World Grain - December 2021 - 66

FEATURE: OPTIMIZING EGYPT'S WHEAT IMPORT PROCESS
Hardware infrastructure upgrades
With progress being made on the software infrastructure,
another goal that must be realized, Prikhodko
said, if Egypt is to optimize its food security, is modernizing
its grain " hardware infrastructure. "
" This is where our partners from the development
banks come in, " he said. " They have big grain supply
companies as clients, and they are the ones investing
in infrastructure. "
What that will entail is modernizing grain handling
equipment and increasing storage capacity at the port
terminals, which are among the most congested in the
Middle East.
Egypt's love affair with bread:
A miller's perspective
As the managing director of one of Egypt's largest flour millers,
Khalid Al-Hazaa of Al-Hazaa Group understands the importance
of bread in Egyptian society and why the government has gone
to great lengths to keep bread prices at just pennies per loaf
over the last 30 years.
But with the global wheat market under strain from COVID-19
lockdowns, supply chain problems and disappointing harvests in
major wheat producing countries, Khalid Al-Hazaa said he also
understands why the Egyptian government may have no choice
but to reduce the subsidy.
" Reducing the bread subsidy will cause increased demand on
unsubsidized bread that is produced using the private sector's
flour, " he said. " This will open new opportunities for private flour
mills in Egypt and for investments in the Egyptian milling industry,
which makes it one of the most promising markets in the field. "
While Egypt's state grain buyer, General Authority for Supply
Commodities (GASC), imports wheat mostly from the Black Sea
region, Australia and France for its bread subsidy program, AlHazaa's
two Egyptian flour mills source most of their wheat from
the United States, Canada, Australia and Russia. Khalid Al-Hazaa
said his company has strong relationships with multinational agribusiness
companies such as Cargill, Louis Dreyfus, Archer Daniels
Midland Co. and others.
" The milling industry in Egypt is enormous and growing rapidly
year by year, " he said. " And despite the big competition in the
Egyptian market, it is one of the promising markets in the Middle
East in terms of consumption and growth. This is due to many
reasons such as location and quick population growth. "
The Egyptian government prohibits private millers from producing
82% extraction flour, which is what is used in the bread
subsidy program. But Khalid Al-Hazaa said his company is making
inroads in the market with 72% extraction flour that is used for
products such as Arabic bread, Shrak bread, fino bread, noodles,
pasta, biscuits, pasteries and other bakery products that are sold
under the brand names Platinum Flour, Dream Flour, Al-Asfar
and El-Moatamayez.
66
" I think there has already been quite substantial investment
there, " he said. " At the moment it's mostly
by the government, but we have also seen some private
sector investment in the ports. "
A more long-range infrastructure goal is to utilize
barge transportation to move grain along the Nile River,
Prikhodko said. He noted that the EBRD has financed
barge transportation systems in other countries that has
reduced the burden on their trucking industries.
" Right now, in Egypt, all 12.5 million tonnes of wheat
are moving by trucks through very densely populated areas, "
he said. " The Nile can be used as a navigation channel
to supply grain to Cairo and work to the same extent
that the Mississippi River works in the United States. "
Public-private cooperation
Prikhodko explained that 60% of annual wheat imports
are handled by the government through tenders issued
by the GASC and is targeted for its bread subsidy program,
while the private sector supplies its wheat to
the Egyptian milling sector where it is converted into
bread, pasta or other wheat products.
" The Egyptian government and the private sector are
destined to work together, " he said. " They are operating
as market players in the same market. I think from
that standpoint we are quite happy that we have facilitated
and established a dialogue on the specific sector
issues that I have mentioned. "
And because of this cooperation, Prikhodko is optimistic
that the protests like the one he witnessed in
the streets of Cairo in June 2013, when the FAO and
EBRD met there to discuss the project, will not return.
His hope is the work they are doing will help prevent
that scenario by ensuring that Egyptians continue to receive
their daily bread at an affordable price.
" Bread is so fundamentally important in the Egyptian
culture and diet, " he said. " It plays an important role
and touches the hearts of Egyptians. "
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December 2021 / World Grain / World-Grain.com
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World Grain - December 2021

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