Top importer Egypt boosts price incentives for own wheat farmers

CAIRO Thu Feb 28, 2013 8:34am EST

CAIRO Feb 28 (Reuters) - Top wheat importer Egypt will raise the price it pays for local wheat during the coming harvest season to 400 Egyptian pounds per ardeb (150 kg) - around $400 a tonne - from 380 pounds, to lessen reliance on imports.

Egypt's wheat imports are sharply down this year as it endures economic and political crisis but state and private buyers say the state is allocating priority financing for wheat imports. They are also looking for an increase in domestic production.

"The price of the ardab has been set at 400 pounds ($59.4)," said Salah Moawad, head of the agricultural services sector at Egypt's agriculture ministry. "An ardab is 150 kilograms therefore the tonne is at 2,666.50 pounds ($400)."

"This is for the new harvest which will start in end-April. This is for the next summer's crop," Moawad said.

Moawad said the decision was taken about 5 months ago, adding it raises the targeted amount of local wheat supplied to the government the coming season to 4 million tonnes, up from an average target of 2.4-3.7 million tonnes in previous years.

A Cairo-based trader said: "I don't think this new price incentive to farmers will reduce the amount of wheat Egypt needs to import."

"The reason imports are down this year is because the country had stocks from the previous year," the trader said.

"The cost of local wheat ends up being pricier for Egypt because of the high subsidies the government pays the farmer," the trader said.

The country's supplies minister said on Wednesday that Egypt has strategic stocks of nearly 2.3 million tonnes of the grain from international and local suppliers, enough to last until May 29, 2013. Buyers say they have funds to keep the nation supplied with its staple bread.

Egypt has a history of bread riots but maintained supplies of heavily subsidised flat loaves - which sell to the poor for just 5 piastres (less than 1 U.S. cent) - throughout the uprising that overthrew president Hosni Mubarak in 2011.

Banks involved in commodity trade finance for the country said on Wednesday that Egypt's state grains buyer General Authority for Supply Commodities, (GASC), is exploring options beyond systematic tenders to secure future needs. ($1 = 6.7392 Egyptian pounds) (Reporting by Shaimaa Fayed; Editing by Anthony Barker)

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