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The Role of Bread in Maintaining the Egyptian State

Eat like an Egyptian - Bilal Randeree

Egypt is remembered around the world for the events of the “Arab Spring” of January-February 2011, centred around Tahrir Square which saw President Mubarak stand down. Since then there have been further upheavals and a continuing insurgency in the Sinai Peninsula. Social unrest remains a problem, and the economy has failed to grow sufficiently to support the country’s rapidly growing population.

Egypt population

Figure 1 Changes in the Egyptian population

Corruption is also a widespread problem, for example Reuters detailed in 2016 how the Egyptian government’s wheat supply chain was riddled with corruption, from fraudulent wheat purchases by local suppliers to hacked smart cards that allowed bakers to steal flour. This report was confirmed in August 2016 by a parliamentary report that stated that, “There are obvious flaws that rise to the level of complicity in the supply ministry and all of its bodies supervising the wheat procurement system.”[1] Wheat is a major problem for Egypt, the price of wheat is subsidized in order to feed its population. Egypt is the world’s biggest wheat importer and the General Authority for Supply Commodities (GASC) of the Ministry of Supply and Internal Trade of Egypt (MoSIT) alone is the world’s biggest wheat purchaser.[2]

The FAO noted in 2015 that, “The Egyptian Government is heavily involved in the wheat value chain at all levels. Not only does it import more than one-third of all wheat imported into Egypt and represents the sole purchaser of domestic wheat, but it also owns an important share of storage capacity and more than half of the milling capacity of the country.”[3] In particular the Government ensures the supply of heavily subsidized baladi bread to the population, a third of whom are below the poverty line. The cost of the baladi bread programme was about EGP 11 billion (USD 1.815 billion) p.a. in 2011/12.[4] The bread subsidiary programme is therefore very expensive, in the financial year 2014/15  Egypt spent $5 billion on its subsidized bread programme.

Wheat is central to the maintenance of the Egyptian state, the Bread Riots of 1977 killed scores of people and high bread prices and related shortages were a factor in civil unrest in 2007, 2008 and 2011. It is not an exaggeration to say that the survival of Egyptian Governments is dependent on the supply of bread to the masses.

The behaviour of the Egyptian Agricultural Ministry and the GASC during 2016 have also highlighted the failures of Egyptian bureaucracy. In 2016 the Agricultural Ministry banned the import of wheat with any ergot fungus, a higher standard that required by other international purchasers, these requirements also contravened GASC’s tender specifications, which limited ergot to no more than 0.05%, which was in line with the Codex Alimentarius’ standard. As a result wheat cargoes have been turned away from Egypt and suppliers have refused to tender for supply, on the 31st August 2016 only one company tendered to supply, and the tender was cancelled (the fourth time that this had happened in the year). The US Foreign Agricultural Service, concluded, “These burdensome inspection and phytosanitary requirements add a premium to an already burdened economy that ends up eating away at the country’s precious foreign exchange, while saddling its consumers with higher food costs. It is in Egypt’s best interest to revise these standards and bring them in line with those of the global trading community.”[5] The costs are higher because the only suppliers prepared to bid have put a premium on the normal world price for wheat to compensate for the risk of cargoes being refused by the Egyptians.

Egypt maintains stockpiles of wheat, and in the medium term the country will increase its dependence on imports, as its population grows and its local production falls. As the USDA noted, “In the next few years however, with more limited Nile water availability looming due to the construction of Ethiopia’s Renaissance Dam and because of heat stress issues and assuming salinity problems in the Northern Delta persist, absent the development of especially drought-tolerant seed varieties, a gradual reduction in planted area of wheat, rice and corn is expected.”

Wheat, or rather bread, therefore serves to encapsulate Egypt’s problems; a growing population, water stress, salinity in farmland, climate change, corruption, incompetent bureaucracy, foreign exchange issues, wastefulness, and the fear of social unrest.

The failure of its economy to grow, and the collapse of the Egyptian Pound in 2016 placed major pressures on its foreign reserves, at a time when transfers from Egyptian workers in Arabia have been falling. Its population had rocketed to over 91 million in 2015, but this is predicted (by the UN) to grow to 200 million by 2100. As Figure 5 shows a high proportion of the population is under 30, and so the high levels of youth unemployment may be a source of future social unrest. In 2016 Egypt agreed to borrow $12 billion from the IMF, and to start internal reforms, but as The Economist noted that there were serious problems, with an unemployment rate over 40% for young people, “The education system is broken, so much so that the jobless rate is actually higher for university graduates than for the near-illiterate.”[6]

As noted previously, Egypt’s economy is one of the most vulnerable to sea level rise, and it is estimated that a one metre rise in sea level would take approximately 12.5% of Egypt’s agricultural land, and reduce its GDP by over 6%. I have also referred to David Montgomery and his concerns that irrigation, facilitated by the Aswan High Dam, has resulted in water logging of soils and subsequent salinization.

Chris Jarvis of the IMF said in August 2016 that, “Egypt is a strong country with great potential but it has some problems that need to be fixed urgently.”[7] There have been many large scale developments in Egypt since the time of Nasser, and few have achieved success, even the Aswan High Dam may prove to be a liability in the long run because of the associated problem of salinization. David Sims said, talking about the focus on developing the Egyptian desert, “The desert allows the government and a whole raft of cheerleaders to concentrate on the desert and ignore the reality of existing urban pressures. Land reclamation and desert development are all part of the manufacture of hope. Dulling the people’s frustration with big government pronouncements has been going on for many years, in phases. It has been around since Nasser with the New Valley, with Sadat with the new towns program, with Mubarak, and now under the present government.  They all talk about opportunities for youth. The record of the smallholder reclamation graduate program in the desert has not been a very good one.  It’s costly, badly run, and has had no effect on getting people out there.”[8]

The stresses imposed on Egypt by climate change, population stress, and poor governance are likely to worsen in the 21st century, it is the largest Arab state and arguably the one under the greatest stress, apart from Yemen.

[1] Knecht, Eric & El Dahan, Maha – “Egypt’s government complicit in wheat corruption – parliamentary report”, Reuters, 28 August 2016, http://uk.reuters.com/article/uk-egypt-wheat-corruption-idUKKCN1130JE, accessed 29 August 2016

[2] “Egypt: Wheat Sector Review”, Food and Agriculture Organization, UN, Rome, 2015, p.xi

[3] “Egypt: Wheat Sector Review”, Food and Agriculture Organization, UN, Rome, 2015, p.66

[4] “Egypt: Wheat Sector Review”, Food and Agriculture Organization, UN, Rome, 2015, p.72

[5] Wally, Ahmed, USDA Foreign Agricultural Service – “Egypt, Grain and Feed Annual Report, Foreign Exchange Crunch and Unusually Restrictive Trade Measures Affect Wheat Imports and Continued Mishandling of Rice Export Policy”, 10 March 2016

[6] “Egypt reaches a deal with the IMF”, The Economist, 12 August 2016

[7] “Egypt reaches a deal with the IMF”, The Economist, 12 August 2016

[8] Sims, David – “David Sims takes a hard look at Egypt’s struggling desert development”, Interview on the American University in Cairo Press Website, February 2015, http://www.aucpress.com/t-enewsletter-DavidSims-February2015.aspx?utm_source=newsletter&utm_medium=email&utm_campaign=february2015, accessed 30 August 2016, see also David Sims – “Egypt’s Desert Dreams”, AUC Press, Cairo, 2015

(c) Andrew Palmer 2016, not to be reproduced.

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