Together, Russia and Ukraine account for 30% of global wheat exports
Egypt’s stability depends on these imports. The government uses the wheat to make subsidised bread, on which many families rely. When Anwar Sadat, a former president, lifted the subsidy in 1977 there were riots and he quickly backtracked. When Egyptians revolted in 2011, their three main demands were “bread, freedom and social justice”. The latter two proved elusive, but the provision of cheap loaves continues. A small one sells for 0.
Now, though, a potential disruption in commodity markets threatens this Egyptian staple. The vast majority of the wheat Egypt imports comes from Russia and Ukraine, which are lurching towards war. Wheat prices already reached their highest levels in almost a decade last year. A number of factors were to blame, including higher fuel and fertiliser prices, poor weather and backlogs at ports exacerbated by the pandemic. A Russian tax on exports, intended to keep excess stocks at home, didn’t help. At Egypt’s latest tender, on January 28th, it paid $350 per tonne, $100 more than what it had budgeted for. At that price Egypt will pay an extra $1.5bn this year for wheat.
Things will probably get worse. When Russia seized Crimea from Ukraine in 2014, wheat prices spiked. Ukraine has since become a grains powerhouse. Last year its wheat sales grew by 28%, making it the fourth-largest exporter of the stuff. Russia comes first. Together they account for 30% of global wheat exports, twice their share in 2014. “Tensions in Ukraine are only going to make wheat prices jump further,” says a trader. “It can easily hit the 400s.
How will that affect the price of bread in Egypt? President Abdel-Fattah al-Sisi knows it is a sensitive issue. When his government signed a deal with thein 2016, it agreed to slash subsidies on petrol, electricity and vegetable oil. Bread was left out. But last year, as commodity prices rose, Mr Sisi reconsidered. He warned that food rations would soon be limited to two beneficiaries per family and that newly-weds would be cut off entirely.
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