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ANALYSIS

Egypt's scope to boost local wheat purchase limited

Cairo, May 25, 2014

Egypt aims to buy about half of its domestic wheat harvest this year at 4.4 million tonnes and is unlikely ever to get much more from farmers, who need to reserve the rest for seed and to feed their families.

Egypt, the world's largest wheat importer, is striving to boost self-sufficiency and reduce its 32 billion Egyptian pound ($4.6 billion) food import bill.

But at most, the government will be able to increase domestic supply by around 1 million tonnes a year through improving storage and transportation.

Supplies Minister Khaled Hanafi, whose ministry is in charge of local wheat procurement, said this week the government had purchased 2.75 million tonnes to date in the harvest season that began in mid-April, on track to meet its target.

The harvest is now in full swing in northern parts of the breadbasket region of the Nile Delta and nearly finished in fields further south.

Hanafi said his ministry was pushing ahead with the plan to buy 4.4 million tonnes of domestic wheat this year. The target consistent with the target set, but not met, last year by the government of ousted Islamist President Mohamed Mursi.

The government says that improvements to the outdated storage system and the addition of new silos could cut down on the more than 1 million tonnes lost yearly due to storage and transportation problems.

Yields for the Egyptian wheat crop are already among the highest in the world. Unlike fellow wheat producers such as Australia with inconsistent production, the Egyptian crop is reliable.

Many farmers in rural agricultural areas in the verdant Nile Delta region are willing to sell only about half of their harvest to the government.

Men who eke out a subsistence living on their land, using mostly the technology that their fathers and grandfathers did, say they are already selling the maximum amount they can.

Farmers such as Ahmed Sagheer say, given the needs of his own family, he cannot sell more wheat unless their small plots produce much more.

Sagheer, from a small village in Sharqiya province in the heart of the Egypt's breadbasket north of Cairo, complains of water shortages and expensive fertilizer and says he does not expect the yield on his roughly one acre of land to increase dramatically soon.

"We don't have a good supply of water, fertilizer is too expensive, and sometimes insects attack our crops," he said.

Traders surveyed in a Reuters poll ahead of the harvest put the year's crop at around 7 million tonnes, in line with last year's total.

Private traders' estimates for the local crop are consistently below government estimates, which also do not vary significantly from year to year.

The US Department of Agriculture (USDA) expects Egypt's production to reach 8.95 million tonnes this year, up only 300,000 tonnes from last year.

Any efforts to expand wheat production onto uncultivated land are hampered by soaring population growth and illegal building on farmland, which officials say has increased since the 2011 uprising that ousted Hosni Mubarak.

"LIVING DAY TO DAY"

The government has steadily increased the fixed price it pays for local wheat in recent years. This year it raised the fixed price from 420 Egyptian pounds ($58.88) per ardeb (150 kg) from 400 pounds, hoping to encourage farmers to sell to the government.

The local price exceeds the price Egypt pays in the international market by more than $100 per tonne.

But 59-year-old farmer Hussein Sobhi Hussein, standing by his water buffalo near his already harvested field, said the Egyptian pound "buys less than it used to", suggesting that it was a safer bet to keep a large part of his crop for his family rather than taking cash for it.

Another farmer from al-Baheira province, in the northernmost part of the Delta, where the harvest is currently in full swing, explained why he cannot afford to give up more of his crop.

"I have only one feddan [1.038 acres]. I have to plant it half with wheat because the other half is alfalfa for my livestock to eat," said Mohamed Seshar, a father of three who farms part of his late father's land, having split it with his brothers.

"Then I need to keep half of my wheat harvest for my family to eat," he said. "I'm living day to day," he added.

"I'll store half at home and sell the rest because of my family's needs," said Walid Ali, 25, a father of three who stood sweating in the midday heat. He and his young wife worked with other family members to put stalks of wheat that they had cut by hand into a threshing machine, which would have been replaced by a combine machine in a more mechanised farm.

"I'd like to sell more but for now it is not possible," Ali said as he turned to get back to work. - Reuters




Tags: Egypt | wheat | Purchase |

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