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Egypt should think beyond money when it comes to buying wheat

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Egypt needs to start thinking with more than its wallet when it comes to buying wheat.

 

Of the 4.1m tonnes the Gasc, grain authority for the world’s top wheat importer, has bought so far for delivery in 2017-18, it has bought more than three-quarters of that from Russia.

 

That focus leaves Egypt vulnerable to hiccups in these supplies.

 

More than money

 

It is easy to see the appeal of focusing on Russian wheat.

 

The grain is cheap - priced as low as $193 a tonne to Gasc on Tuesday - winning recent tenders by a comfortable margin, and there is plenty of it, after the country’s record 80m+ harvest this year.

 

But cost should not be the only criterion used in deciding on wheat purchases.

 

That is true even for a buyer as cash-strapped as Egypt, which has seen the value of its currency halve against the dollar since being floated last year - albeit with a removal this week of foreign currency curbs on import seen as a positive sign.

 

Knack for controversy

 

Relying so much on any single origin for supplies of such a vital commodity is not ideal, making the buyer vulnerable to interruption in that supply chain.

 

And being beholden to Russia carries particular risks, given the country’s knack for political controversy, besides within agriculture its record of export taxes and trade curbs, besides the potential hard winters which have in the past hampered logistics.

 

As Moscow’s (now resolved) spat with Ankara shows, after Turkey two years ago shot down a Russian jet, being a large agricultural client of Russia is no guarantee against the country imposing trade barriers.

 

And Russia’s record of intrusion in other countries, whether physically, as in the annexation of Crimea, or in its alleged interference with elections such as the US presidential poll and the Brexit vote, leaves it vulnerable to broader international curbs too.

 

Strength in breadth

 

Spreading its favours would serve Egypt well in the long-term too.

 

Russia should be wholly congratulated for the extent to which it has raised its wheat production, beginning to realise the potential which had eluded it for so long.

 

But Egypt would be wise to help ensure that any single origin does not gain too much of a stranglehold over world output, and avoid other major growers going the way of the US, whose sowings for the 2018 harvest have been forecast at their lowest on data going back to 1919.

 

Buying from the likes of the European Union, even at higher prices, may prove a wise investment.

 

It is not worth risking a shortage, or high prices, of food, as North Africa has already demonstrated in this decade, in the unrest and revolutions that marketed the so-called Arab Spring.

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