Wheat

Egypt Shifts From Wheat Tenders To Direct Deals Amid Ukraine Uncertainty

Egypt Shifts From Wheat Tenders To Direct Deals Amid Ukraine Uncertainty - The country is in talks with India to import wheat on the basis..

Egypt, the world’s largest wheat importer, has changed the long standing way it buys grains in order to help it better manage the volatile and high food prices that have resulted from Russia’s invasion of Ukraine. It also received $500 million from the world bank for funding wheat purchases and to improve its wheat storage capacity to alleviate the impact of war between its main suppliers. Before the war, Ukraine and Russia together accounted for 85% of Egypts wheat imports. 

Russia’s invasion of Ukraine pits the world’s largest wheat exporters against one another, creating a disruption in the global food supplies and spoiling Egypt’s efforts to fill its grain stockpiles. The country has canceled the practice of launching International tenders for buying wheat and now has adopted direct talks and deals that allows it to gain more flexibility to buy smaller quantities and better prices than the global market for the commodity. 

Steps Taken By Egypt To Meet Its Wheat Requirements 

Egypt adopted two avenues to ensure that its annual needs for wheat are covered:-

  • Finding New International Sources Of Wheat 

It opted to hold private talks with traders to purchase the grain directly from suppliers to gain better control over the prices. Being the biggest purchaser of the commodity, Egypt’s wheat buying is watched closely by the global grains market. 

General Authority for Supply Commodities (GASC) stated that the change was driven by high and volatile prices it was receiving in international tenders. According to the grain traders and media reports, GASC is believed to have made at least 3 purchases using direct talks with traders since Mid-July. The total amount of wheat bought is believed to be 1million metric tonnes to 1.5 million metric tonnes. The last tender in July’22 was canceled after it viewed the bids received as too expensive. Prices of wheat have eased since the UN brokered a deal that saw some Ukrainian ports reopen to grain shipments. Egypt recently bought 130,000 tonnes of wheat via direct talks with Russia. Wheat Buyer From Mills

The country is in talks with India to import wheat on the basis of a government agreement as the Indian ban on wheat exports exempts governments including the Government of Egypt.

  • Collecting The Largest Possible Amount Of Wheat From Local Farmers

Egypt procured 4.2 million tons in the Wheat supply season over a period of 5 months from its local farmers which amounted to around half of the wheat produced in the nation. The wheat was procured at EGP880 per ardeb(equivalent to 150kg) with additional incentives to encourage farmers to supply larger wheat quantities to the country.

Conclusion 

The country consumes around 18 million tonnes of wheat annually. GASC would continue using direct purchases till the uncertainty surrounding global wheat prices persists. According to data from the United States Department of Agriculture (USDA), Egypt will roughly import 12 million metric tonnes of wheat in the year, making it the largest importer of the commodity. Next year, USDA expects Egypt will slip into second place behind Indonesia. Ensuring adequate food supplies for its population of over 100 million people is a key concern for Egypt’s leaders. The government subsidises bread for millions of its citizens and regularly buys wheat to fill its strategic stockpiles. It also approved to raise the price by 13.6% EGP 1,000 per ardeb to further encourage farmers to supply wheat to the government as majority of the farmers prefer to keep wheat for personal use or sell it to the private sector.

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