Egypt has been famous throughout history for the fertility of the Nile Delta, but a big population has far outstripped its capacity to produce food, making it one of the biggest grain importers in the world. With food a big political issue, the government continues to take a major role in ensuring supplies of grain to feed the country’s population.

"Food safety nets have long been instituted and play an important role in addressing food security and poverty in Egypt," according to the United Nations Food and Agriculture Organization (FAO) Country Program for Egypt, drawn up in 2006. "More than 50 million Egyptians benefit from, and to some extent depend on, an extensive food subsidy program."

The FAO defines Egypt as a low-income, food-deficit country. "Egypt imports nearly 45% of its grain requirements," it said, adding that the country’s National Agriculture Strategy for 2000 to 2017 "aims to achieve greater self-sufficiency in basic foodstuffs by increasing local cereal production to meet 75% of consumption requirements, and to improve incomes and standards of living."

"Given that nearly all the population lives on less than 4% of the national territory, the government is investing in initiatives such as a desert land reclamation project and resettlement strategies," it said.

According to the International Grains Council (IGC), Egypt is set to produce 15.5 million tonnes of grain in 2009-10, compared with 15.2 million the previous year. Wheat production in 2009 is estimated at 8.2 million tonnes, up from 7.9 million, while maize (corn) production is estimated to rise to 6.3 million tonnes from 6.2. Production of oats is put at an unchanged 900,000 tonnes.

The Th IGC is expecting Egypt to import 13.1 million tonnes of grain, down from 14.6 million. Of that total, it will import 8.4 million tonnes of wheat in 2009-10, compared with 9.6 million the year before. Maize imports are predicted at 4.7 million tonnes, compared with the previous year’s 4.9 million.

"The main wheat importer is the government through the General Authority for Supply Commodities (GASC)," Roz Reynolds, head of marketing at the United Kingdom’s Home Grown Cereals Authority (HGCA), told World Grain. "GASC buys five to six million tonnes of wheat per annum," she said. "The GASC issues tenders, usually at very short notice, and makes a quick decision on the bids, usually taking the lowest bid. They will cancel the tender if they think bids are too high."

"Countries have to be registered on the official government tender list in order to be able to bid," she added. "The U.K. has been on the list since 2005."

GASC did buy wheat from private importers in local currency in 2008, which favored Black Sea origins as the private sector purchases small vessels from that area.

According to a report published by the U.S. Department of Agriculture (USDA) attaché in March, Russia remains the largest wheat supplier to Egypt. "From the beginning of marketing year 2008-09 through the end of February 2009, Russian exports accounted for 54%, or about 3 million tonnes, of Egyptian wheat imports," it said. "U.S. market share decreased in 2008-09 from the previous year. U.S. market share continues to lag well below levels of a few years ago."

In the same period, U.S. exports were about 29%, or 1.5 million tonnes, of the wheat imported into Egypt, with the rest coming from Ukraine and Canada. "It is expected that U.S. wheat exports to the Egyptian market will increase through the end of marketing year 2008-09 since GASC is no longer purchasing locally from the private sector importers," the report said. "GASC is only buying through international tenders."

In recent months, the trade has been marred by a dispute after some Russian wheat was rejected amid quality concerns.

There have also been reports that Egypt has banned genetically modified crops, although, according to the news agency Reuters, officials have denied that any such ban exists.

"Egypt continues to have one of the highest wheat per capita consumption levels in the world," the USDA attaché said. It predicted total wheat consumption at 15.9 million tonnes for 2008-09. The attaché put Egyptian per capita consumption of wheat in 2007-08 at 195 kg.

In 2007-08, the subsidy on local style baladi bread was estimated at 9 billion Egyptian pounds. "During the same period, private sector companies purchased 2 million tonnes of imported wheat to produce 72% extraction flour used in the production of high quality flat bread and European-type bread, pastries and pasta," the attaché said. "Most of the domestic wheat crop is sold directly to consumers or retained by farmers for on-farm consumption."

The attaché put the total quantity of locally produced wheat sold to the Ministry of Industry and Foreign Trade in 2007-08 at 2.5 million tonnes, compared to 1.7 million in 2006-07. "This increase in GASC purchasing quantity results from the higher price offered to farmers by the government," it said. "The General Authority for Supply Commodities has a target to purchase 3.5 million tonnes this year. Most observers suspect that GASC will once again not achieve its target since the private sector will continue to offer higher prices to the farmers."

GOVERNMENT CONTROLS MOST MILLS

Reynolds said the government has control over most of the milling industry. "It owns 126 mills with a capacity of 7 million tonnes a year," he said.

The mills are operated by seven private sector companies, all affiliated to the Food Industries Holding Company (FIHC). "Shareholdings in these mills have been sold to the private sector but the government still retains control," she said.

There is also a growing private sector with around 36 mills and a capacity of 2.8 million tonnes a year. "Public sector mills produce 82% extraction flour for subsidized baladi bread," she said.

"Private sector mills mainly produce 72% extraction flour for high-quality flat bread and European-style bread, pastries and pasta."

According to the USDA attaché, the Egyptian milling industry has more than adequate capacity to cover the country’s need for 72% extraction flour. "While total consumption of 72 percent extracted flour is estimated at 1.8 million tonnes, or 2.5 million tonnes of wheat, total milling capacity is estimated at 2.7 million tonnes of 72% flour, or 3.76 million tonnes of wheat," the report said.

OILSEEDS SECTOR FADING

Limited returns to farmers and shortages of land and water have caused a decline in cotton and sunflower plantings and a stagnated area of soybeans, according to a USDA report published in April. "Cotton is the major oilseed grown in Egypt," the report said. "It is produced primarily for fiber, with oil and meal production being of secondary importance. Soybeans and sunflowers also are cultivated, but on a much smaller scale."

It estimated Egypt’s total annual crushing capacity at about 1.6 million tonnes. "With the decline of cotton and soybean production, several crushing facilities are operating at the present time at less than full capacity, some reaching only 50%," it said. "In 2008-09, total oilseeds crush is estimated to reach 1,228,000 tonnes, as compared to 1,362,000 tonnes in 2007-08."

The report also explained that demand for oilseed meal has risen as a result of the growth in livestock production. "The increase in the use of meal has been particularly noticeable in the poultry sector," it said. "Most soybean meal is utilized in poultry rations, while cottonseed cake is used in livestock feed.

The dairy industry also is beginning to expand and modernize, and many farms are now using high-quality feed rations based on protein meals."

It put total meal consumption in 2008-09 at 1.1 million tonnes and forecast a slight decline in 2009-10, mainly due to an outbreak of avian influenza. It estimated per-capita consumption of vegetable oil in Egypt at slightly over 20 kg per year.

BIG BEAN MARKET

A highly unusual feature of the Egyptian market is its taste for beans for human consumption, with demand at around 1,000 to 1,200 tonnes a day. "They basically have a small amount out of their own crop," Andy Bury, who trades beans at Frontier Agriculture, told World Grain. "The balance is from France and the U.K." Some beans are also brought in from Australia, if that country has any supplies available.

As well as importing for its own consumption, Egypt also takes beans for reexport to Sudan, Palestine or Libya.

The market divides into whole beans which are used for making fool, or boiled beans for breakfast and beans for splitting for falafels. "French beans tend to be lighter on the inside, which makes them good for splitting," he said, although the variety Wizard from the U.K. is also used for splitting.

The size of the Egyptian crop last year has been put at 50,000 to 90,000 tonnes. "It’s a bit of a mystery," he said. "It’s all private. Principally there are three or four industry players and a multiplicity of local traders."

Chris Lyddon is World Grain’s European editor. He may be contacted at: chris.lyddon@ntlworld.com.

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