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Russia-Ukraine war: Egypt bread prices soar as conflict disrupts wheat supply

Price of unsubsidised bread up by 50 percent over the past week, amid effects of war and soaring insurance and freight costs
Between 2020 and 2021, Egypt imported most of its wheat - 12.5 million tonnes - from Russia and Ukraine (Reuters)

Egypt, the world’s top wheat importer, is witnessing a dramatic rise in the price of unsubsidised bread, following Russia’s invasion of Ukraine, one of the world's biggest wheat producers.

The country is one of several Middle Eastern countries, including Iraq, Lebanon, Tunisia, Algeria and Turkey, that imports both Ukrainian and Russian wheat, and who are all bracing themselves for continuing price increases.

Khaled Sabri, a member of the bakeries division at Egypt’s chamber of commerce, told Bloomberg that a pack of five flat-bread loaves can now sell for about 7.5 Egyptian pounds ($0.48) in the greater Cairo area, up from 5 pounds a week ago.

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Between 2020 and 2021, Egypt imported most of its wheat - 12.5 million tonnes - from Russia and Ukraine.

The price of bread is political in Egypt, and at least 70 percent of the country's 102 million population rely on subsidised bread. 

The current price of subsidised bread is five Egyptian pounds ($0.32), with Prime Minister Mostafa Madbouly saying last month that an increase in the price of a loaf of subsidised bread "will certainly happen". 

Nearly five years ago, angry demonstrations erupted across Egypt after the government cut bread subsidies amid an economic crisis.

Strategic reserves

The last price change of a loaf of bread was 34 years ago. In 1988, "the loaf price rose to five piasters (about $0.0032) when the cost of the loaf for the state was 17 piasters (0.0108 dollars) in 1988," Madbouly said. 

Following the Russian invasion of Ukraine, Nader Saad, the Egyptian cabinet's spokesperson, raised the alarm that the country currently has nine months' worth of wheat in silos, including five months of strategic reserves and four months of domestic production to cover the needs of the country's bread for millions of Egyptians.

Saad added that Egypt would not be able to buy wheat at the same price Russia offers.

"There are 14 countries other than Russia and Ukraine approved by the Ministry of Supply as sources for the supply of wheat, including countries located in regions outside Europe such as Australia, the United States, Canada and Paraguay," Saad said.

Expensive combination

The United Nations' World Food Programme warned on Friday that disruptions in production and exports as a result of the war in Ukraine could lead to food insecurity globally. 

The body noted that with Russia and Ukraine providing some 29 percent of the global wheat trade, serious disruptions in production and exports could send food prices - already at 10-year highs - even higher. 

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The price of wheat continued to rise on Monday, with soaring insurance and freight costs adding to the effects of the war.

Bakery owners are already feeling the pressure, Attia Hammad, head of the chamber’s bakeries division, told Bloomberg.

“[They are] getting a tonne of flour for 12,300 pounds versus 9,000 a week ago, on top of the high price they pay for everything from electricity to fuel,” he said.

“I’m not saying the government should leave bakeries alone - no, they should inspect and control them, but input prices are already hitting them.”