Solving Egypt's Wheat Shortage Through Spurring Nile-Based Agriculture
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Solving Egypt's Wheat Shortage Through Spurring Nile-Based Agriculture
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By Davis Mwania, Research Analyst, Botho Emerging Markets Group
August 1, 2022
What began as a national disaster on 24th February when Russia invaded Ukraine has become a global crisis affecting millions by disrupting global food supply chains. Russia, the largest exporter of fertilizer and wheat, imposed temporary export bans on both products on 1st February and 14th March, respectively. Ukraine also banned wheat exports on 9th March. Due to these bans, the FAO cereal price index increased by 17%, the vegetable oil price index by 23.2%, and the sugar price index by 6.7% in March. As a result of the uncertainty, global trade is projected to only grow by 3% this year, a rate which is 1.7% lower than earlier forecasts.
African countries are largely import-dependent, and as a result of the war, many are facing food security challenges. Egypt, the world’s top wheat importer, will likely be hit the hardest by the ongoing conflict — in 2020, it imported wheat valued at $4.45B from both Russia and Ukraine. To put it in context, the cumulative wheat imports from Libya, Sudan, and Tunisia, were less than 10% of Egypt’s imports in 2020. Egypt has a weak agricultural sector that does not have the capacity to meet up to half the local demand for grains and some Egyptians are at risk of starving if it does not find an immediate solution to its food shortage crisis.
In the short term, Egypt’s local wheat harvest season that began in April, combined with its four months’ long reserves, can only meet its wheat demand up to January 2023. One of the solutions that Egypt is exploring is sourcing foods from other countries, such as India. But, even if Egypt finds a reliable exporter of wheat, its rising inflation means that millions will still not have access to wheat due to its cost. Despite this, the government is optimistic that the country will not face a food crisis due to the Russia-Ukraine war. "This year, for the first time in the history of Egypt, we are expected to reach 10 million tons of wheat production," Egypt’s Prime Minister, Mostafa Madbouly, asserted last month. The Prime Minister’s optimism is a display of his confidence in his government’s efforts to address the food crisis.
To ensure food security in the long run, Egypt must reconsider its food imports and build its internal capacity to produce enough food to meet domestic demand. President Abdel Fattah el-Sissi announced new agricultural projects to reduce import dependency by increasing domestic wheat production from 40,000 acres in 2022 to 120,000 acres next year. Another solution proposed by the government is to relocate individuals from Egypt’s fertile land to reclaimed desert land. However, the economic viability of the model of irrigation is uncertain due to the cost and sustainability constraints. Furthermore, only 4% of Egypt’s land is fertile, which means that the government will need to find other areas to farm wheat to increase its production.
Nevertheless, such an initiative could be limited by the ongoing conflict between Egypt, Sudan, and Ethiopia over proprietary rights to the Nile. Despite signing the “Declaration of Principles” in March 2015 to determine usage rights to the Nile, tensions are still present, especially between Egypt and Ethiopia over the construction of the Grand Ethiopian Renaissance Dam (GERD). Egypt has recently filed a complaint to the United Nations Security Council against Ethiopia’s third filing of the GERD in a row without agreement with downstream countries. Once filled, the GERD will supply electricity to Ethiopia while denying Egypt of its largest water supply through the Blue Nile. The United States has consistently backed Egypt’s water security and has reinforced its commitment to advance the resolution of the conflict in July 2022.
Another solution that has been proposed over the years has been desert farming. The International Water Management Institute in Cairo estimated that desert farming is ten times more expensive than cultivating the fertile Nile valley and the delta. Moreover, the costs of digging close to 1000m deep wells, drip and sprinkler systems, ferrous precipitation, and high towers that will be incurred are high. Desert cultivation utilizes water reserves for a limited period of 50 to 100 years, after which they run out. Conversely, the Nile, which has been excluded as a proposed water source for these projects and has been around for centuries, poses a de facto long-term solution that makes both economic and financial sense. According to Gamal Siam, an agricultural economist at Cairo University, optimizing the production of the fertile lands around the Nile rather than reclaiming deserts for agriculture should be the priority. The optimization of fertile lands could be spurred by adopting mechanized raised-bed techniques that save an average of 4 million cubic meters of water annually.
Pooling the minds of African leaders around a common interest like wheat dependency is urgent as it could potentially lead countries to strike newer deals and bridge political and economic ties in the regional economic blocs. The resulting sustainability among the Nile countries would be a major win - not only on the food security front but also in terms of Africa’s economic independence.
Davis Mwania is a Research Analyst at Botho Emerging Markets Group