The Egyptian government is currently facing a severe crisis because of the shortage in strategic wheat stocks, which has forced it these days to supply half of the prescribed quantity of flour to bakeries. The General Commodity Supply Authority of the Ministry of Supply and Internal Trade, which is responsible for importing wheat from overseas, is currently facing a dilemma due to the declining strategic wheat reserve, which began to decline to its lowest levels for the first time. According to responsible sources at the Ministry of Supply, there will be enough for the country for only two months after the government announced on the first of last March that the strategic reserve of wheat would suffice for four months.
Many bakery owners have complained about the government’s inability to provide them with sufficient quantities of flour, as the government has started providing them with half of their prescribed rations of flour, which presages great danger linked to the production of subsidized bread for more than 70 million citizens who receive it. According to the Central Agency for Public Mobilization and Statistics, bread and flour subsidy beneficiaries in warehouses reached 71 million. The whole bread owed to beneficiaries amounted to about 120.8 billion loaves per year. According to the sources, the Ministry of Supply has added India to 16 other wheat import sources to get out of the current crisis of importation of wheat, including Russia, Ukraine, France, Germany, Kazakhstan and the United States. Latvia was the latest addition to the list last November.
The Ministry of Supply said in an official statement on April 12 that future purchases of Indian wheat will depend on “the ability of wheat suppliers to provide competitive offers that contribute to the representation of Indian wheat at affordable prices in the authority’s tenders, as well as within the limits of the quantities available for export of Indian wheat.”
Concerns about Indian wheat’s quality
According to official sources, India is looking to take advantage of the gap in the wheat export market left by the Ukrainian crisis. Despite its surplus wheat stocks, logistical bottlenecks and quality concerns have previously hampered India’s efforts to sell large quantities on the global market.
The Egyptian Supply Commodities Authority often prefers Black Sea wheat for its proximity, quality and competitive prices. Still, the Russian invasion of Ukraine in late February led to a rise in global wheat prices and disrupted shipping through the Black Sea. Egypt bought quantities of wheat, mainly from France, last Wednesday to support declining reserves for the first time since the Russian invasion of Ukraine. Egypt’s strategic wheat reserve continues to decline from its normal levels due to the Russian-Ukrainian war, as the countdown to depleting the recorded resources began in early March. Resources were sufficient for four months, much lower than the current levels, and from the government’s six-month goals.
Egypt received all the accumulated shipments of Russian wheat last March, but the blockaded ports in Ukraine mean that few grain shipments will be able to break the blockade. The two countries provided about 80% of Egypt’s wheat imports before the war. With the chaos in the markets, the government has shifted its focus to purchasing local wheat. It announced earlier that it aims to spend about 36 billion pounds to buy 6 million tons of local wheat this year, which is about double what the government spent last year on local cereal.
According to several sources, the General Authority for Supply Commodities at the Ministry of Supply put forward two tenders after the Russian invasion of Ukraine but soon cancelled them with the rise in prices. This week, the Egyptian government submitted the third tender as the General Authority for Supply Commodities in Egypt offered a limited tender to purchase an unspecified quantity of wheat from European import sources approved only in the notebook authority tender.
According to the sources, the shipping date for onboard delivery tenders will be May 20-31, while the shipping date for delivery tenders will be June 1-15, exactly two months later, which means that the stock is at its limit. And if the government fails to get the imported wheat within two months, which is the specified time for the arrival of the imported shipments, the government will face running out of its reserves of imported wheat. Egypt, the world’s largest buyer of wheat, is speeding up efforts to secure supplies to feed its citizens after the war in Ukraine upended the global grain trade. The Egyptian government buys wheat through regular international tenders, which low-cost supplies have long dominated from Russia and Ukraine.
Direct order instead of bidding
The sources did not rule out that the Egyptian government may change the wheat purchasing system through tenders to the direct purchasing system due to the shortage of wheat stock available in the stores currently and that these reserves are approaching depletion over the next two months.
Russia’s attack on Ukraine has sent global grain prices soaring, and Chicago wheat futures have jumped 44% since the start of the year, leaving import-dependent countries particularly vulnerable people’s endurance capability across the Middle East and North Africa is at breaking point, according to the United Nations World Food Program.