Egypt.. Wheat Prices Pressure the Cost of Tourist and 'French' Bread

- The Egyptian government is studying the production cost of tourist bread and "French/Viennoiserie" bread and the inputs for production, at a time when the rising cost of flour is putting pressure on bakeries, while the Bakery Division is demanding a review of current prices without any official decision yet regarding any new increase. The discussion of the production cost of bread and inputs took place during an extensive meeting held by the Minister of Supply and Internal Trade, Sherif Farouk, with the General Bakery Division and the Grain Industry Chamber, where the meeting addressed the milling and bread systems, the availability of free flour, food industry supplies, and the production cost of tourist and Viennoiserie bread, in addition to monitoring the markets.

Sherif Farouk stated that the ministry continues to take the necessary proactive measures to secure the country's wheat needs, alongside working to diversify import sources from several countries, which enhances the stability and diversity of supply sources and limits the impact of fluctuations in global markets, in addition to the quantities received from local wheat during the current season. Farouk confirmed the continuation of intensified monitoring campaigns on markets, mills, and bakeries, monitoring the movement of flour trading, ensuring compliance with the established regulations, and addressing any practices or unjustified price increases, or any practices that could affect the availability of flour or bread and food commodities, while taking legal action against any violations that are detected.

Abdullah Gharab, the head of the Bakery Division at the Federation of Chambers of Commerce, stated that the price of a ton of flour has risen from about 17,000 Egyptian pounds when prices were set according to the previous ministerial directive to about 21,000 Egyptian pounds currently, an increase of 4,000 pounds per ton, which puts pressure on the production cost of tourist and "French" bread, amid rising wheat import costs and supply chain disruptions. These developments come at a time when global wheat trade is facing disruptions in the Black Sea region, which is one of the main areas in wheat trade.

Gharab explained, in exclusive statements to Afaq News in Arabic, that the increase in the price of a ton of flour equates to about 400 pounds (7.6 dollars) in the price of a 100-kilogram flour sack, and about 200 pounds (3.2 dollars) for a 50-kilogram sack, pointing out that the rising cost of flour is reflected in the prices of tourist and French bread, while subsidized local bread remains subject to the support system managed by the state. The cost of wheat for importing countries is not limited to the price of the commodity in the country of origin, as it is also affected by transportation, shipping, insurance costs, and supply routes, which are factors that change with international trade disruptions.

The Egyptian government had set the prices of tourist bread and fino and their weights last March, while the Bakeries Division believes that the rising cost of flour necessitates a reconsideration of the prices set according to the previous ministerial directive. Ghareb pointed out that the division believes the current prices need to be reviewed in light of the new increase in flour costs, especially since the division is talking about an increase of nearly 15% on the existing prices according to the new cost. However, he clarified that this increase has not yet received the approval of the Minister of Supply and Internal Trade, and the matter is still under study, with the minister monitoring market developments during this week, and a meeting will be held next Sunday to discuss the matter.

In response to disruptions in global wheat markets, the Egyptian government is working to diversify its sources of import, focusing on France and other European suppliers, and enhancing cooperation with Bulgaria and Romania, amid disruptions facing some traditional supply routes. Ghareb stated that the available quantities of flour are sufficient to meet the needs of bakeries, noting that there is a strategic stock sufficient for about 6 months, and that the state is moving towards diversifying its sources of wheat imports in light of the problems facing some supply sources, with a focus on France and other wheat-producing countries.

Egypt has increased its local purchases of wheat in the current supply season, while the government continues to explore mechanisms to secure additional quantities, and the Ministry of Supply is in talks with the Future Egypt Authority and the Ministry of Finance to purchase additional quantities of wheat. The head of the Bakeries Division pointed out that the increase in the price of a ton of flour by 4,000 pounds represents a direct increase in the cost of a key input for bread production, and that the division is awaiting the results of the Ministry of Supply's study before determining any change in prices.