Egypt scraps poultry imports, talks up wheat harvest prospects

16-Dec-2015 - Last updated on 16-Dec-2015 at 22:11 GMT

Related tags Currency

Egypt has made a U-turn on importing poultry after a backlash from domestic producers, as the government says cuts to the wheat production subsidy will not reduce production.

The change of policy on poultry imports comes just weeks after the Egyptian government announced it would source poultry meat, along with a range of other food staples, from abroad in an attempt to secure supplies and stabilise prices. According to Reuters, Egyptian poultry producers were upset by the country’s General Authority for Supply Commodities’ (GASC) intention to buy the meat from abroad, and offered to match the prices being offered by foreign suppliers.

Not all tenders cancelled

GASC had been set to reveal the winner of its first ever poultry tender– speculated in Egyptian media to be a US firm supplying 500 tonnes of meat – but the organisation has not announced any information on the tender to date. Egypt’s supply minister, Khaled Hanafy, told Reuters the deal with local producers did not mean all poultry tenders would be cancelled.

Meanwhile there were fears for Egypt’s wheat production, after a reform in subsidy payments intended to cut fraud. The government announced it would move away from a fixed subsidy, and would pay a smaller amount as well as a price based on average global wheat prices – a move which many farmers were reported to have condemned.

Traders told Reuters up to 1m tonnes of the last 5.3m tonne Egyptian wheat harvest could be foreign wheat, mixed in with domestic production in order to boost subsidy payments. Reuters reported the new system will mean farmers will lose up to US$230 per feddan (0.42 hectares) in subsidy payments.

Many farmers said the change would mean they would be unable to make money from growing wheat. Some said they were planning to shift to other crops, which would put further pressure on Egypt to import sufficient grain.

Harvest to remain stable

But supply minister Hanafy denied reports of reduced harvests saying the area under cultivation for wheat would remain the same at around 3.3m feddans (1.39m hectares) for the next growing season. He told Reuters the wheat harvest may even rise.

According to the US Department of Agriculture, Egypt will import around 11.5m tons of wheat this financial year, more than twice its domestic harvest. But the country’s dwindling foreign currency reserves make importing food increasingly difficult.

Egypt’s had around US$16.4bn in foreign currency reserves at the end of October, down from US$36bn before the unrest of the Arab Spring in 2011. This month the Egyptian government announced the cost of subsidies, including food, electricity and social benefits, rose 9.2% in the June to September quarter, compared to the same period the year before.