Global Wheat Crisis: Egypt and Argentina Coping with Soaring Bread Prices
Bread, a staple commodity in many countries, has seen significant price hikes around the world, with nations like Egypt and Argentina facing unprecedented increases due to multiple factors, including global crises and production costs. In Egypt, the government has announced an increase in the price of subsidized bread to 20 piasters from 5 piasters, starting next June. This 16% of the actual cost of a loaf reflects the spiraling costs that the nation has been struggling with.
Prime Minister Mostafa Madbouly emphasized the necessity of this adjustment, citing the global wheat crisis exacerbated by the Russian-Ukrainian war. The price of wheat on the global market has soared from $260-$270 to $540 per 150 kilograms. This increase has led to the announcement of an exceptional supply incentive aimed at encouraging local farmers to supply wheat at higher prices.
Egypt's dependence on imported wheat is critical, with local production covering only 35-40% of the country's needs. The Egyptian government has allocated around 125 billion pounds ($2.66 billion) for bread subsidies and about 147 billion pounds ($3.1 billion) for petroleum product subsidies in the current fiscal year.
In Argentina, bread prices in the Buenos Aires Metropolitan Area have also seen a steep increase, now costing between $2,200 and $2,400 per kilo, a 30% rise. Bakeries have had to pass on these costs to consumers as they struggle with rising production costs and utility bills. The price of a 25-kilo bag of flour has escalated from $8,000 to $10,000-$11,000.
These cost increases are largely driven by the international surge in wheat prices, reflecting the production losses in key wheat-producing regions like Ukraine and Russia due to adverse weather conditions. Additionally, domestic production in regions like Rio Grande Do Sul in Brazil has been hampered by floods, further tightening the supply.
A detailed study by the Agricultural Foundation for the Development of Argentina (FADA) notes that primary factors like wheat and flour only account for a small portion of the total bread production cost. However, other elements such as taxes and production expenses drive the final price up, making it burdensome for the end consumers.
- In Egypt, the decision to raise bread prices aligns with a broader strategy to address financial strains from global crises. The rising cost of petroleum products adds another layer of complexity to managing the subsidies for essential commodities.
- The Argentinian bread price hike reflects the cascading impact of international wheat price fluctuations on local markets. This situation emphasizes the need for countries to adapt their agricultural and economic policies to mitigate the effects of global agricultural crises.
