WATANI International 29 August 2010
Predictably, the forest fires which raged through Russian lands during the past weeks have left behind huge losses and have been the cause of great chagrin. But miles away, in Egypt, they have also been the cause of ample anxiety. Russia is among Egypt’s largest providers of wheat and, with the fires obliging the Russian government to impose an export ban on the grain, Egyptians felt panicky about their food security. Some 80 million Egyptians depend on bread as a staple food. Egypt consumes around 14 million tons of wheat annually, out of which some nine million tons are used to produce subsidised bread. With Egyptian wheat production standing at around 8 million tons annually, the government has to import some 6 million tons a year to meet the balance. Spiralling bill The most recent annual report by the government revealed that 90 per cent of Egyptian families consume subsidised bread, and 60 per cent of them depend on it as the major nutrient. In fiscal 2008/2009, the report said, the government spent EGP13.8 billion to subsidise the bread, a bill which was then seen as overly high since that particular year had seen a rise in the price of the grain. But this would seem like child’s play compared to the current price rises since the Russian ban. While the State-run General Authority for Supply Commodities (GASC) had purchased 60,000 tons of Russian wheat at USD198.24 last July, the price including freight, it had to agree to pay France USD291.32 a ton of grain last week, free on board. Allegations of mismanaging the wheat crisis have been levelled at the Egyptian government. The Muslim Brotherhood MP Farid Ismaïl demanded that the government should resign since, owing to lack of political will, it had failed to secure Egypt’s strategic food supply. The government, he said, preferred to deal with the problem from a commercial perspective of profit and loss, going for the imported wheat because it is cheaper than the locally produced grain. He accused the government of deliberately undercutting the price of wheat cultivated in Egypt in order to humiliate the Egyptian farmer. No incentive “The government has come up with some EGP4 billion to purchase wheat from sources other than Russia,” says Abdel-Salam Gomaa, head of the Agriculturalists’ Syndicate and supervisor of the wheat research programme at the National research Centre. That money, Dr Gomaa says, would have been put to much better use had it been employed to subsidise wheat production in Egypt through offering the Egyptian farmer higher prices for his produce of grain. “This,” he insists, “would have acted as an incentive for wheat farming, and would have been a much more effective subsidy than the current subsidy to bread prices which ends up being squandered to the non-needy.” For his part, Mustafa Abdel-Hamid who is an investor with sizeable investment in the agricultural sector, told Watani that several factors have led farmers to prefer cultivating vegetables, fruit, clover, or other crops since they yield better, and quicker, profit than wheat. In light of the current high rents for agricultural land, and higher prices of fertiliser and agricultural utilities, most farmers are already in debt. This, he explains, makes quick profits and higher yields on investment a naturally attractive choice. Missing the point Economic expert Mukhtar al-Sharif, however, begs to disagree with Ismaïl and Gomaa who both implied it was possible for Egypt to reach self sufficiency in wheat provided enough incentives were offered to farmers. That it is practically impossible for Egypt to be self-sufficient in wheat production is a matter of simple math, he insists. The total area of cultivable land in Egypt is a mere 8 million feddans (a feddan is 4,200 square metres of land); wheat is cultivated in some 3 million feddans. A feddan produces anywhere between 18 and 24 ardabs (1 ardab = 150 kg) of wheat. It is unreasonable to plant more than half our cultivable land with wheat in order to attain self-sufficiency—especially considering that Egypt’s population grows at a staggering 1.2 million every year, while the area of cultivable land and water resources are expected to diminish. It is not true, Dr Sharif says, that the government pays farmers too low a price for wheat. The government pays farmers EGP285 for an ardab of wheat, the equivalent of USD340 per ton. Those who cry foul because Egypt will have no access to Russian wheat until the end of the year, according to Dr Sharif, are missing the point. Egypt can buy wheat from Canada, France, Argentina, or others, even if at higher prices. But the fact that Egypt’s population is exploding at unprecedented proportions is the real threat we should be facing, he said, since it stands to threaten the future of our children and grandchildren.