In Egypt, “nothing can afford,” even bread

Bread prices in Egypt have been skyrocketing in recent days. Two weeks ago, Rabia, a baker in central Cairo, raised the price of his tortillas from 50 Egyptian pound cents to 75 cents. “With this war, not only flour is becoming more expensive, but also gasoline and food: everything is becoming more expensive,” he justifies himself, leaning between the stove of his shop and the cart.

In Egypt, bread occupies such an important place in the diet that they say “aysh” (life), in dialect. To counter this sudden increase of 50%, which was the result of the skyrocketing world prices for wheat, the government decided on Sunday, March 20, to adjust its price. In return, Supply Minister Ali Al-Moseli promised to supply flour at a reduced price. Rabia pancakes have fallen in price to 50 cents.

Wheat shortage risk

This measure, designed to ease the burden of the crisis on the population of Egypt, a third of which lives below the poverty line (according to official figures), but puts pressure on the country’s wheat stocks. The world’s largest importer of wheat, more than 85% of which comes from Ukraine and Russia (23% and 62% respectively), Egypt has not received any grain since the start of the conflict in Eastern Europe, the minister said.

→ READ. Ukraine: “Each year, 74% of the wheat produced in the country goes abroad”

Faced with the risk of shortages and at a time when global prices are peaking, the authorities are turning to the local harvest, scheduled for April. The £36bn envelope should allow orders to be doubled to reach 6m tonnes of Egyptian wheat. Farmers will have to provide at least 60% of their crops, otherwise they face the loss of subsidies, fines or even prison.

These penalties are commensurate with the urgency. Because these stocks are needed to support the bread subsidy program, which is sold at a fixed price of 5 cents. It is used by at least 70% of the population. These orders for Egyptian wheat, added to strategic stocks, will cover the production of subsidized bread for the rest of the year.” says Gamal Siam, professor of agricultural economics at Cairo University.

Increase in strategic stocks

According to this food security specialist, Egypt, which “imports 60% of its food needs, must increase its strategic stocks. Moving from a four-month reserve at present to a year of wheat will avoid the consequences of crises such as Covid-19 or the Russian-Ukrainian war,” he points.

→ ANALYSIS. War in Ukraine: the wheat planet is in turmoil before the threat of shortages

But the time for such reforms has passed. Egypt’s economy is shaken by the global rise in commodity prices. According to the National Statistical Agency, in February, the inflation rate reached 10% year-on-year, which is a record since mid-2019. At the head of this skyrocketing price: staples, particularly popular as the month of Ramadan approaches on April 2nd. To curb inflation, the authorities banned the export of wheat, beans, lentils, pasta and flour for three months.

currency devaluation

At Munir Market, a few blocks from the Rabia bakery, shoppers are struggling to see the consequences of the decision. “Nothing is available anymore. I have no other choice but to reduce the amount and I don’t buy meat anymore.” laments Nadia, a 50-year-old mother of four children.

→ REPORT. Tunisia: War in Ukraine exacerbates wheat shortage

In the latest blow, last Monday, the central bank devalued the currency in an attempt to stem the war-induced flight of foreign capital. The pound fell 14%, signaling a further rise in the cost of living. “Many people are at the limit of their abilities”, regrets the seventy-year-old man he met at the exit from the market.

According to Finance Minister Mohamed Mayet, $7 billion (6.36 billion euros) has been allocated to mitigate the effects of inflation. This plan, in particular, provides for 450,000 families to join the subsidy system. Egypt, which is starting talks with the IMF for a new loan, is also wrapping up talks with India, the world’s second-biggest wheat producer, and in talks with the US, Argentina and France.

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