Concerns over reduced wheat prices

The Egyptian government is hesitant to announce the prices for local wheat supplies due to concerns  with the decline in wheat production as a result of lower prices last year.

Last year, the government linked the price of local wheat to international prices, said a government source, and as a result, international prices are lower this year.

Prices will remain between LE280 and LE350 per ardeb (1 ardeb = 150 kg) depending on the quality of wheat crops. However, due to price decreases last year, several farmers and traders have complained about the small profit margin, said the source.

The price of agricultural products, specifically wheat, is not arbitrarily set, as some people believe, he said. There are, however, specialized committees in charge of setting prices in accordance with certain rules, the most important of which ensures an appropriate profit margin for farmers, he added.

If local prices greatly surpass international prices, farmers will begin importing wheat for use in the local market, he said.

Meanwhile, members of the Grain Cultivation Association expressed their concern over the continued delays in announcing the prices of several basic crops, including wheat. It is natural that the cost of supplying local wheat exceeds international costs, due to its high quality, said Ali Abdel Aziz, a member of the association. The local wheat, he noted, is of a high quality, pursuant to specifications set by the Supply Commodities Authority for imported wheat.

"If the government sets the same standards for imported wheat, as those applied to Egyptian products, the  price of the latter will be significantly more expensive than imported wheat," he added.

Abdel Aziz expects wheat production to decrease this year due to reduced prices, pointing out that farmers will resort to growing crops with a higher profit margin which are less costly than wheat.

Hussein Ali, a farmer in the Daqahlia Governorate said farmers will move to alternative crops like beets and clover, rather than wheat, since there is no need to grow wheat in light of the government’s insistence on maintaining low supply prices which are not compatible with the actual cost.

The government, he said, has to announce prices early this month, which is when farmers will decide what types of crops they will grow. The postponement of the announcement is an implicit indicator that the prices will not be encouraging, he said.

Translated from the Arabic Edition.

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