Reference Date: 25-August-2022

Slightly above average cereal outturn forecast in 2022

Harvesting of 2022 wheat and barley crops was completed by early June and was followed by sowing of the 2022 spring crops, primarily maize and rice. Cereal production is almost entirely irrigated, resulting in stable yields, with year-on-year production differences attributable to adjustments in the planted area and ongoing introduction of improved seed varieties, particularly of wheat.

In 2022, about 3.6 million feddans (1.52 million hectares) were reported to have been planted with wheat, up from 3.5 million feddans (1.46 million hectares) in the previous year. The total cereal output in 2022 is estimated at a slightly above-average level of 24 million tonnes, about 350 000 tonnes above the 2021 crop. At 9.7 million tonnes, wheat production is reported by the government to be about 7 percent above the previous year’s harvest and almost 10 percent above the five-year average on the account of an area expansion and a broader use of improved seeds.

The 2022 wheat procurement season runs from 1 April to 30 August. As of mid‑August 2022, the Ministry of Supply and Internal Trade purchased about 3.92 million tonnes of local wheat, lagging behind the target of 6 million tonnes, but slightly more than 3.43 million tonnes purchased in 2021. Depending on quality and moisture levels, the 2022 procurement prices ranged from EGP 865 to EGP 885 per ardeb (150 kg, corresponding to USD 300 to USD 308 per tonne using exchange rates applicable in April 2022 after the currency devaluation in March 2022), up from EGP 705 to EGP 725 (USD 298 to USD 307 per tonne using exchange rates from 2021) in 2021. The procurement prices are derived from a moving average of prices paid for imported wheat in the previous two months.

The government aims to raise the country’s self‑sufficiency in wheat, through supporting domestic production among other areas, from about 50 percent in 2020 to 65 percent in 2025. While increases in the planted area (from 3.4 to 3.7 million feddans) as well as increases in average yields (from 2.7 to 3 tonnes per feddan) using improved seed varieties and better cropping practices are foreseen, a crucial part also rests on lowering the average per capita consumption, limiting food waste and increasing wheat flour extraction from 82 to 87.5 percent.

Cereal import requirement forecast slightly above average in 2022/23

The overall cereal import requirement in the 2022/23 marketing year (July/June) is forecast at about 22.9 million tonnes, 11 percent higher than the imported quantity in 2021/22 but close to the five‑year average level.

Wheat imports for the current 2022/23 marketing year (July/June) are forecast to reach 12.5 million tonnes, about 10 percent more than in the previous year. Between 2016 and 2020, the country sourced about 18 percent of its wheat imports from Ukraine, and 58 percent from the Russian Federation. The start of the war in Ukraine put a halt on marine exports from Ukraine. Although shipments of food from the Russian Federation were not subject to direct sanctions, restrictions on financing and insurance coverage slowed down the pace of exports. Consequently, Egypt – the world’s largest wheat importer – sought to diversity its import base. A number of countries, including India, Serbia and Portugal, were approved as new origins. The government also gave the GASC (the state buyer) the right to contract directly with any government or company to purchase wheat without the need to make an international tender, as was customary in the past.

Although the country terminated contracts for 240 000 tonnes of Ukrainian wheat, which were unable to be shipped due to blocked ports, wheat imports from the Russian Federation surged. Egypt received 1.056 million tonnes of wheat from the Russian Federation in the March‑May 2022 period, compared to about 573 000 tonnes in the same period a year earlier.

As of July, the country’s strategic reserves of wheat were sufficient to cover national consumption needs for 7 months. In March 2022, the Ministry of Trade and Industry banned the export of all types of wheat flour, wheat grain, pasta, beans, and lentils for a period of three months. The ban was extended for another three months.

Food price inflation stable in July 2022 but well above 2021 levels

In July 2022, the annual food price inflation was estimated at 22.4 percent, about the same as in June 2022, but well above the single digit values registered a year ago. The increases were driven by strong international commodity prices and a weakening currency.

The Central Bank devalued the currency in March 2022 to 18.171 per USD to help alleviate the pressure on the foreign exchange reserves. In August, USD 1 was selling for about EGP 19. The country’s foreign reserves were estimated at USD 33.14 billion at the end of July 2022, down from USD 40.8 billion in September 2021, reflecting higher international commodity prices and consequently higher import bills. The government remains in negotiations with the IMF regarding a loan programme.

In the 2022/23 fiscal year (July/June), the government allocated EGP 356 billion (USD 18.5 billion) for various social protection programmes, including EGP 90 billion (USD 4.68 billion) to cover food subsidies; bread subsidies account for EGP 55 billion (USD 2.86 billion). In the 2021/22 fiscal year, the resources to finance subsidies on food commodities amounted to about EGP 87.22 billion (USD 5.56 billion at the 2021 exchange rates), of which EGP 50.62 billion was used to subsidize the retail price of bread.

About 71 million people, over 70 percent of the country’s population, benefit from a subsidy card programme that entitles them to EGP 21 (USD 1.1) worth of goods per month in addition to five loaves of bread per day. Despite the current situation on the international wheat markets, no changes are being made to the subsidized bread programme, which continues to be provided to citizens at 5 piasters (EGP 0.05 or USD 0.0026) per loaf.

In July 2022 the government announced that it would add a bonus of EGP 100 (USD 5.29) per month to each ration card for a period of six months to help citizens from more vulnerable social groups (pensioners, families, and public employees on low salaries) to cope with the increasing food prices.

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