Enjoying freshwater from the Nile, Egypt’s agriculture strategy has long focused on high-value, high-profit exportable produce, rather than wheat and other grains. The country was the world’s biggest exporter of oranges in 2020, second-largest supplier of figs, third-largest exporter of dried onions and fifth-largest exporter of raw potatoes, according to CAPMAS. Yet, it is the world’s largest importer of wheat and the fifth largest of sunflower oil, based on U.S Department of Agriculture (USDA) figures.
The war between Russia and Ukraine, which combined supply Egypt with 85% of its wheat and are major suppliers of other commodities, has accelerated the government’s original food security plans. Currently, Egypt cultivates 9.7 million feddans (10 million acres). “We aim to increase our agricultural area by 3 million to 3.6 million acres … through projects [in] Toshka and development of north and central Sinai,” Mohamed El-Quseir, the minister of agriculture and land reclamation, told the media in February, before the start of the conflict.
Accordingly, the state should concentrate on two paths: finding immediate, reliable suppliers of wheat and creating a sustainable agriculture environment that lessens dependence on grain imports. That might not be simple. “Food security is strongly influenced by intricate social, cultural, political, economic and environmental factors,” Leanna Parekh, a reporter for Canada’s World Vision, an advocacy organization, wrote in March.
Egypt’s food security
One of Egypt’s incumbent problems has been its ever-increasing reliance on imported grain, despite decades of efforts to reverse that trend. A case in point is Egypt’s wheat self-sufficiency, which stands at 62% with only four months of reserves as of February, according to El-Quseir.
The USDA reported that Egypt’s wheat imports reached 13 million metric tons in 2021, making it the biggest importer in the world. Additionally, the country was the seventh-largest importer of copra oil and oilseeds (95 and 410,000 metric tons, respectively) and the 16th highest importer of milled rice (900 million metric tons).
According to the Central Bank (CBE), the government spent 56.6% of its non-oil raw material import budget on wheat and maize in fiscal year 2020/2021. They are, respectively, the second and third most costly non-oil imports after cars.
Since the pandemic, ongoing disruptions to global supply chains have caused soaring prices of imported food commodities. “In 2021, Cairo was … facing down food inflation levels not seen since the Arab Spring civil unrest a decade earlier,” said Michael Tanchum, a nonresident fellow with the Middle East Institute’s (MEI) Economics and Energy Program, in a March blog.
The war in Ukraine has only compounded the problem. Finance Minister Mohamed Maait, speaking to Al Arabiya in March, said Egypt will see a massive increase in its overall food import bill this year. Wheat will likely cost about $955 million more than forecast at the start of 2022, noted Maait. International wheat prices increased 32.8% between Feb. 21 and Mar. 28, according to Trading Economics, a data aggregator portal.
Another complication facing the Egyptian government is its food subsidies, particularly wheat, across the entire supply chain. The state sets purchase prices at every stage — from how much the government pays farmers to what consumers pay for subsidized loaves. In March, the state capped the prices of unsubsidized local (baladi) bread.
According to USDA data, before the Russia-Ukraine war, Egypt’s subsidy covered nearly 90% of the cost of subsidized bread. The Ministry of Social Solidarity allocates five loaves per day for every eligible recipient. According to CAPMAS, 88.5% of Egyptian families benefited from the program as of October 2020.
It is a similar story with vegetable oils. The government imports 95% of the commodity, according to the General Authority for Supply Commodities, and sells it at subsidized prices, albeit less aggressively than wheat.
President Abdel Fattah el-Sisi spoke to the media about the unsustainability of Egypt’s food situation in August 2021, saying, “It is time for the [five] piaster loaf to increase in price. It’s incredible to sell 20 loaves for the price of a cigarette.”
Tanchum of MEI noted that raising prices by lowering the subsidy would not be a sustainable solution: “Ultimately, part of Egypt’s long-term solution is to increase its agricultural output by expanding its arable land and further modernizing the farming sector through advanced agri-tech, water management and green energy technologies.”
Step one: find more suppliers
With Russia the world’s largest wheat exporter and Ukraine the fifth, together accounting for 30% of the global supply, it is inevitable that importing countries adjust their sources.
India was the world’s second-largest wheat producer in 2020, according to the 2022 World Population Review published by the U.S. Census Bureau. India’s data shows the country accounts for more than 13.5% of global production, nearly equal to Russia and Ukraine combined.
Despite that, India accounts for less than 1% of total global exports, according to government data. That could change, as forecasters expect the country’s wheat exports will rise to an all-time high of 7 million metric tons. The Indian government said in early March that export contracts delivered between April and June nearly quadrupled compared to a year earlier.
Egypt already is looking to India to secure its wheat needs. In late March, the Indian Agricultural and Processed Food Products Export Development Authority (APEDA) said it was in “final talks” to export the commodity to Egypt. APEDA officials also met with local logistics and transportation officials. In March, APEDA Chairman M. Angamuthu said India is concentrating on “building infrastructure in the value chain [to boost] cereal exports.”
India’s maize farmers also could benefit, as India produces about the same amount as Ukraine, but exports very little. There is no news about Egypt’s plans regarding maize.
However, some worry that emerging countries might increase their dependence on Indian wheat and grains, only to find themselves caught short. Like Egypt, India imposes strict pricing across its supply chain to moderate consumer prices. “It is both a boon and bane,” said Pushan Sharma, an economist for Crisil Research, in a March interview with the Times of India.
The higher international prices would generate foreign currency inflows for India, he said, but that would push up local prices. “If Indian wheat exports rise by 45% to 50% in 2022, it will expectedly push up the price of grain by 8% to 10% from a year ago in the first quarter of the next fiscal year,” said Sharma, adding the government would likely curb price hikes by limiting exports to increase local supply.
India’s Essential Commodities Act and Foreign Trade Act allow the government to restrict or ban exports. Additionally, the government has no free trade policies regarding produce exports. “India is considered … an unreliable trading country because of its government’s random and ad-hoc interventions in agriculture trade,” Sanjeev Sabhlok, a former economist at the Victorian Department of Finance and Treasury in Australia, wrote in a March blog in the Times of India.
In a March press conference, India’s food secretary Sudhanshu Pandey said, “At the moment, we are not worried about prices rising because we have huge stocks and a new crop is about to come.”
Less viable options?
Egypt has other options, including current wheat exporters such as the United States, France and Canada, whose exports increased by 34% in February compared to a year earlier.
It may not be possible for other exporters to replace Russia and Ukraine. The United States was the second-biggest exporter of wheat globally in 2020. However, like the rest of the world, it faces higher fertilizer prices. In 2021, the cost of locally produced fertilizer soared by 80% compared to the previous year due to more expensive natural gas prices. “We already were facing some of the highest fertilizer prices and chemical input costs we’ve seen before this event transpired,” Kansas Wheat CEO Justin Gilpin told Successful Farming in March. “But now with [the war between Russia and Ukraine], it’s just going to put that much more pressure on production, and not just in the United States.”
Russia is the largest producer of fertilizers and their essential components, including natural gas, but now sanctions have severely limited trade. “Maybe we will find one or two options different from Russia, but it’s going to be very expensive,” Malick Niang, a corn and rice farmer from West Africa, told the Wall Street Journal in March.
Additionally, drier weather in the United States and elsewhere has decreased the quality of the last wheat harvest, said the USDA’s National Agricultural Statistics Service in March.
Canada, the world’s third-largest wheat exporter, has similar problems. “Wheat production was significantly reduced due to last year’s drought, and there is not a significant amount of wheat uncommitted and available to the market until the next harvest,” Canada’s Agriculture Minister Marie-Claude Bibeau said in March.
Meanwhile, France, the fourth-biggest wheat exporter, may limit exports if the war in Ukraine continues. During the 2021-2022 marketing season, which ended before the conflict, the government exported 2.5% less wheat than the previous season. According to the French Ministry of Agriculture, the slight reduction was due to allocating more of the harvest to animal feed because of lower overall yields due to unpredictable weather.
The long game
To ensure long-term food security, Egypt needs to start growing more grain to cover the needs of its predominantly young population, growing by 2% a year. That requires more than just connecting freshwater to new desert plots and cultivating them using existing approaches.
The latest agriculture technologies will invariably expedite wheat cultivation using fewer resources than traditional methods. “The idea of intelligent machines running farms is not science fiction,” said Asaf Tzachor, author of a paper published in February by the University of Cambridge’s Centre for the Study of Existential Risk (CSER). “Large companies are already pioneering the next generation of autonomous ag-bots and decision support systems that will replace humans in the field.”
Those artificial-intelligence (AI) solutions use data from satellite images, soil sensors and agricultural machinery to calculate how much, when and where fields need water and fertilizer. Linking that information with advanced machinery would maximize yields and encourage non-specialized investment, noted Tzachor.
Such solutions would be ideal for wheat growers.” Wheat is often grown on large areas, so growing conditions vary from plot to plot,” according to NEC Corp., a Japanese AI company that develops solutions for wheat farmers. “That makes it necessary to apply subtle and precise adjustments to the AI system.”
Another sustainable solution is developing wheat strains more resilient against drier and erratic weather patterns. Leading that research is Australia’s national science agency, CSIRO. A 2019 paper noted its latest wheat strand could boost yields by 20% and “better adapt to changing climates,” wrote Greg Rebetzke, the chief research scientist at CSIRO.
Meanwhile, farmers in South Australia are developing new cultivation techniques that can yield as much as 11.7 metric tons per hectare. “If you go back five years, we were probably growing six and seven, and we thought that was pretty good,” Jennifer Lillecrapp, a project officer at Field Applied Research Australia, told ABC Australia in February. “Whereas now, I think if we’re not getting eight to 10 we’d be pretty disappointed, so you know it has been a phenomenal jump in yields.”
Those high yields result from ongoing research and funding from the Grains Research and Development Corporation, a private sector scientific research firm working with farmers in that region. “We’ve got a thousand plots of wheat and barley dedicated to trying to find the most productive, cheapest, most suitable-to-grow variety in the region,” Nick Poole, the project’s leader, told ABC Australia.
Meanwhile, U.S. farmers use guar (cluster beans) as a crop between wheat seasons to convert hydrogen in the air to fertilizer in the plant or soil. “Guar is a heat-tolerant, drought-tolerant crop,” Calvin Trostle, an agro-economist at Texas A&M AgriLife Extension Service, told Agrilife Today in February. “Climate change makes our climate warmer and drier.”
And guar doesn’t need a lot of fertilizer. “With fertilizer prices as high as they are now, [we need] a variety that … could fix more atmospheric nitrogen and leave residual nitrogen for the following crop, thus reducing the [need for] synthetic fertilizer the following season,” said Trostle. A USDA paper published in 2021 said using guar as an intermediate crop in wheat cultivation would yield immediate improvements.
Implementing solutions from abroad with no customization would likely not yield the same results in Egypt. “Adoption and intensity of adoption of improved wheat production technology is a function of socio-economic, demographic, farmer’s attitude, and institutional factors,” noted a report from Hawassa University in Ethiopia published in January.
Favorable laws and regulations help stimulate wheat R&D and food investment, even when that ecosystem is already active. In March, Scotland passed a law that allows the government to support gene editing of wheat and other crops to produce higher-yielding and more resilient strains. “The National Institute of Agricultural Botany has been using gene editing experimentally in a variety of crops, including wheat, barley, rice and strawberries, for several years,” CEO Mario Caccamo told The Scottish Farmer in March. The new law “will make a big difference to prospects for research.”
Additionally, having a law that aligns with international practices will attract a new type of FDI. The law “marks a small but important step” aligning with other parts of the world, such as Australia, Canada, Japan and the United States,” stressed Caccamo. “Adding a more science-based and proportionate regulatory approach will help unlock … plant genetics, fostering a research environment that encourages innovation in agriculture.”
Supporting individual farmers is equally crucial. The research from Hawassa University found that young, educated, large-scale farmers are most likely to adopt and invest in new technologies. It also noted that farmers who are part of associations that promote such technologies would likely adopt them. Such organizations can ensure all members have easy access and tech support when implementing advanced solutions.
“Smallholder farmers usually face multiple complex production and marketing challenges that hinder the technical efficiency of their agricultural production,” said Dongshi Chen of the China Academy of Rural Development at Zhejiang University, in a paper published in January.
According to an unidentified government official speaking to Al Ahram, Egypt, where half of the farmers own less than 15% of farmland, needs a national strategy to support them.
Chen’s research stresses the role of government in including small farmers in one or more national e-commerce platforms to facilitate access to local and international markets. “By directly matching and connecting buyers and sellers (especially those living in rural regions) via the internet, e-commerce reduces transaction costs and facilitates the exchange of goods, services, information and knowledge,” said Chen.
He noted that the government needs to organize training for farmers and raise their awareness of the benefits of the internet, saying the state also should incentivize them to participate.
Another policy focus should be on formal primary education for farmers to enable them to accept and use e-commerce platforms. Lastly, he stressed the importance of gender inclusion, particularly in rural areas. “Policymakers should use incentives to encourage more women to actively participate in the adoption of e-commerce,” noted Chen.
Those developments will require a lot of investment, given that agriculture is one of the biggest economic sectors and employers in Egypt. According to a USAID report updated in March, agriculture accounts for 11.3% of the country’s GDP and 28% of all jobs. In Upper Egypt, 55% of jobs are related to farming.
The government likely would require international financing to develop Egypt’s agriculture sector, particularly wheat cultivation. In March, Akinwumi Adesina, the African Development Bank (AfDB) president, told Bloomberg that AfDB will help African countries “utilize climate-resilient technologies and increase the output of heat-tolerant wheat varieties.”
He saidAfDB would earmark $1 billion to implement that strategy. “We are going to be really ramping up our efforts to mobilize that money,” said Adesina. “If there was ever a time that we needed to drastically raise food production in Africa, for Africa’s food security and to mitigate the impact of this food crisis arising from this war, it is now.”
The AfDB president said Africa has the potential to look inward to reach continental wheat self-sufficiency. “New methods have already helped Ethiopia raise its wheat production, and it now expects to be self-sufficient … within three years,” he noted. “Surplus production could then be exported.”
To achieve that vision, the African Export-Import Bank announced in January it is developing a real-time payment transfer system for African countries to replace off-continent financial institutions. The African Continental Free Trade Agreement, which opens free trade corridors among 54 of the 55 African countries, will further boost trade on the continent.
In addition, several infrastructure projects connecting African countries are underway, including the $3.2 billion 3,900-kilometer East African railway project involving Tanzania, Burundi and the Democratic Republic of Congo. A $15 billion, nearly 1,000-kilometer highway is also under construction to connect Lagos in Nigeria and Abidjan in the Ivory Coast.
Tanchum from MEI said Egypt also should seek funds from outside the continent, particularly when looking to finance agriculture projects. “Egypt should continue its constructive financing cooperation with the IMF as well as its Arab Gulf state partners,” he noted.
Accelerating agriculture projects in Egypt could have positive regional ramifications in the long term. Said Tanchum: “Establishing joint venture investment partnerships with Egypt to increase local food production could strengthen the fragile state of Egypt’s food security and promote regional agricultural cooperation in the eastern Mediterranean and the Middle East.”