Reference Date: 14-October-2015
FOOD SECURITY SNAPSHOT
Average levels of cereal crop production and import requirements estimated to remain same during 2015/16 marketing year
Inflation rates easing after fiscal consolidation reforms and electronic ration card gradually rolled out
Harvesting of 2015 winter crops was concluded in June while harvesting of millet is ongoing. Harvesting of maize and rice is expected to start shortly. So far, normal weather conditions prevail.
Average cereal harvest gathered in 2015
The 2015 cereal harvest, at 21.8 million tonnes, was similar to the level of last year and slightly above the past five-year average. At 9 million tonnes, wheat production is estimated to remain on the same level as last year but some 7 percent above the five-year average. On the other hand, maize production is likely to be below the average but slightly above last year.
High Government procurement prices, at EGP 420/ardeb (USD 400/tonne) since the 2013/14 season, are also encouraging additional plantings. A national silos construction project is reported to be progressing well and is expected to increase the country’s wheat storage capacity from 1.5 million tonnes to almost 5 million tonnes; the new infrastructure is also expected to contribute to minimization of post-harvest losses.
Efforts are underway to increase water and land productivity as well as to utilize drought-tolerant higher yielding wheat varieties. Among other initiatives, the African Development Bank approved a USD 50 million loan for the Egyptian National Drainage Programme to develop or improve irrigation systems and to avoid water logging and soil salinity. According to the Government, the programme is expected to boost crop productivity by 15 to 21 percent for selected strategic crops, including wheat, and increase farm income by 40 percent for a typical 1 hectare farm.
In the livestock sector, in July 2015 the Government announced an increase in the funding to the “Veal Project” by EGP 300 million (USD 38 million) to make red meat more affordable. The original “Veal Project”, established in 2012 with EGP 450 million (USD 58 million) aims to improve livestock rearing to increase the rate of self-sufficiency in meat production by providing micro-credit loans to small farmers at a low interest rate of 4-7 percent, compared to the prevailing market rate of 16-20 percent. High input costs, and large share of imported feed are the main constraints preventing livestock expansion.
Cereal import requirements forecast at average levels
Egypt remains the world’s largest wheat importer. Wheat imports for the 2015/16 marketing year are estimated at 11 million tonnes, about the same as the previous year and the average for the last five years.
The overall cereal import requirements in the 2015/16 marketing year (July/June) are forecast at around 19.1 million tonnes, about the same as the previous year and 9 percent higher than the five-year average.
Government domestic purchases in 2015 amounted to about 5 million tonnes, compared to 4.25 million tonnes in the 2014/15 marketing year and 3.7 million tonnes purchased in 2013/14. The Government allocated EGP 10 billion (USD 1.3 billion) to local wheat purchases. Imported wheat is mixed with local wheat to increase its gluten content. According to local reports from September 2015, the strategic reserves of domestic and imported wheat for the production of subsidized bread are sufficient until March 2016.
Inflation rates easing, electronic ration card system for food gradually rolled out
The annual food and beverage inflation rate was about 8 percent in August 2015, compared to 15 percent in May 2015 owing to a sharp decline in poultry prices.
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 content) 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 provides citizens with 20 private and Government-procured products, including meat. It also 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. A similar card system is being considered for fuel distribution.
According to UNHCR, as of mid-July 2015, there were 130 000 registered Syrian refugees in Egypt.