UPDATE 1-Egypt raises local wheat procurement price by 10%

(Recasts with year-on-year price comparison in paragraph 1, GASC comment in paragraph 2, farmer comment in paragraphs 6-8, trader comment in paragraphs 9-11)

CAIRO, Oct 2 (Reuters) – Egypt has raised its local wheat procurement price by 10% to 2,200 Egyptian pounds ($45.51) per ardeb (150 kilograms) for the 2024/2025 season, the government said on Wednesday.

The increase aims to encourage farmers to cultivate more wheat next year, Hossam El Garahy, vice chairman of state buyer the General Authority for Supply Commodities, told Reuters.

However, farmers and traders expressed doubts about the effectiveness of the price hike amid inflation and currency volatility.

Egypt, the world’s largest wheat importer, requires more than 8 million metric tonnes of wheat annually to produce subsidized bread for more than 70 million citizens.

The government typically purchases 3.5 million tons from local farmers and imports the rest.

Despite the higher procurement price, some farmers say wheat is still not profitable.

“I won’t grow wheat,” said Mohamed al-Gohary, a farmer from Dakahlia, 135 km (84 miles) north of Cairo.

“Beet offers much better returns, with revenues of 54,000 to 90,000 Egyptian pounds per feddan (1.038 acres) compared to 33,000 to 44,000 pounds for wheat.”

The expected drop in local wheat production may force Egypt to import more, according to Cairo-based trader Hisham Soliman.

“The procurement price is higher than global rates, but inflation and currency risks could wipe out those gains for farmers,” Soliman said.

“We anticipate rising fuel and electricity costs and a potential currency devaluation by the April 2025 harvest,” he added. “These factors will erode any profit from the higher wheat price.”

In March, Egypt signed an $8 billion economy reform program with the International Monetary Fund that includes subsidy cuts and a free-floating currency.

Since then the U.S. dollar has strengthened by about 55% against the Egyptian pound, while inflation has been around 25%. Prices of several subsidized commodities, including food, fuel, and energy, have increased as subsidies have been cut, with further reductions pledged.

($1 = 48.3400 Egyptian pounds) (Reporting by Momen Saeed Atallah and Mohamed Ezz; writing by Nayera Abdallah; editing by Jason Neely and Jan Harvey)

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