of July.
The 3.6 million-tonne purchase this year was slightly lower than last year’s purchase, when the state bought 3.8 million tonnes of domestic wheat.
Nomani attributed the decline to the fact that farmers had not sold their entire crop to the government. He explained that when farmers feel there is an economic slowdown, they may prefer to hoard their stocks and sell them later at higher prices to private mills, especially since selling wheat to the government is not mandatory.
Meanwhile, this year’s purchase contradicted the ousted government’s pledges of a bumper wheat crop. During his speech in a wheat field at the beginning of the harvest season, former president Mohamed Morsi said that this year’s harvest would reach 9.5 million tonnes, an increase of 30 per cent over last year.
However, experts were sceptical, saying that the official figures were inflated and were intended to show the public that the government was doing something right. The US Department of Agriculture and the FAO echoed these reservations, pointing out that the estimates were “unrealistic and exaggerated.”
The new minister of supply told Reuters in an interview last week that Morsi’s government had made “incorrect calculations” regarding Egypt’s wheat stocks and that the estimates made by the ousted government were “based on guesses, not on facts.”
The new interim government would aim to increase total stocks to between five million and 6.5 million tonnes by the end of Egypt’s current fiscal year next June, he said.
He said the government currently had reserves of 3.6 million to 3.7 million tonnes of local wheat and 500,000 tonnes of imported wheat.

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