Conquering Bread: Egypt’s Decision To Buy Indian Wheat

“Where two fight, the third wins.” This Polish saying could not have gotten truer in the context of the developments pouring in as a direct consequence of Russia’s actions in Ukraine. Previously, India benefited immensely by buying highly discounted Russian Oil in and purchasing it not in dollars, but with the Rupee-Rouble mechanism. Nevertheless, the war in the east has provided India, benefiting from this neutrality, with yet another significant window in the form of an opportunity to export wheat to Egypt. Perhaps, for the first time in its history this event has taken place. The sudden shift in Cairo’s policy can be ascribed as complementary to the stance of New Delhi all throughout and in economic terms, it is indeed a remarkable development. The Russia-Ukraine crisis could trigger a massive food security crisis as it can drive the rising food prices even higher and lead to scarcity. Especially in those regions that depend primarily on the warring nations for their food supplies. Due to the disruption of agricultural supply chains, the countries in the Middle East and North Africa would be the ones who would face the music in the subsequent months. 

Egypt is the largest importer of wheat in the world, where the commodity is of vital importance. Around 62 % of the total wheat in the Egyptian market at present, comprises imported wheat. Despite the efforts of the government to mitigate food insecurity following the 2008 financial crisis, the country continues to depend on imports, 57 % of which come from Russia and Ukraine. Egypt imports 12 to 13 million tonnes of wheat every year and its population of 105 million which grows at a rate of nearly 2 % every year, depends heavily on imports. In general, Egypt produces scant quantities of wheat domestically and has historically relied on Eastern Europe and Latin America to meet its requirements. Half of the wheat market is heavily regulated and controlled by the Government while the other half is operated by private cooperatives. Despite the reforms implemented by Mohammed Fateh El Sisi since his ascent to power, the agricultural and the pesticide industries haven’t taken off.

The immense supplantation of the primary workforce to the tertiary sectors can also be an attributable cause of this stagnation. However, to denounce Cairo as complacent is certainly not correct as policymakers and officials in Cairo realised this beforehand and started deliberating on what their course of action should be and they interestingly went ahead to enlist India to import wheat. Erstwhile Ancient Egyptians managed to monopolise their agricultural temperament and the situation is not bad at all in modern Egypt. The country has been self-sufficient in producing everything except wheat, oil, and sugar. Therefore, India is an interesting and historical choice not because it was previously barred from exporting wheat to the country but because it beat other nations like Argentina and even the African Union into securing the deal. Nevertheless, it can not be asserted that India has a bad trade rapport with Egypt. In reality, it is decently good. India has been a major exporter of cotton, meat, tobacco, and automobiles to Egypt in the past. It has also been exporting large quantities of wheat primarily to Afghanistan,  Bangladesh, Nepal, UAE, and Sri Lanka. It can be said that both nations aim to exploit the benefits of neutrality from this situation. 

Since the culmination of the Arab Spring, Egypt’s political institutions have looked to revise their efforts into ensuring neutrality and staying aloof from the rules-based international

order. This has allowed Egypt to reset its relationships with countries in the African Union and beyond its sphere. The country was one of the key founders of the Non-Aligned Movement and under the El-Sisi regime, it has followed a secular and a neutral policy. It has thus been able to elevate its economic status. Since the majority of the finance has now been diverted into the development of a new capital city and the refurbishment of its towns and ports, this deal would also allow it to ease the pressure off of its agricultural sector. India, on the other hand, views this as another opportunity to gain whatever it can from this development. It aims to step up and fill the global wheat export gap created by the war. Being the second-largest exporter of the commodity, India’s wheat has gained a lot of competitiveness in the wake of the war in the East. Now, all that it has to do is to ensure the best possible quality of its output as this is an area of concern that in the past has stymied its efforts of enhancing its exports. These quality issues have routinely prompted many buyers to mull importing wheat from India or not. It was the primary reason why Egypt itself prohibited Indian wheat from its markets in the past. Egypt has imposed its quality controls. It requires importers to submit a request for inspection of Indian wheat before shipment, as per the charter of the Egyptian Agricultural Quarantine. Quality is the determinant of the suitability of grain. It is highly likely that now, this clause might get revoked and all India has to do is export good quality wheat. 

This historical development stands at the intersection of geoeconomics and radical changes in the global sphere where both the countries stand to gain. India, in particular,  has pursued excellent international diplomacy in the past and this decision would enhance it even more. Moreover, this also allows it to gain leverage over others in the Egyptian economic setup at large as there are more than 450 Indian companies listed in Egypt, and further cooperation beyond agriculture may become inevitable in the future if the dynamics of the world continue to change.

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