June 7, 2008 / 12:23 AM / 9 years ago

Egyptian farmers eager to reap wheat bonanza

5 Min Read

<p>Egyptian farmers thresh wheat with the help of a machine in a field on the outskirts of Cairo, May 19, 2008.Asmaa Waguih</p>

EL-ZA'FARAAN, Egypt (Reuters) - Egyptian farmer Fahmi Gaafar says he plans to sell two or three of his four cows because he does not want to plant more clover to feed them.

Nor does he want to plant cotton, a crop that has made some Egyptians rich on and off for some 200 years. "Cotton has become extinct," said Gaafar, 58.

So what does he plan to plant next year? "I will perhaps plant one acre of clover for the remaining cow, and will plant the other seven acres with wheat," he told Reuters at his farm in the Nile Delta province of Kafr el-Sheikh.

Egyptian farmers are focusing more on grain crops such as wheat, rice and corn, hoping to cash in on a record rise in grain prices, which have sparked riots in several developing countries, including their own.

Higher prices could bring more cash to a largely underdeveloped countryside that has long complained of state neglect, at the expense of the urban poor, who are struggling to keep up with high inflation.

The U.N. Food and Agriculture Organization (FAO), holding a summit in Rome this week to seek ways to secure food supplies, expects food prices to remain high over the next decade despite a bumper harvest this year, worsening the situation of 850 million people already suffering from chronic hunger worldwide.

Experts blame the surge in prices in part on rising demand from growing economies such as India and China, high oil prices that have pushed up production costs and a big push in biofuel programs that divert land once used for growing food.

Once described as the bread basket of the Roman Empire, Egypt is one of the world's leading wheat importers. Consumption increased from 8 million tons in 1982 to about 14 million tons this year, six of which the government buys from major producers such as the United States, Russia and France.

In an attempt to meet the need of consumers, the government has promised farmers it will buy their wheat at international prices, at a minimum of 380 Egyptian pounds ($71) for each 150 kg, compared to about 200 pounds a year ago. The price is equivalent to more than $470 per ton.

Even after world prices eased below that level, the government is wary of trying to pay farmers less.

"We have not decided on this yet," said Saad Nassar, an adviser to the minister of agriculture.

Rice Ban

The shift towards planting more grain crops came at the expense of cotton, which dethroned wheat to become Egypt's main crop in the 19th and early 20th centuries.

Standing near lush rice fields, Gaafar pointed to a strip of land which he said was planted with cotton last year.

"This is now corn," he said. "The cost of producing cotton is now more than the market price."

Gaafar and other farmers criticized the government for banning rice exports until 2009 to hold down prices but said it would not stop them planting the lucrative crop. Nassar said the government had no other way to protect consumers.

"We know that if everyone banned exports this will be a disaster," he said. "But what else could have we done?"

Yet despite the record prices for grain, Gaafar and other farmers say they have yet to see more money in their pockets.

"The prices of fertilizers have risen. The price of fuel has risen. The price of everything has risen," said Youssef Mohamed, another farmer.

Inflation in rural Egypt stood at 17.6 percent in the year to March, compared with 12.8 percent in January. Economists say inflation is likely to keep rising after a government decision in May to increase fuel prices.

"We have a feeling of insecurity," said Gaafar, a grandfather of seven. "Steel is at 8,000 pounds a ton. The price of cement is rising. How can you build a flat for your son if he wants to get married?"

In the village's bustling vegetable market, many said they were feeling the pinch of higher food and fuel prices.

"The situation is of course worse," said Mohamed Wasil, who runs a grocery. "People have less money to spend."

But Ibrahim Siddiq, a professor of agricultural economics, said the rise in crop prices was expected to boost the income of farmers, starting next year.

"Inflation will not exceed 25 percent," he told Reuters. "We have seen the prices of some crops rise over 100 percent."

He said the price increase would encourage farmers to boost the productivity of their land, a hope the government shares.

Egypt has also proposed planting wheat in the fertile lands of neighboring Sudan, a suggestion also made by other Arab countries, including Saudi Arabia.

"If Sudan was seriously developed, Egypt would benefit, Saudi Arabia would benefit and other Arab countries would benefit," Siddiq said. "I just hope it is not just emotional euphoria at a time of rising prices."

Editing by Dominic Evans

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