Egypt is treading a fine line in efforts to stave off a potential crisis in its subsidized bread program as the cash-strapped government buys wheat on international markets for the first time since February and imported stocks hit historically low levels.
Millers and bakers in the world's largest wheat-importing nation say stocks of imported international wheat have sunk to levels that could reduce the availability of the flour they need to produce bread of an acceptable quality.
Egyptian wheat does not contain enough gluten to be used for bread-making on its own. It must be mixed with flour from imported wheat to produce the kind of dough needed to bake a loaf that people will want to eat.
While Egyptians are not yet complaining that bread quality has deteriorated as imported wheat stocks dwindle, millers say the amount of international wheat available has shrunk to low levels.
Historically, bread has been one of Egypt's most sensitive issues. President Anwar Sadat triggered riots when he cut the bread subsidy in 1977, while President Hosni Mubarak faced unrest in 2008 when the rising price of wheat caused shortages.
Persistent political turmoil and economic crisis over the last two years have eroded the country's hard currency reserves, raising questions about its ability to import the wheat needed to feed its 84 million people with the cheap bread that they expect.
With one in four Egyptians living below the poverty line of $1.65 a day, millions depend on the loaves that sell for less than 1 U.S. cent per loaf—a state-regulated price unchanged since 1989 and equal today to a seventh of the real cost.
Egypt bought 180,000 metric tons of wheat in its first purchase since February on Tuesday, after its longest absence from the world market in years. However, any wheat purchased is unlikely to arrive until September.
Last week the government said it has 3.613 million metric tons of wheat stocks, enough to last until November 17.
Mamdouh Abdel Fattah, vice chairman of the state grain-buying agency, the General Authority for Supply Commodities, declined to comment on how much international wheat was left in government stocks.
"There's between 300,000 and 400,000 metric tons of international wheat left," said an Egyptian miller whose mills supply the government.
This would equate to less than two months of supply of imported wheat needed for the subsidized bread program which is estimated to require a combined total of around 750,000 metric tons of local and international wheat per month.
"The concern is at the baker level as they know it's not going to be the best quality bread," an industry source in Egypt said.
Egypt in the past maintained stocks of imported and local wheat that would meet at least six months coverage and imported around 10 million metric tons of wheat per year via private and state purchases.
