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Wednesday, 16 March 2022

Price controls for unsubsidized bread are happening

Gov’t to fix price and specifications of unsubsidized baladi bread: President Abdel Fattah El Sisi ordered the government to set a fixed price for unsubsidized bread yesterday, in the latest move to hold down local prices amid surging global inflation, according to an Ittihadiya statement.

Local bread prices have climbed rapidly since the conflict in Ukraine began, with some reports suggesting that prices have doubled in recent days.

How much will it cost? The exact details will be announced “within days,” but industry professionals expect the unsubsidized loaf of baladi bread to cost around EGP 0.75 and to weigh around 90 grams, said head of the bakeries division at the Cairo Chamber of Commerce Attia Hamad in a phone-in with Ala Mas’ouleety’s Ahmed Moussa (watch, runtime 9:21). The decision sees the government providing flour to private bakeries at set prices for the next four months to ensure they sell them to consumers at the fixed price, Hamad said.

El Sisi has also told the government to offer incentives to farmers to ramp up wheat production to ensure sufficient supplies amid the global supply crunch. Incentives will be announced “within hours,” Deputy Agriculture Minister Mohamed El Kersh said last night in a phone-in with Al Hayah Al Youm (watch, runtime 4:42).

Farmers will be nudged to sell more of their wheat harvest to the government, according to a document seen by Bloomberg. The business information service appears to suggest that farmers taking incentives to plant more wheat will need to sell a minimum quota to the state. Farmers could also be prevented from selling the rest of their crop to other buyers without first getting a license, the document reportedly said.

More wheat, less expensive fertilizer: Farmers who provide at least 90% of their yield to the government this season will receive subsidized fertilizers for the summer, according to the document. Officials from the supply and trade ministries declined to give comment to Bloomberg.

The new measures come as the government tries to bump up local wheat cultivation (and to buy more of it to put in reserves) to make up for the shortage of Russian and Ukrainian wheat, whose exports have been heavily curtailed due to the conflict. The two countries provide around 80% of Egypt’s wheat and account for more than a quarter of global supply. The government is now aiming to buy more than 6 mn tonnes of domestic wheat this harvest season, up from its previous 5.5 mn-tonne target.

The government is upping its storage capacity to make space for additional supplies: The Supply Ministry now has space for 5.4 mn tons of wheat, up from around 3.4 mn tons previously, the cabinet said in a statement.

A wheat shipment is currently on its way from France, Reuters reports. A vessel with about 30,000 tonnes of French wheat is incoming, in what appears to be a sale to a private importer, not state-buyer GASC, the news agency said.

Food protectionism is growing: Morocco became the latest country to introduce export curbs yesterday, announcing limits on tomato exports to hold down prices ahead of the Ramadan season, according to Bloomberg. Argentina and Indonesia have taken similar measures to cut back specific exports, while Russia and Ukraine have in recent days announced export bans of food staples.

Egypt has put in place bans of its own, last week announcing that exports of food staples such as wheat, flour, corn and oils will be prohibited for the next three months.

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