Africa: Egypt Partners With Sudan to Grow Wheat

[Dr. A ♥ O 203]

Africa: Egypt Partners With Sudan to Grow Wheat

Business Daily (Nairobi)

12 May 2008

Posted to the web 12 May 2008

Steve Mbogo

Egypt has announced that it is to partner with its southern neighbour Sudan to till up to two million acres of new land to grow wheat.

The country is facing unprecedented food crisis with its subsidised bread system facing a major credibility test after bread shortages caused riots in some parts of the country last month.

Agriculture Minister Amin Abaza announced in the past week that new land close to the shared border town of Wadi Halfa will soon be used to grow wheat in a joint project to help both countries become self sufficient in wheat.

Egypt's 80 million people consume about 14 million tonnes of wheat every year. But the country is only able to produce about eight million tonnes. The rest is imported using aid money provided by the United States, which enables the government to subsidise a certain type of bread popular among the population by up to 96 per cent, according to Egypt's Central Agency for Public Mobilisation and Statistics.

Details of the joint project between Egypt and Sudan will be ironed out on May 23, a senior government official said here. Both governments said it will cost about Sh130 billion Kenyan money equivalent to reclaim and develop enough land to grow two million tonnes of wheat every year.

While data on Sudan's wheat consumption was not available, the country imports about two tonnes every year and is facing significant food crisis. Officials, however, said more land will still need to be found because it would take about 4 million extra acres of land to cover the wheat deficits of the two countries. By developing the project, both countries are hoping to save on other costs associated with imports like freight and insurance.

Egypt's wheat shortage has transformed from a social to security and political challenge because of the enormous popularity of bread in the Egyptian society and its use as a political stability balancing tool. Data mined from the local media shows that the country has 23,664 bakeries translating into one bakery for every 3,380 citizens. But commentators say that is not enough and the number of bakeries should be increased.

President Hosni Mubarak ordered the government to use foreign exchange reserves to buy additional what and increase spending on bread subsidies, which are allocated 5.5 per cent of the total national budget. Overall, Egypt spends about $3.1 billion or Sh200 billion on food subsidies every year.

The country receives an almost equal amount in US aid, but not all of it used for food subsidies.

The president also ordered the army and the police to increase their bread outputs to help meet civilian bread demand. The Egyptian government provides highly subsidised foods as a guarantee to social peace; the public gets cheap food in return for peace and support for the government.

High food and oil prices here as in the rest of the world have led to rise in inflation pressure. Central Bank of Egypt Monetary Policy Committee reported in a statement posted on its website that that headline consumer price inflation has maintained its upward trend reaching 16.4 per cent in April compared to 15.8 per cent in March while domestic food inflation reached a high of 22 per cent.

The bank subsequently raised lending rates on Saturday, a third time this year after expectations that inflation will continue Recent price hikes of fuel and cigarettes to generate additional tax to cover wage increases announced before the May 4 general strike over low wages and high prices.

The Central Bank has already raised interest rates this year, by 50 points in March and another 25 in February in attempts to stem out of control inflation hitting the North African nation.

The Central Bank said despite tentative signs of moderation in international wheat prices, "domestic inflation outlook is affected by the latest regulated price adjustments."

Source

[Nagishkaw 510]

Well, they have to do something, I suppose.