Egyptian military agency takes over wheat buying
An agency of the Egyptian military has taken over the import of strategic commodities, a letter seen by Reuters reported on December 6th showed.
This replaces a decade-old state institution to take over international buying tenders in addition to conducting direct purchased which have shaken the wheat market in recent weeks.
Egypt’s military is unique in the Arab world as it also operates as a business conglomerate which produces a number of household products.
As of the world’s largest wheat importers, Egypt had relied on the General Authority for Supply Commodities, or GASC, part of the ministry of supply, to buy the grain for 70 million people for whom subsidised bread is a staple.
A letter from the ministry to Russian minister of agriculture Oksana Lut said the Mostakbal Misr agency for sustainable development of the Egyptian air forces had become the sole body responsible for the import of food commodities.
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The letter, seen by Reuters, said the agency had plans to employ direct purchase agreements alongside international tenders, intending to streamline processes, although this has raised concerns among global traders.
Military-owned companies had flourish under Sisi’s rule, worrying some business leaders and foreign investors. Egypt’s government says these companies were filling gaps in the market.
The letter read that “Mostakbal Misr agency will assume all jurisdiction previously held by GASC…. the supply ministry guarantees that the agency has the financial capacity to honour all commitments arising from tenders and direct purchases.”
A written response to Reuters by GASC stated that the letter is intended to introduce the officials of the new agency. “This aims to ensures the import of wheat without any difficulties” it stated, citing a decision by the cabinet to activate the role of Mostakbal Misr’s authority for unified procurement.
The Russian grain exporters and producers union stated it “cannot confirm or deny the existence of this letter…. we have not yet received any information through the official channels traditionally used for exchanging information of such importance.”
Mostakbal Misr was founded two years ago by presidential decree and serves as the development arm of the Egyptian armed forces. Its remit has extended from land reclamation to projects to include major sectors of the economy.
It has been taking over projects from both military organisations and civilian bodies, making its first attempt to procure wheat and vegetable oil through direct purchase agreements in November.
Procedural ambiguities led to traders being confused, prompting calls for clarity and a postponement. Egypt has long relied on GASC as its intermediary for international trade.
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Mostakbal Misr is not well-known in the world of wheat training. It said it wanted to lower Egypt’s wheat imports bill in 2022 by supplying around a million metric tons of local wheat to the government in 2024.
However, the local harvest this year only reached 3.42 million tons by closure in August, a marginal increase 3.41 million tons last year and even less than the 3.7 million supplied in 2022, according to data from the supply ministry seen by Reuters.
There is scepticism from traders about the new agency. “GASC terms for deals in international tenders have been built up over many years. They are trusted and only when there is trust can big purchases be made with many millions of dollars involved,” a German trader said. “In the long run, the new organisation will no doubt be able to make purchases. In the short term it may face difficulties.”
Reuters
