Egypt, the biggest wheat importer, plans to cut the state’s inbound shipments of the cereal and boost local purchases to feed the Arab world’s most populous nation as it tries to recover from its deepest economic slump in two decades.
The government intends to buy 3 million metric tons on the international market in the 2013-14 fiscal year that starts July 1, compared with 3.4 million tons this year, Supply Minister Bassem Oda said today in an interview in Cairo. Egypt previously bought more than 5 million tons a year on world markets.
“This plan is to encourage local production and support the Egyptian farmer,” Oda said. “When we decrease imports, we go for increasing purchases from local production and this is the real support for the Egyptian farmer.”
Egypt has struggled to pay for food and fuel as foreign currency reserves dwindled more than 60 percent in the past two years, as the country faced political upheaval and social unrest surrounding the ouster of former President Hosni Mubarak.
The government has pinned hopes for an economic recovery on a stalled $4.8 billion loan from the International Monetary Fund, which officials say can unlock more than $10 billion in external support and restore investor confidence more than two years after the 2011 uprising that prompted Mubarak’s departure. Since then the economy has been growing at about 2 percent a year, the slowest since the early 1990s, according to IMF estimates.
Egypt may spend 16.8 billion Egyptian pounds ($2.4 billion) on 6 million tons of domestic wheat in 2013-14 compared with 11 billion pounds to purchase 4.5 million tons this year, according to Oda.
Subsidized Bread
President Mohamed Morsi is counting on locally-produced wheat to ensure adequate supplies of subsidized bread for the nation of 84 million people. Wheat provides about a third of the country’s daily calorie intake, according to the United Nations’ Food & Agriculture Organization. Per-capita consumption of about 182 kilograms (401 pounds) a year is more than double the U.S., according to the Rome-based FAO.
The African country’s total wheat imports were 11.65 million tons in 2011-12, and are forecast to be 8 million tons this year and as much as 9 million tons in 2013-14, according to estimates by the U.S. Department of Agriculture. Domestic consumption was about 18.4 million tons in 2012-13, according to the data.
Bloomberg
