Egypt sets aside $1.4bn to buy domestic wheat
Cairo, April 11, 2014
The Egyptian government has set aside "around 10 billion Egyptian pounds" ($1.4 billion) to buy wheat from local farmers, the Supplies Minister said, as the world's top wheat importer aims to encourage domestic output and reduce its import bill.
Minister Khaled Hanafi told Reuters the amount would be enough to cover "all (that) farmers deliver" and reiterated that the government sought to purchase 4 million tonnes of the local crop.
The figure is a significant jump from the 7 billion pounds that the agriculture minister cited last month.
The government will begin buying wheat from farmers next week during a harvest season that runs through June.
Traders surveyed in a Reuters poll estimated this year's crop at around 7 million tonnes, in line with the previous harvest.
Private traders' estimates for the local crop are consistently below government estimates.
The Agriculture Minister has said this year's harvest would produce 9.5 million tonnes and put the figure for last year at close to 10 million tonnes.
The government typically buys 3.6 million tonnes of wheat a year from local farmers. The state and private buyers purchase around 10 million tonnes from abroad.
Last year the government raised the fixed price it pays for local wheat to 420 pounds per ardeb from 400 pounds, with the aim of encouraging farmers to grow wheat and lessen reliance on imports.
An Egyptian ardeb is the equivalent of about 150kg. The local price exceeds the price Egypt pays in the international market by more than $100 per tonne.
Meanwhile, two wheat cargoes purchased by Egypt are stuck at Russia's Novorossiisk port, after the trade house selling the grain had problems opening the importer's letters of credit, traders said.
Egypt's state wheat buyer the General Authority for Supply Commodities (GASC) bought the two 60,000-tonne shipments from global commodities trader Cargill in a February 27 tender for March 15-31 shipment.
Cargill declined to comment and GASC was not immediately available. - Reuters