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Sunday, 13 February 2022

Private sector eclipses GASC as Egypt’s leading wheat importer

The private sector was Egypt’s leading wheat importer last year: Private sector wheat imports surpassed purchases by the state-run General Authority for Supply Commodities (GASC) in 2021 — and could continue to lead Egypt’s wheat imports, Reuters reports, citing industry experts.

In numbers: The private sector imported 6.9 mn tonnes of wheat last year, an 11% y-o-y rise and almost 50% more than GASC, whose imports fell 32% y-o-y to 4.7 mn tonnes, Reuters reports, citing data from the UN’s Food and Agriculture Organization (FAO) and two regional traders. GASC accounted for some 51% of wheat imports in 2020, with around 30 private sector companies importing the remainder.

Subsidy reform could mean that 2021 isn’t an anomaly: “If GASC wheat purchases decline in the next years as expected due to potential reforms in the subsidy system, a sector of the consumers of the subsidized bread will turn to the free market bread,” FAO Representative in Egypt Nasredin HagElamin told Reuters. The Supply Ministry is working on several scenarios that would see the government taper bread subsidies as rising international prices pressure the state budget, with a final decision expected at the end of March.

Spiraling global wheat prices are squeezing the state purse: The rise in global wheat prices will cost us an additional EGP 12 bn this fiscal year, Finance Minister Mohamed Maait said last month. GASC had been allocated some EGP 87 bn in this fiscal year’s state budget. As the world’s biggest importer of wheat, we’re significantly exposed to price hikes that saw the grain trade in 2021 at its highest levels in more than a decade amid the global commodities squeeze. Prices have continued to rise this year on fears that major producers Russia and Ukraine could go to war.

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