x Abu Dhabi, UAESaturday 20 January 2018

Egypt's wheat buyer Nomani removed

Egypt's removal of Nomani Nomani as the buyer of more than 5 million tonnes of wheat a year on world markets put a spotlight on a role that brought stability to the task of feeding the nation's 80 million people.

Tens of millions of Egyptians are dependent on subsidised bread. Amr Abdallah Dalsh / Reuters
Tens of millions of Egyptians are dependent on subsidised bread. Amr Abdallah Dalsh / Reuters

Egypt's removal of Nomani Nomani as the buyer of more than 5 million tonnes of wheat a year on world markets put a spotlight on a role that brought stability to the task of feeding the nation's 80 million people.

Mr Nomani, 58, has worked at the General Authority for Supply Commodities (GASC) since 1979.

The authority helps to provide subsidised bread in a country where a quarter of the population lived below the poverty line in 2011, according to state figures.

He took over as vice chairman of GASC under the government of the former president Hosni Mubarak and said in an interview he would become an adviser to Bassem Oda, the supply minister, on the planning and purchase of commodities.

Mamdouh Abdel Fattah, a colleague at GASC who joined the authority in 1981, will replace him.

"What this person does is critical to the Egyptian political stability," said Hani Sabra, an analyst at Eurasia Group, a political risk and research company, speaking from New York.

"You have tens of millions of Egyptians dependent on subsidised bread.

"The country will collapse politically if there is no access to bread."

The government that came to power after the 2011 uprising against Mr Mubarak is making changes at key ministerial posts as it contends with a growing budget deficit and negotiations to secure IMF financing.

The US$2.5 billion (Dh9.18 bn) a year programme provides 80 billion round loaves at less than one US cent a piece, a daily average of about three per person, the department of agriculture in Washington estimates.

Mr Nomani's decisions on buying grain moved futures markets from Paris to Chicago, said Arkady Zlochevsky, the president of Russia's Grain Union in Moscow.

When he bought 400,000 tonnes of wheat from the United States, France and Romania on December 1, GASC's first purchase from the US in the season that started on July 1, Chicago futures rose as much as 1.6 per cent and Paris-traded wheat jumped 1.8 per cent on December 3.

"Regardless of who's in power, Egypt relies on its subsidised bread programme," Mr Zlochevsky said.

"Any government that dares to give up this system will be swept away by the anger of the Egyptian people. And that's why every government will continue to fund wheat tenders no matter the cost."

Mr Nomani picked the combination of factors that would benefit Egypt most and played time and origin spreads as well as competition between suppliers, Mr Zlochevsky said.

His one-time purchases could be big enough to feed Ghana for an entire year.

"The government saw it fit in the present time to allow me to become the adviser to the minister and allow someone else to take my position," Mr Nomani said at his new ministry office.

"I will be keeping an eye on the international commodity markets in my new job, but not as frequently as I did in my former post."

Egypt's wheat consumption has surged 39 per cent in the past 10 years, outpacing a 32 per cent increase in output and making the country rely on imports for half of its use, the USDA data shows.

 

* Bloomberg News