Supply Ministry reduces domestic wheat supply target by half a million tons

The Supply Ministry announced in a statement on Saturday that it aims to procure 3.5 million tons of local wheat during this year’s harvest, which begins in a few weeks and lasts until the end of summer.

The ministry’s procurement target is half a million tons less than it was last year. 

This year, the burden on farmers has been exceptional due to severe inflation at home driving up maintenance and production costs, with pressures compounded by a drop in wheat prices in international markets. 

With global prices decreasing, the ministry is set to import a larger proportion of the 7.7 million tons it requires annually to support the provision of subsidized wheat products like bread and pasta.

At the same time, a threshold for domestic production is in place to encourage farmers to cultivate wheat for food security reasons. 

In March, the government increased the price it offers to buy locally-cultivated wheat from farmers by 33 percent compared to last year. The increase, however, was viewed as insufficient by farmers, who were concerned that the price paid to them remains low considering the rising production costs and inflation rates.

The ministry is prepared to receive any quantities of wheat as the upcoming season commences in mid-April, the head of its media office Ramadan al-Shahat told Mada Masr, adding that silos are equipped to store up to 4 million tons of the grain, with the minimum threshold set at 3.5 million tons.

But local wheat is costly, a grain importer said to Mada Masr on condition of anonymity, adding that the price of a ton of wheat in global markets is currently LE1,000 less than the locally-grown alternative.

When wheat prices were higher on global markets, the government struggled to meet its procurement target. The Supply Ministry’s General Authority for Supply Commodities fell short of its 4 million procurement target last year, collecting only 3.4 million tons. Similarly, during the 2022 season, the government also failed to reach its target of 6 million tons. The government extended the season for several months, culminating in the procurement of only about 3.8 million tons, despite farmers being obligated to deliver their produce and facing legal repercussions for non-compliance.

More competitive prices from the private sector and high prices on offer for animal feed meant that farmers were keen to sell their produce elsewhere over the past years.

This season, however, the price of wheat dropped on global markets, prompting private sector buyers inside Egypt to opt for imports over local purchases. Feed prices have also dropped in recent weeks, dissuading farmers from selling their wheat to feed factories.

“Farmers are now left with no option but to sell to the government,” the grain importer said.