Miller Magazine Issue: 148 April 2022

105 COUNTRY PROFILE MILLER / APRIL 2022 in production cost. The current cost of subsidizing one loaf of baladi bread is EGP 0.60 ($0.03). The Ministry of Supply and Internal Trade is always trying to raise the efficiency of the bread and food subsidy system management to prevent any type of leakage (waste of sub- sidy resources) in addition to increasing the effectiveness of the system so that it has a positive impact on the subsidy recipient. Better targeting could reduce inefficiencies in the wheat sector and reduce consumption. MoSIT has been studying several options to improve its bread subsidy program, such as the potential of switching to a conditional cash bread subsidy. Unfortunately, the cur- rent ramifications of the Russian– Ukrainian conflict put the implementation of these reform measures on hold for the time being. This system would have enabled beneficiaries to buy their actual bread needs, reducing consumption, and reducing the cost of the bread subsidy program as a whole. The sub- sequent savings could then be invested in more targeted food security and nutrition interventions, in addition to improving the efficiency of bread production and increasing competi- tion between bakeries which will in turn en- hance bread quality. In fiscal year (FY) 2021/22 (June – July), the government allocated $5.5 billion for bread and food subsidies. Of this amount, roughly $3.2 billion is earmarked for the bread subsidy program. Another $2.3 bil- lion is allocated to the supply commodities (i.e. rice, cooking oil, sugar, chicken, and beef). The Egyptian Ministry of Finance es- timates an additional cost of $761 million - $952 million above the current fiscal year’s budget as a result of surging global wheat prices. MILLING CAPACITY The Baladi bread program uses both imported and locally grown wheat. In practice, the two types of wheat are blended together before milling. As a result, blending with imported wheat is important to achieve the right quality of flour. Egypt currently has more than 410 pub- lic, public/private, and private sector mills with total investments of more than $1.5 billion. Public mills and public/private mills produce 82 per- cent extraction flour, which is used for making the subsi- dized Baladi bread. They produce 70 percent of all the flour going to the Baladi bread subsidy program, while private mills produce the remaining 30 percent. WHEAT STOCKS FAS Cairo forecasts Egypt’s ending stocks in MY 2022/23 at 4.36 MMT, up by 7.4 percent from Post’s MY 2021/22 es- timate which remains unchanged from USDA official esti- mate. This is due to higher production and lower consump- tion. GASC normally keeps a four to six month supply of stocks (including wheat) in the import pipeline, with an ad- ditional one-month supply of wheat in transit to Egypt. Over the course of several years, Egypt raised its capabilities to store wheat from 1.6 MMT to 4 MMT in modern silos, as well as modernizing old storage facilities with 1.5 MMT capacity, and as a result, increased its strategic stockpile of wheat from three to six months. This enables the state to deal with any rise in global commodity prices as this reserve secures food demand by the Egyptian market for a period of time until prices resume a downward trend. Wheat Production, Consumption and Imports in Egypt (1000 Tons) 2020/2021 2021/2022 2022/2023 Production 8900 9000 9800 Consumption 20600 20500 20000 Import 12149 12000 11000 Source: USDA Rice Production, Consumption and Exports in Egypt (1000 Tons) 2020/2021 2021/2022 2022/2023 Production 4000 2900 2900 Consumption 4300 3800 3800 Import 223 600 600 Source: USDA Corn Production, Consumption and Exports in Egypt (1000 Tons) 2020/2021 2021/2022 2022/2023 Production 6400 7440 7440 Consumption 16400 15800 16350 Import 9633 9200 9200 Source: USDA