Reference Date: 28-November-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
Planting of 2017 winter grain crop underway
Sowing of the winter wheat usually takes place in November, while sowing of winter barley starts in mid‑November and concludes in mid‑December. In general, normal climatic and supply conditions were reported although in some areas of Delta and Upper Egypt flash floods following heavy rainfall submerged prepared agricultural land and claimed lives of 25 people.
Egypt set the wheat procurement price for next year's harvest at EGP 450/ardeb (150 kg), 7 percent higher than in the past years in local currency terms and slightly above the current level in the international market. However, following the sharp currency depreciation in early November, after the decision of the Central Bank of Egypt to let float the Egyptian Pound (EGP), the current purchasing price in USD (corresponding to about USD 195/tonne) is significantly lower than the last year’s purchasing price of about USD 280/tonne. In November 2015, the Government considered replacing the procurement price policy with direct subsidies to farmers and the purchasing of the local wheat harvest at the average international price prevailing during the harvest time (April‑June). However, the decision was subsequently reversed and the procurement policy reinstated to encourage farmers to increase the area planted to wheat.
The Government also increased the rice procurement price by 25 percent. To preserve water, Egypt will decrease the land area used for rice cultivation in the 2017 season by a third decree issued by the Ministry of Irrigation. Only selected governorates will be allowed to cultivate rice and unauthorized fields will be fined.
Average cereal harvest gathered in 2016
Harvesting of the 2016 winter crops was completed in early June. 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.
Since the 2013/14 season, the Government maintained high the procurement prices of wheat, at EGP 420/ardeb (USD 315/tonne) to encourage additional planting and discourage switching to other crops. In the 2016 wheat procurement season, the Ministry of Supply and Internal Trade 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.
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 20.6 million tonnes, about the same as the previous year and 11 percent higher than the five‑year average.
Inflation rates increasing
The annual food and beverage inflation rate was 13.8 percent in October 2016, compared to 11 percent in September 2015. Following the sharp currency depreciation in early November 2016, increases in inflation are expected.
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 (approximately USD 2) instead of EGP 15/month (approximately USD 1.7). Reports indicate that tens of thousands 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.
Currently, 67 million citizens (out of a total population of 92 million) are carrying the smart cards to benefit from the food subsidy system. The Ministry of Supply and Internal Trade is committed to reviewing eligibility criteria.