Reference Date: 16-February-2015
FOOD SECURITY SNAPSHOT
Average levels of cereal crop production and import requirements estimated in 2014/15
Inflation rates easing after fiscal consolidation reforms and electronic ration card gradually rolled out
Planting of 2015 winter crops to be harvested from April, concluded in December. Vegetation response captured by the Normalized Difference Vegetation Index using satellite images suggests good establishment of winter crops.
Average cereal harvest gathered in 2014
The 2014 cereal harvest, at 21.4 million tonnes, was similar to the level of last year and slightly below the past five-year average. At 8.8 million tonnes, wheat production is estimated to remain on the same level as last year but some 5 percent below the five-year average. Maize production is likely to be below the average but slightly above last year.
Efforts are underway to increase water and land productivity as well as to utilize drought-tolerant higher yielding varieties. Streamlining post-harvest handling, transportation and storage will also result in higher production. High Government procurement prices, at EGP 420/ardeb (USD 400/tonne) since the 2013/14 season, are also encouraging additional plantings. The Principal Bank for Development and Agricultural Credit is starting a programme to finance agricultural co-operatives to allow them to access funding before the wheat supply season. As a result of the subsidy reform of July 2014 (described in the inflation section), fertilizer prices were scheduled to increase by 33-50 percent, creating discontent among farmers. Local reports indicate unresolved issues regarding fertilizer availability and distribution given increasing costs of natural gas and unprofitable domestic fertilizer production.
A national silos construction project is progressing to increase the country’s wheat storage capacity from 1.5 million tonnes to almost 5 million tonnes by the end of 2015.
Elsewhere, from January 2015 the Government is no longer paying the subsidy of EGP 350 per qintar of cotton (160 kg), amounting to about 40 percent of the domestic market price. Farmers are encouraged to grow cotton only if they have contracts to sell it.
Cereal import requirements forecast at average levels
Egypt remains the world’s largest wheat importer. Cereal import requirements in the 2014/15 marketing year (July/June) are forecast at around 18.1 million tonnes, about the same as the previous year and 9 percent higher than the five-year average. Wheat imports for the 2014/15 marketing year are estimated at 10 million tonnes, about the same as the previous year and the average for the last five years.
The Government expects to purchase 4.25 million tonnes of wheat from local farmers in 2014/15, compared to 3.7 million tonnes purchased in 2013/14. Imported wheat is mixed with local wheat to increase its gluten content.
Inflation rates easing, electronic ration card system gradually rolled out
The annual food and beverage inflation rate was 9.66 percent in January 2015 compared to 10.13 percent in December 2014. The largest monthly increase of 3.5 percent in general inflation rate since 2008 was recorded in July 2014, following the fiscal consolidation programme of the Government which commenced the phasing out of energy subsidies. Among others, prices of diesel increased by 63 percent, gasoline by 40 to 78 percent (depending on the octane) and electricity by 28 percent.
Egypt is progressing on the rolling out of the ration card system for food subsidies. Subsidized bread continues to be sold at the same subsidized price of EGP 0.05 per loaf (free market price of EGP 0.35 per loaf) with a maximum of five loaves of bread per person. Bakers are no longer allowed to buy wheat flour at subsidized prices but will be reimbursed by the Government based on sales data gathered from the smart cards. The new ration card system, introduced so far in 17 out of Egypt’s 29 provinces, provides citizens with 20 private and Government procured products, including meat. It aims to provide more balanced diets to the poor by extending choice of commodities and contribute to the fiscal consolidation. Reports indicate that overall consumption in the areas where smart cards were already introduced decreased between 15 and 35 percent.
According to UNHCR, as of mid-February 2015, there were 140 000 registered Syrian refugees in Egypt.