Reference Date: 2-August-2016
FOOD SECURITY SNAPSHOT
Average levels of cereal crop production; import requirements estimated to remain at same level during 2016/17 marketing year
Inflation rates increasing, subsidy allocation decreased
Average cereal harvest gathered in 2016
Harvesting of the 2016 winter crops was completed in early June. Figures released by the Ministry of Agriculture and Land Reclamation in March 2016 show a slight increase in the area planted to wheat (1.435 million hectares in 2015/16 compared to 1.418 million hectares in the previous year). The Ministry also reported normal availability of fertilizers, which in the past were seen as a constraint to production.
The 2016 cereal harvest, at 22.1 million tonnes, is slightly up from the level of the previous year and about the same as the past five-year average. At 9 million tonnes, wheat production is estimated to remain at the same level as the previous year and the five‑year average. On the other hand, maize production is estimated to be below the average but about the same as last year.
Since the 2013/14 season, the Government maintained high procurement prices, at EGP 420/ardeb (USD 315/tonne of wheat) to encourage additional planting and discourage switching to other crops. The Ministry of Supply and Internal Trade ended the 2016 wheat procurement season in June. It procured close to 5 million tonnes of local wheat compared to 3.7 million tonnes purchased in 2015, above the previously stated goal to buy 4 million tonnes. Some millers and traders expressed concerns that the figures may have been misreported.
For the 2016 yellow maize crop, the price was set at EGP 2 100 per tonne (236 USD), encouraging domestic cultivation to reduce reliance on imported maize.
Elsewhere, the Ministry of Agriculture announced it would reclaim over 600 000 hectares of marginal or desert land for agricultural use. Only 3.6 percent of the total area is arable, with the most fertile soils located along the Nile River and its delta. Annual urban encroachment is estimated at 21 000 hectares. Reclamation includes drilling of irrigation wells, with water being sourced mostly from underground aquifers.
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 11.5 million tonnes, about the same as the previous year and about 1 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 20.1 million tonnes, about the same as the previous year and 9 percent higher than the five‑year average.
Following the internal disagreement on the levels on ergot in wheat earlier this year, when the General Authority for Supply Commodities allowed for a 0.05 percent ergot level (in line with the “Codex Alimentarius”), while the Central Authority of Plant Quarantine demands shipments to be completely free of ergot, in June 2016 the Cabinet backed a decision allowing shipments containing 0.05 percent of ergot.
Inflation rates increasing, subsidy allocation increased
The annual food and beverage inflation rate was almost 17.6 percent in June 2016, compared to 11 percent in June 2015, supported by sharp currency devaluation in March 2016 when the Central Bank of Egypt devaluated the EGP by 12.6 percent to EGP 8.85 for USD 1, bringing it closer to the unofficial exchange rates.
To mitigate the impact of the rising inflation due to the devaluation of the Egyptian Pound, the Government increased its food subsidy allocation by 20 percent per beneficiary in May 2016. As of 1 June 2016 each beneficiary is entitled to EGP 18 /month (app. USD 2) instead of EGP 15 /month (app. USD 1.7).