The government announced on Wednesday that Egypt had increased its local wheat purchase price by 10%, to 2,200 Egyptian pound ($45.51), per 150 kilograms (ardeb).

Hossam El Gahary, vice-chairman of the General Authority for Supply Commodities and state buyer, said that the increase is intended to encourage farmers next year to grow more wheat.

Farmers and traders have expressed concerns about the impact of the price increase, given the inflation and currency fluctuations.

Egypt, which is the largest wheat importer in the world, needs more than 8,000,000 metric tons of wheat per year to provide bread subsidies for its 70 million citizens.

The government buys 3.5 million tonnes from local farmers, and imports the remainder.

Some farmers claim that wheat is not profitable despite the higher purchase price.

Mohamed al-Gohary is a farmer in Dakahlia located 135 km north of Cairo.

Beet is a much more profitable crop, with revenues ranging from 54,000 to 94,000 Egyptian pounds per feddan (1.38 acres), compared to wheat's 33,000 to 444,000 pounds.

According to Hisham Soliman, a Cairo-based trader, the expected decline in local wheat production could force Egypt to import additional amounts.

Soliman stated that although the purchase price was higher than other global rates, inflation and currency risk could negate those gains.

He added, "We expect rising fuel and electric costs as well as a possible currency devaluation before the April 2025 harvest." "These factors will erode the profit that we might have made from the higher price of wheat."

Egypt signed a $8 billion economic reform program in March with the International Monetary Fund, which includes subsidy reductions and a freely-floating currency.

Since then, the U.S. Dollar has gained about 55% in value against the Egyptian Pound. Meanwhile, inflation is around 25%. As subsidies are cut, prices of several commodities have increased, including fuel, food, and energy. Further reductions have also been promised.

(source: Reuters)