Why Egypt Increased Its Wheat Purchases Tenfold Compared to the Previous Year?

Why Egypt Increased Its Wheat Purchases Tenfold Compared to the Previous Year?

Egypt has significantly increased its external wheat purchases in the past month and a half, both through international tenders and direct purchases. The total agreed-upon quantities from the beginning of September to date have reached around 1.6 million metric tons, compared to only about 120,000 metric tons agreed upon in the same months of 2022, which is roughly ten times the amount from the previous year.


The reasons for Egypt’s current expansion in wheat imports can be attributed to two main factors. First, global wheat prices have fallen by 32% compared to the previous year during this period, and given Egypt’s severe economic crisis, this is an opportune time to purchase wheat, especially as prices may significantly increase due to the ongoing Israeli aggression on Gaza.


The second point is that Egypt has concerns regarding political instability in the region resulting from the same conflict, which could lead to international sanctions on countries exporting grains.


For many years, Egypt has financed its wheat import deals from its own resources, with the Egyptian Central Bank managing the foreign currency resources for the Ministry of Supply and Internal Trade and the General Authority for Supply Commodities to open import letters of credit.


In recent months, changes have been made to this mechanism, with the government relying more on external loans to finance a significant portion of wheat and other grain imports.


Egypt considers itself the world’s largest wheat importer and now stands as one of the major countries relying on external loans to purchase grains, food, and fuel. Egypt typically imports up to 12 million metric tons of wheat annually.


The General Authority for Supply Commodities, a subsidiary of the Ministry of Supply and Internal Trade, signed an international deal in August to purchase 235,000 metric tons of Russian wheat.


Despite being the largest wheat importer, Egypt doesn’t rely on external sources exclusively to secure its wheat stock. The Ministry of Supply and Internal Trade continues to receive locally produced wheat from farmers in some provinces while providing incentives for farmers to increase supply.


The Ministry of Supply also worked on developing and increasing the capacity of 21 storage silos belonging to milling companies, with a storage capacity of approximately 530,000 metric tons, at a cost of about 60 million Egyptian pounds. This is part of the state’s plan to increase the production capacity of local and premium flour to meet the country’s needs for subsidized bread production, which amounts to a daily production of 250 to 270 million loaves. Additionally, local wheat must be paid to farmers within a maximum of 48 hours from the date of receipt.


Private animal feed manufacturers and those responsible for managing them are still prohibited from using local wheat, either on its own or mixed with straw, grains, or any other materials in feed components of all types, or possessing it for use during the marketing season without permission from the Ministry of Supply.


Egypt’s wheat production ranges from 8 to 9 million metric tons annually, while its wheat consumption amounts to approximately 18 million metric tons. The gap, estimated at around 9 to 10 million metric tons annually, is filled through imports. According to the latest report from the U.S. Department of Agriculture, Egypt’s total wheat consumption is expected to rise to approximately 21 million metric tons for the year 2021/2022.