Low wheat pricing exasperates Egypt’s farmers

The price the government is offering is higher than the wheat price on the international market where 1 tonne of wheat sells for $180-$208.
Sunday 05/05/2019
An Egyptian man harvests wheat in Saqiyat al-Manqadi village in the northern Nile Delta province of Menoufia. (AFP)
A host of challenges. An Egyptian man harvests wheat in Saqiyat al-Manqadi village in the northern Nile Delta province of Menoufia. (AFP)

CAIRO - Wheat pricing is emerging as a problem as the Egyptian government tries to collect enough grain to produce bread for millions of citizens enrolled in the national food rationing system.

Ahead of the wheat harvest, which started in late April, the Egyptian Ministry of Supply said it would pay 3,900 pounds ($226) per tonne of wheat bought from local farmers.

This price is not satisfactory for farmers, who say the cultivation of the wheat is too expensive.

“This price isn’t fair at all,” said Saddam Abu Hussein, the self-styled head of the Independent Farmers’ Union. “The farmers were surprised by the ministry’s price declaration.”

The Ministry of Supply said it needs 3.6 million tonnes of local wheat to produce subsidised bread for national food rationing beneficiaries. Approximately 73.6 million Egyptians are enrolled in the country’s food rationing system. They buy bread at about 12% of its production cost. The government pays the rest.

Egyptian bakers produce nearly 91 billion loaves of bread every year. The 3.6 million tonnes of wheat would cover only one-third of quantities needed for bread production. That means the Egyptian government must turn to international markets for the rest.

However, the failure of the government to offer an appropriate price for the wheat — at least in the view of farmers — may force it to import more wheat this year, specialists said.

“The wheat pricing policy is totally wrong,” said Adel Qadir al-Naquib, the former dean of the College of Agriculture at al-Azhar University. “The government has to offer the farmers an appropriate price for their wheat so they can be tempted to sell their produce to it, not to the private sector.”

Nonetheless, the price the government is offering is higher than the wheat price on the international market where 1 tonne of wheat sells for $180-$208.

Among the complaints of the farmers are high wheat production costs. Wheat producers do not receive government support, except for fertiliser and some technical tips.

Subsidised fertiliser offered by the government, the farmers say, is but a fraction of what they need for their farms.

“The farmers have to buy the remaining amounts of fertiliser from the market and at market prices that keep increasing every day,” Abu Saddam said.

Apart from fertiliser, landowners also must pay workers, agricultural equipment rent and fuel for equipment. Combined, the costs are far higher than the price the government is offering for wheat.

That leaves farmers and landowners searching for buyers who pay higher prices.

This year, around 1.3 million hectares of Egypt’s 4.1 million hectares farmland is cultivated with wheat. Overall, wheat production is expected to reach 9.5 million tonnes, Minister of Agriculture Ezzedine Abu Steit said.

Wheat farmers sell some of their crop to the Ministry of Supply, some to the private sector and keep some for personal use. Most Egypt’s farmers bake their own bread. They use wheat as feed for animals.

Wheat pricing is a problem that appears every year and an increase of wheat imports puts pressure on the state budget and lessens foreign currency reserves.

“Importing more wheat seems to be inevitable, even as it is still early to reach this conclusion because we are still at the beginning of the harvest season,” said Mohamed Saad Abdel A’ati, a professor of agriculture at the University of Kafr al-Sheikh in the Nile Delta.

He said he expected the government to need to import more than 6 million tonnes of wheat this year.

Egypt’s ability to increase wheat production is limited by water resources, growing consumption and poor storage.

After harvest, the wheat is often stored in outdated silos that result in a loss of almost 20% of the output, said the Research Committee for Wheat Output, a government panel tasked with finding ways to increase wheat production, of which Abdel A’ati is a member.

“This reduces the overall output and increases the need for imports,” Abdel A’ati said. “These imports are also a heavy pressure on the state budget.”

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