By regional standards, Egypt has a high degree of self-sufficiency in food, including in cereals, but its import requirements are still high, with the country ranking as the world’s largest importer of wheat, due to the heavy consumption of subsidised bread by poorer Egyptians. This reliance is becoming especially problematic as a result of historically high wheat prices and a range of economic problems. The authorities have plans to increase self-sufficiency by raising production and reducing consumption, but they are also taking short-term measures, cutting import volumes based on forecasts of a strong domestic harvest. Still, some forecasts are less optimistic, and there are concerns that on-going fuel shortages could negatively affect harvests.

SELF-SUFFICIENCY: Egypt is one of the most self-sufficient countries in the region as regards food supply. The country imports 40% of overall food consumption, according to the Ministry of Agriculture and Land Reclamation (MALR), and is nearly or fully self-sufficient in a number of key staples, including rice, potatoes, fresh vegetables, citrus fruits, chicken, eggs and milk.

Notwithstanding, Hanee Afia, CEO of Integrated Dairy Business, an agrifood subsidiary of Citadel Capital, told OBG, “There is a deficit of raw milk supplies in Egypt – the market grows by 20% each year while raw milk supply only grows 10%.” Cereal import dependency for 2007-09 was at 35.5%, the lowest in North Africa, compared to a regional average of 49.9%, according to the Food and Agriculture Organisation (FAO). This ratio has been stable over the past 20 years – within the 30-40% range. For cereal crops, the country produced 48.8% of its wheat and 51% of its maize consumption in 2011, though the range varies: wheat self-sufficiency was 40.5% in 2010 and 74.4% in 2009.

RISING COST OF IMPORTS: However, despite this comparatively strong performance as regards self-sufficiency, the country nevertheless runs a substantial agricultural trade deficit, worth over $10bn in 2011, according to WTO figures. Furthermore, while Egyptian cereal imports are low as a proportion of national consumption by regional standards, they are large in absolute terms. Indeed, the country is the world’s largest importer of wheat, despite also being a major producer of the crop, buying 8.5m tonnes of the commodity from abroad in 2012. (The country’s main suppliers are Russia, France and the US.) High domestic levels of consumption and imports are a result of the heavy reliance of poor Egyptians on subsidised bread as their main dietary staple. The cost of food and wheat imports is becoming a significant stress on the economy. The value of wheat imports from abroad shot up from an average of $1.33bn in the period between 2006/07 and 2009/10, to $2.46bn in 2010/11 and $2.27bn the following year, driven largely by significantly higher international wheat prices in recent years.

GOVERNMENT PLANS: The authorities have been working to improve food security and self-sufficiency. The government buys wheat from Egyptian producers at rates well above the international price, effectively subsidising domestic production, in order to stimulate wheat production. The stability provided for by the fixed price of wheat and its guaranteed purchase also encourages farmers to grow the crop.

The government’s agricultural strategy, launched in 2009, aims to improve self-sufficiency in wheat to 81% and in maise to 92% by 2030. To achieve this it calls for raising the area planted with wheat to 4.2m feddans (partly at the expense of rice growing) and raise productivity to 3.7 tonnes per feddan. Thanks in part to these and similar efforts, wheat production in 2012 was up 5% on the back of an already strong harvest in 2011, to 8.8m tonnes, according to the FAO. Factors behind the rise included hikes in the government’s purchase price and the use of better adapted strains of wheat.

The government has long-term plans to reduce food subsidies and in March 2013 announced plans for a pilot rationing programme based around the use of smart cards in Port Said and Port Fouad. This could reduce consumption of bread, which is currently heavily subsidised and, some reports suggest, is sometimes used wastefully due to its low price by, for example, being used as animal feed. This would in turn reduce the country’s wheat consumption. However, such moves will be extremely politically sensitive. Technology could help Egypt reduce its dependence on imports. In 2012 the Academy of Scientific Research and Technology (ASRT) and the Agriculture Research Centre (ARC) launched a three-year project to boost wheat yields by 20% to reduce imports to 25% of consumption. The initiative is part of a regional project by the International Centre for Agricultural Research in the Dry Areas (ICARDA), to improve food security in the Arab world. In June 2012, the ASRT said experimental techniques, like the use of new seed varieties at over 1000 sites nationwide, had boosted yields by an average of 30%.

DIFFICULT YEAR: The cost of imports has become problematic in recent months, particularly in light of the shortage of foreign exchange from which the country was suffering in early 2013. The recent depreciation of the pound will further push up the cost in the local currency of imports. Faced with serious economic problems, the authorities have said they aim to halve wheat imports in 2013. Reports in March suggested that the General Authority for Supply Commodities – the government agency charged with grain purchases – had ruled out purchases from abroad until at least the end of the financial year at the end of June – though some observers suggested the authorities may use different channels for purchases. In January and February the body’s purchases amounted to one third of those made in the same period the previous year. Private wheat importers have also struggled to pay for purchases due to the shortage of foreign currency.

As a result, strategic wheat stocks have been falling, standing at 2.1m tonnes, or around 85 days of supply, in late March 2013. Previously the authorities had normally sought to ensure that the country had around six months of wheat cover, more than twice the levels at the end of March. In order to reduce the need for imports, the government reportedly instructed millers to increase the proportion of Egyptian wheat they use to produce flour (which is made with a mix of Egyptian and imported wheat), which some observers have suggested will undermine its quality. The government hopes to reduce imports in 2013 and increase local production and will purchase 4.5m tonnes of wheat from local farmers. In January it raised the price it pays for locally produced wheat, from LE380 ($54) per ardeb (approximately 150 kg) to LE400 ($57), following a previous increase from LE350 ($50) in November 2011.

HARVEST INDICATORS: The authorities’ ability to meet targets and compensate for reduced imports will depend on the results of the upcoming 2012/13 harvest. The government has forecast a harvest of 9.3m tonnes, above the previous record of 8.523m. The US Department of Agriculture, however, predicted between 8.5m tonnes and 8.7m tonnes. As of March 2013 there were fears that diesel shortages affecting the country since January could disrupt the harvest and hamper transportation of wheat to cities. Farmers use diesel to power irrigation pumps as well as for equipment, such as combines and tractors and for transportation of the crop. The government said it will ensure that enough fuel is available for the harvest; nevertheless, the transport of larger volumes of domestically-grown wheat from rural areas to the country’s factories in main urban conurbations is also expected to pose logistical difficulties given the distances involved. However, there are some other promising signs: according to the government the total area planted with wheat for the 2012/13 season rose to 1.43m ha, up around 100,000 ha on the previous season. Also, in April the FAO said that weather conditions for the harvest were favourable.