Egypt planning for major wheat import savings, sources say
Egypt plans to cut wheat imports by mixing corn or sorghum with wheat flour at a 1:4 ratio starting April 2025, potentially saving 1 million metric tons of wheat. However, bakers oppose the change, citing quality concerns. Currently, Egypt spends about $2.1 billion annually on wheat imports, primarily from Russia, while facing rising debt and inflation.
Egypt has developed plans to slash wheat imports and spend less on subsidised bread by adding corn or sorghum as ingredients, five industry sources briefed on the plans told Reuters.
The proposals could save the government millions of dollars but face opposition from bakers and millers who could lose out financially and argue that bread quality would suffer.
Egypt has been grappling with rising debt, foreign currency shortages and persistent inflation. The government says that its bread subsidy programme, which it aims eventually to phase out, is a major strain on the budget.
Under the supply ministry’s latest plan, which was presented to bakers and millers at the end of September, corn flour would be mixed with wheat flour at a 1:4 ratio, starting April 2025, saving about one million metric tons of wheat, two sources in the baking industry said.
The government scrapped an earlier plan to increase the rate at which flour used in subsidised bread is extracted from wheat, after resistance from industry lobbies, three of the industry sources said.
Egypt has floated wheat substitution schemes in the past as it strove for greater self-sufficiency. Corn was used for several years two decades ago before campaigning by industry groups pushed the government to abandon it.
Introducing corn flour as an ingredient could allow for significant hard currency savings if locally grown corn was used, though not if the corn was imported, according to two of the sources.
Russian Wheat, which Egypt heavily relies on, costs about $220 per ton at current market prices, while corn is priced around $200 per ton, according to LSEG data.
“At best, the government could save around $35-41 per ton,” said Hesham Soliman, a Cairo-based trader, referring to the widest likely spread between the two prices.
The change could also be unpopular, producing bread with a different texture and smell, Soliman and the five industry sources said.
Egypt’s supply ministry needs around 8.25 million tons of wheat per year to make subsidised bread available to more than 70 million Egyptians, according to the 2024-25 budget. Some 3.5 million tons are sourced locally and the remainder is imported.
The ministry did not respond to a request to comment.
Record tender
Egypt is one of the world’s largest wheat importers, with the state spending approximately 104 billion Egyptian pounds ($2.1 billion) annually on imports, largely from Russia.
In August President Abdel Fattah al-Sisi ordered the country’s largest-ever wheat tender in an effort to lock in cheap prices after a fall in the global benchmark, but the state grains buyer only acquired 7% of the targeted 3.8 million tons.
The country has explored alternatives including bank loans to purchase wheat and direct deals with traders.
Sources told Reuters on Wednesday that the state grains buyer had struck a deal for direct Black Sea wheat purchases between November and April, with one estimating a total quantity of 3.12 million tons.
In another money saving move, the government raised the price of subsidised bread this year for the first time in decades.
At the end of August, officials had floated the plan to increase the flour extraction rate for subsidised bread to 93.3 percent from 87.5 percent. In addition, the supply ministry proposed using cheaper sorghum flour in breadmaking, an idea that has not been entirely discarded, three baking industry sources said.
Bakeries oppose the plan, arguing that coarser flour with more bran requires lengthier baking times and would increase labour costs.
Mills are also opposed because they are paid based on the amount of wheat they process, which would be reduced.
Egypt consumes around 15.3 million tons of corn per year, US Department of Agriculture data shows, using it mainly for animal feed. While its local harvest estimates have fallen over the past two years to around 7 million tons, a drop experts attribute to climate change and pests, the government had announced plans to expand corn cultivation in state-run desert reclamation projects.
Egypt grows sorghum in modest quantities, buying about $1 million-worth of seeds annually, mainly from India. It also imports $1 million worth of the grain, according to the UN Comtrade Database.
Source Link : https://www.newarab.com/news/egypt-planning-major-wheat-import-savings-sources-say
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