Reference Date: 19-May-2017
FOOD SECURITY SNAPSHOT
Cereal crop production in 2017 forecast at average levels
Import requirements estimated to remain at same level during 2016/17 marketing year
Inflation rates at highest levels in last 30 years following sharp currency depreciated in November 2016
Harvesting of 2017 winter grain crop underway
Harvesting of the winter wheat started in early May and is expected to finish in early June. Harvesting of winter barley, which started in mid-April, is nearing completion. Across the country, normal climatic and supply conditions were reported. Cereals in Egypt are grown on irrigated fields, yielding stable harvests. Actual production of individual cereals depends mostly on competition among crops.
For the domestic crop purchases, the Government announcement from January 2017 stipulated that the 2017 procurement price will be based on the average international price prevailing in the two months immediately prior to the purchase. The measure aimed to curb subsidies and fraud. In March 2017, responding to concerns about volatile exchange rates and local production costs, new fixed wheat procurement prices for the 2017 crop were announced. The average local procurement price of USD 214 per tonne is very close to the price paid by the country for its imported wheat in the last tender before the announcement. The actual procurement prices range from USD 210.2 to USD 217.8 per tonne (EGP 555- 575 per ardeb or 150 kg) depending on crop quality. The procured wheat could only be received in by silos and barns owned by holding companies belonging to the Ministry of Supply and Internal Trading to preserve the quality of the grains and no wheat will be received in dirt barns (“shonas”, the traditional flat storage system). In the past, a fixed procurement price often well above international prices was announced at the beginning of the planting season to encourage farmers to increase the area planted to wheat and discourage farmers from switching to other crops.
The Ministry of Finance allocated EGP 16 billion to purchase 4 million tonnes of local wheat.
Cereal import requirements forecast to remain stable
Egypt remains the world’s largest wheat importer. Wheat imports for the 2016/17 marketing year (July/June) are estimated at 12 million tonnes, about the same as the previous year and about 1.3 million above the average for the last five years.
The overall cereal import requirements in the 2016/17 marketing year (July/June) are forecast at around 20.8 million tonnes, about the same as the previous year and 11 percent higher than the five‑year average.
Inflation rates increasing
Following the sharp currency depreciation in early November 2016, the annual food and beverage inflation rate gradually increased from 13.8 percent in October 2016 to almost 42 percent in March 2017. The general inflation rate in March 2017 reached 32.5 percent, the highest level in the last 30 years.
Reports indicate that a large share of Egyptians, once well-off, now struggle to cope in a collapsing economy and survive on handouts. The Egyptian Food Bank, one of the largest aid organizations feeding the hungry, increased handouts by one-fifth and launched a programme to support middle-class families falling into poverty.
Responding to the high inflation rates and in preparation for Ramadan, the Government is considering increasing food subsidies to poorer families. Around 70 million of the country’s 92 million people benefit from a subsidy card programme which entitles them to EGP 21 (USD 1.16) worth of goods monthly in addition to five loaves of bread per day.