Wheat grain cascades from cut sacks on a delivery truck at a government-operated mill in central Fayoum, Egypt, May 2022. Islam Safwat/Bloomberg via Getty Images
Russia is the world’s largest exporter of wheat and Ukraine the world’s fifth largest. As grain piled up in silos and cargo ships were halted at ports, alarm rippled through countries of the Middle East and North Africa that depend on wheat from this region. Although grain started to move again through the Black Sea after the United Nations and Turkey brokered an agreement in July, exports remain lower than before. With the grain deal set to expire next month and the ongoing conflict disrupting agricultural production in Ukraine, uncertainties remain about grain flows from this region.
For Egypt, this conflict has stirred deep anxieties. Egypt depends on imported wheat, and in recent years the vast majority of these imports have come from Russia and Ukraine. Imported grain provides half the flour that goes into a subsidized bread program which feeds some 72 million Egyptians on a daily basis. This staple is a cornerstone of Egyptian diets. It is readily available, filling and for as long as most can remember reliably cheap, having been subsidized since the 1940s.
To the governing regime, the maintenance of Egypt’s bread subsidy is a matter of national security. Egyptian politicians often invoke the possibility of a bread riot to explain why the provision of cheap bread is a “red line” that cannot be crossed. Frequently, they refer back to 1977 when, under pressure from the International Monetary Fund, the government sought to increase the price of fino, a soft white roll, which was at that time subsidized, resulting in two days of riots in which at least 77 people were killed and 214 wounded.[1] Although this uprising was also a response to the government cutting other subsidies and freezing state wages (so-called bread riots are seldom about bread alone), the common reference to the bread riot illustrates how this staple food figures in the Egyptian political imagination.
Thus, when war in a country far removed disrupts the global grain supplies on which subsidized bread production depends, the specter of unrest looms. It takes 9 million tons of wheat a year to produce the five daily loaves to which most Egyptians are entitled. Small-scale, privately-owned bakeries are responsible for baking and selling this bread, but it is up to the government to ensure that these bakeries have sufficient flour and to make up the difference between the cost at which the bread is sold (5 piasters a loaf, or one fifth of one US cent) and the cost of production (currently estimated to be around 80 piasters).
The government buys some wheat from Egyptian farmers, most of whom grow this crop during winter months, producing a domestic harvest of 8.5 to 9 million tons.[2] But even though the government is the sole purchaser—having prohibited exports and sale to the private sector— just a fraction of the harvest goes into subsidized bread; most farmers keep some of their wheat to make homemade bread. As a result, during the domestic procurement season, which lasts from April through June, the government typically buys only enough wheat to provide flour for about five months of subsidized bread production. The remainder, it has to import.
Long before the war on Ukraine, Egypt’s reliance on grain imports was a source of concern. Newspaper articles often comment on this vulnerability. “He who does not own his food does not own his freedom,” remarked one journalist, writing in Al-Wafd newspaper in 2016.[3] It also comes up in everyday conversations. In 2015, when chatting with a woman in the village in western Fayoum where I was conducting fieldwork, she commented out of the blue, “You know, Egypt has to import wheat,” going on to suggest the country should reclaim more desert land for wheat cultivation, “so we’d produce enough wheat for ourselves.” Political leaders are always seeking to reassure the public that the nation’s wheat supply is secure, praising harvest totals, issuing press releases about every grain shipment that arrives at Egyptian ports and broadcasting the number of months worth of grain stored in silos. It is not surprising, therefore, that the outbreak of a conflict between two countries that have been major sources of imports for Egypt in recent years is provoking considerable anxiety, both for government officials and on the streets.
Maximizing Domestic Wheat Procurement
In response to the Russian invasion of Ukraine, President Sisi issued a directive asking the government to maximize its purchase of the 2022 Egyptian harvest, setting a goal of 5.5 to 6 million tons. This was significantly more than the 3.6 million tons it had purchased the previous year. [4]
In pursuit of this goal, the government introduced measures to encourage Egyptian farmers to sell rather than keep their wheat. It increased the price it would pay for grain and created an additional monetary incentive for every 150 kilograms of wheat delivered to the government. It also set a requirement that farmers sell a minimum of 1.7 tons of wheat per feddan, an area of land roughly the size of an acre. Such delivery quotas, along with mandatory crop area allocations, were a hallmark of Egypt’s centralized agricultural system in the 1950s through the 1980s. But they go against the grain of the neoliberal reforms introduced from the late 1980s, which removed most government controls on agricultural production.
With average yields being 2.7 tons of grain per feddan, most farmers would have been able to meet this requirement while keeping some grain for household use. But in marginal lands—like those of western Fayoum—yields are typically closer to 1.8 tons per feddan. For farmers in these areas, the government requirement to sell 1.7 tons per feddan undoubtedly had a major impact on their household provisioning. By the end of the 2022 procurement season, the government reported having purchased 4.2 million tons of Egyptian wheat, falling short of its goal and suggesting that its efforts may have met some resistance.
In addition, the government has made bold claims about the potential for wheat cultivation in the desert. Officials suggest a solution to Egypt’s agricultural dilemmas might be found in the Toshka Scheme, for example, a reclamation project west of Lake Nasser begun in the late 1990s but largely stalled until recently. They also point to new projects inaugurated by President Sisi, such as the “Egyptian Countryside” project in the Western Desert and “Egypt’s Future” initiative west of the Nile Delta. Despite the fact that a series of large-scale efforts to reclaim the desert since the 1950s have failed to meet their targets—hampered by poor soils, limited water and the logistical challenges of farming remote areas—politicians confidently tout the hundreds of thousands of tons of wheat soon to be grown on these lands. Whether or not these plans are realized, the inauguration of large projects and publicizing of figures for wheat that will be grown do important work, reassuring the public that the government is striving to secure the nation’s wheat supply.
Exploring Alternative Foreign Sources of Wheat
At the same time as the Egyptian government has expanded its domestic purchase of wheat, it has sought to diversify its foreign sources. The government has long been aware of the vulnerabilities that come from overreliance on particular countries for its wheat imports. But it is unwilling to import from just anywhere around the world. The General Authority for Supply Commodities—the government agency responsible for imports—has an approved list of the countries from which it will purchase based on their ability to meet its criteria for quality. Over the past year, Egypt has imported wheat from France, Romania, Bulgaria and Germany, in addition to the shipments from Russia and Ukraine that managed to get through after the grain deal was signed. It has also explored new sources, signing an agreement to import wheat from India.
As the government looks to more distant countries, one of its concerns is the increased transportation costs. Indeed, proximity is a primary reason why countries of the Black Sea have become such dominant sources for Egypt’s wheat. Historically the United States, for example, was a major source, due in part to the P.L.480 Food for Peace program—a program designed to address US agricultural surpluses and further foreign policy goals—through which subsidized grain was shipped to Egypt. But higher shipping costs have rendered US wheat largely uncompetitive.
The government therefore faces the prospect of increased expenses as it continues to source flour for subsidized bread, partly due to freight costs and partly due to rising global wheat prices. According to projections by the World Bank, the cost of importing wheat for Egypt’s subsidized bread program may nearly double, from an annual expenditure of $3 billion to $5.7 billion.[5] This change is putting pressure on the budget: For the 2022-2023 fiscal year, the government raised its budget allocation for bread and food subsidies by EGP 3 billion, reaching EGP 90 billion.[6]
The Future of the Bread Subsidy
It is difficult to imagine a future scenario in which Egypt runs out of wheat. Bread is just too important. But what will be the costs of meeting Egyptians’ high demand for this staple food?
One option the government is exploring for reducing reliance on wheat is the addition of other things, like sweet potatoes, to the bread. Past efforts to add maize and rice flour to wheat bread, however, faced technical challenges and generated complaints about taste, calling into question the feasibility of such initiatives.
In addition, the government has taken provisional steps to reduce demand, using the electronic ration card system that it introduced in 2015. Under this system, only those with ration cards can get bread at the subsidized price. In an incentive to limit their consumption below the allotted five loaves per day, they are able to exchange unused bread points for other subsidized goods, such as tea, cooking oil and sugar. In 2019, the government tightened the eligibility criteria for obtaining a ration card, removing some people from the program. But the vast majority of Egyptians—about 70 percent of the population—remain eligible and further efforts to reduce access would be controversial. Even among middle-class Egyptians, who may be living above the poverty line but are far from affluent, bread is highly valued as a form of sustenance that is reliably inexpensive, whatever the fluctuations in other market prices. It is a food that can be turned to when times are tough.
As the conflict in Ukraine becomes protracted, a key question is how the government copes with the cost of purchasing grain either from farther away, with larger freight costs, or at higher prices due to an uptick in global grain markets. In June 2022, the Egyptian government signed a $500 million loan agreement with the World Bank to help finance its grain imports. This project—specifically designed to support the subsidy and ensure the uninterrupted supply of subsidized bread—represents a notable turnaround from bank officials’ previous critiques of the subsidy for being overly costly, inefficiently operated and poorly targeted. The bank’s openness to supporting the program suggests that the recent reforms have addressed at least some of officials’ concerns about the subsidy getting to those who need it the most.
A critical concern among the poor is that the budgetary pressure could lead the government to raise the price of bread, which has been 5 piasters since 1989. Although the government has reduced the size of the loaves over the years, the five piaster price has become the marker of an affordable staple and a valuable symbol, one wielded by the government to proclaim its support for the people. Under pressure from international financial institutions to reduce expenditures and reform the economy, the government has shown its willingness to whittle away other forms of social support, but it has, thus far, refused to raise the price of bread, fearful of the instability such a move might produce.
Recent indications suggest, though, that political leaders may be contemplating a change. During a press conference in 2021, President Sisi expressed skepticism about the feasibility of maintaining this price, commenting that “It’s incredible to sell 20 loaves for the price of a cigarette.”[8] Since then, officials have stated that they are looking into different options, though they have yet to announce any further steps. With high rates of inflation and the spiraling of other costs of living generating considerable hardship and discontent—conditions that were also seen in the run up to the 2011 revolution—the government is no doubt wary of what an increase in bread prices might mean for internal stability. Indeed, despite reports that IMF officials pressed for a complete lifting of the bread subsidy during recent loan negotiations, when the $3 billion loan agreement was signed in December 2022 it contained no stipulation for a change in the bread program (fuel subsidies, on the other hand, were targeted for further cuts).
As policy makers and international experts continue to consider various options for reforming the bread subsidy and conflict in a major area of wheat production and exports continues, it is important to appreciate what is at stake. Subsidized bread is not just an object of policy. It is something that enters into the homes and bodies of tens of millions of Egyptians, which satiates their hunger and makes their meals whole. It is part of their lived experience of security.
[Jessica Barnes is Associate Professor in the department of geography at the University of South Carolina.]
Endnotes
[1] Timothy Mitchell, The Rule of Experts: Egypt, Technopolitics, Modernity (Berkeley: University of California Press, 2022), p. 249.
[2] Data on Egypt’s domestic grain harvest can be found in FAOSTAT, the database of the Food and Agriculture Organization of the United Nations.
[3] I. Al-Gindi, “Al-qamh nuqtat diʿf al-falah al-misri,” Al-Wafd, March 6, 2016.
[4] USDA FAS Report, Grain and Feed Annual Import Challenges and High Prices Reduces Egypt’s Wheat and Corn Imports, March 28, 2022.
[5] World Bank Report: “Project Appraisal Document: Egypt—Emergency Food Security and Resilience Support Program,” (June 13, 2022), p. 10.
[6] USDA Foreign Agriculture Service Report: “Egypt Grain and Feed Update,” October 4, 2022.
[7] Ibid.
[8] Omar Fahmy, “Egypt’s Sisi Calls for First Bread Price Rise in Decades,” Reuters, August 3, 2021.
