Grain milling is a very important market in Egypt, as it is the world's largest importer of wheat, and is also a big wheat producer too. When it comes to wheat, it is used widely in the Egyptian market mainly at flour mills and pasta factories to cover the needs of more than 100,000,000 Egyptians by producing staple foods like flour, bread and pasta. According to statistics shared by the FAO (Food and Agriculture Organization of the United Nations), Egypt is the most dependent country on protein supplies from wheat, reaching to 35 grams per capita per day.

And as a result, wheat consumption in Egypt is enormous and increases every year. Wheat consumption for the current year of 2021 is estimated at 21.1 million metric tons compared to 20.8 million tons from last year. Egypt, as a big wheat producer, witnessed a slight increase in domestic wheat production for this year, yet production numbers are still very satisfying, local wheat production reached 9 million tons for this year compared to 8.9 million tons from last year, according to the Egyptian Ministry of Supply, the government allocated 17 billion pounds for purchasing local wheat from farmers. According to the ministry, Egypt has self-sufficiency of wheat for the coming 6 months. These impressing results come in no surprise for us as millers, who are acquainted with the Egyptian market and who have seen and witnessed the great efforts made by the government in this field for the purposes of increasing local production. 

As a country in the size of Egypt, that highly depends on wheat products, local production would obviously not be enough, which leads to very large investments in wheat imports. It is expected that for the year 2021, wheat imports will reach 13 million tons in Egypt, experts estimated that it would reach 13.2 million however due to reduced wheat exports from Russia, which is a main supplier for wheat in Egypt, the estimated number dropped down to 13 million, while last year wheat imports reached 12.5 million tons.

Imported wheat in Egypt is purchased through tenders managed by the General Authority for Supply Commodities (GASC) in addition to imports made by the private sector directly, wheat is imported from different origins mainly Russia, Romania, and Ukraine. A great accomplishment for the GASC this year is the 13% decrease in Egypt’s wheat import bill, due to the implementation of an integrated information system that control the management, transportation and trading of wheat.

The Egyptian government however is trying to reduce the gap between wheat production and wheat import by increasing domestic production through reclaiming agricultural lands, it intends to allocate an additional one million acres for wheat cultivation within the next 3 years. 

The government is also increasing its strategic storage capacity through the National Project of Grain Silo, the project aims to build new silos among 17 governorates in Egypt to store wheat and grain, with a storage capacity of 1.5 million tons, making the total storage capacities in Egyptian silos of about 3.6 million tons.

EGYPTIAN MILLING INDUSTRY

Wheat in Egypt is distributed among flour mills and pasta factories, the majority of wheat goes to flour mills and is used to produce different kinds of flour including the 82% extraction flour, which is used to produce the subsidized Baladi bread. Egypt has more than 410 flour mills, Al-Hazaa Group owns three flour mills in the country, Al-Hazaa's current production capacity in Egypt reaches 1,780 tons per day. 

Al-Hazaa Group is aware of the significant role that the grain milling sector and food industries have in the Egyptian market, after the pandemic our attention was drawn on the importance of having enough raw materials at all times and so, we focused more on our strategic storage of wheat at our mills. Therefore, we are implementing several procedures to ensure enough provision of wheat at our mills, because it is the source of many vital commodities, we increased our strategic storage capacity in Egypt and the Middle East and built new silos for grain storage, especially that the group works not only in the field of flour milling but also in grain trading, we are also increasing our milling capacity across the Middle East and are investing in renewable energy to reduce production costs, the Group has a solar power plant in Jordan that supplies all its facilities in the country with renewable clean energy. 

Recently Al-Hazaa Group also acquired a new flour mill in Al-Fujairah, UAE and took access to a private wharf and ships unloading station with storage silos to facilitate unloading of its purchased vessels on the Arabian Sea. And with its latest acquisition of the Egyptian Millers in Egypt, Al-Hazaa Group has become one of the big players in the Egyptian milling industry that manages one of the largest milling capacities in the country. Its strong position in the Egyptian milling industry enables the group to export its products to neighboring countries in Africa and Asia. The group has a long history in the milling field that extends to more than 80 years, it has a total daily flour production capacity of more than 4,000 tonnes in 4 countries in the Middle East.

Al-Hazaa Group’s mills in Egypt sell the 72% extraction wheat flour that is considered one of the finest wheat flours in Egypt, private sector mills that produce 72% extraction flour aren’t allowed to produce the 82% extraction flour used for the bread subsidy program. We produce however different other kinds of flour such as flour for different kinds of bread (Arabic bread, Iraqi bread, Shrak bread, tortilla bread, fino bread, etc.), premium flour for bakery and pastries, biscuits flour, pasta flour, noodles flour, pizza flour and much more. Our products in Egypt are sold under different brand names: Platinum flour, Dream flour, Al-Asfar, El-Moatamayez. 

Bread is very important in the Egyptians diet; Egyptians use the word “Aish” for bread, which translates to “life”, which signifies the importance of this product. Egypt produces a daily amount of 270 million pieces of bread and has more than 30,000 bakeries. The government put great efforts in bread subsidy, it spends 44.8 billion Egyptian pound on the subsidy program to produce around 89 billion pieces of subsidized bread annually. Since 2017 bread subsidy is being implemented through ration cards for bread and other necessity goods, there are about 71 million citizens that benefit from these cards, which allow those who are eligible to dispense limited quantities of bread daily. 

All these procedures are implied to ensure that prices of Baladi bread remain unchanged, indeed bread prices have remained unchanged in Egypt for the last 30 years, making it the cheapest price for bread in the world, subsidized bread is sold at a price of 5 Egyptian piasters ($0.0032) per loaf. However, it is expected that the government will change the procedure it follows for bread subsidy because of the great cost of the current program, according to Egyptian Grain Industry the amount of subsidized flour that is used for the Baladi bread reaches 8-9 million tons annually. In line with the remarks of the current Egyptian minister, he intends to increase price of subsidized bread, and reduce the gap between subsidized and free bread prices and also the gap between subsidized bread market price and the cost that the government endures, which is 65 Egyptian piasters.

IMPACT OF COVID-19 ON GRAIN MARKET

Grain prices globally are still considerably high, the impact of Covid-19 was big on the grain market, prices now are higher than its usual compared to the same time last year, the pandemic caused strong price fluctuations and increases because of regulatory restrictions and shipping limitations. So, in our opinion, this step of reducing subsidy is understandable due to the increase in wheat prices, Egypt last bought wheat on Monday 30.08.2021 for $338.10 a tonne c&f Romanian origin for shipment in 15-20 October. 

Furthermore, reducing bread subsidy will cause increased demand on the unsubsidized bread, that is produced using the private sector’s flour, which will open new opportunities for private flour mills in Egypt and for investments in the Egyptian milling industry, which makes it one of the most promising markets in this field.

Since the beginning of 2021 until end of July, Egypt’s both public and private sectors have imported about 5 million tons of wheat. Imported wheat was from different origins, mainly Russia (58.38% of wheat imports), followed by Ukraine, Romania, Australia and France. Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC) bought one million and 859 thousand tons of wheat (37.03% of imports). Al-Hazaa Group mills in Egypt import its wheat from USA, Canada, Australia and Russia, the Group has strong relationships with important wheat suppliers such as Cargil, Dreyfus, IDM and others.

As the above numbers show, the milling industry in Egypt is enormous and growing rapidly year by year, and despite the big competition in the Egyptian market, it is one of the promising markets in the middle East in terms of consumption and growth due to many reasons such as location and quick population growth. Egypt’s demand for wheat flour is very high therefore, Al-Hazaa Investment Group took this opportunity and invested in the Egyptian market through establishing Al-Taj Flour Mills, the Group’s largest milling facility and acquiring the Egyptian Millers Flour Mill in 2021.

Al-Taj Mill was first established in 2005 with a production capacity of 640 tons/ day, then the Group decided to expand this facility in 2016 and increased its production capacity to reach 1280 MT/ day through building a totally new mill in the same industrial area in 6th of October City, the new mill holds the same name and is called Al-Taj Mill 2. Today Al-Taj Mills hold 2.5% of Egyptian market share in the flour production field. The Egyptian Millers Flour Mill was established in 1997, Al-Hazaa Investment Group acquired it in the beginning of 2021 to expand its production capacity in Egypt to reach 1,780 tons per day. 

For our milling facilities, we have a strategic partnership with Bühler Group, all flour mills owned by Al-Hazaa, are equipped with the latest Bühler machines, our mills are fully automatic, from the first step of receiving the grain until producing the final product. We invest in training of our personnel, through Bühler we train our employees and make sure to follow the latest milling trends, Al-Hazaa workers are trained in the Bühler’s training center in Uzwil, Switzerland and in Swiss Milling Schools. Moreover, we send trainees from our companies every year to take courses in the African Milling School in Kenya, eversince its establishment. 

We have been working with Bühler for so long and we are really satisfied with this partnership, Al-Hazaa Group is the agent of Bühler in the Iraqi market. Bühler provides innovative milling solutions that ensure the safety and quality of the grain while maintaining high sustainability and efficiency. Working with Bühler has allowed us to gain even more experience in the milling field, we always try new innovative Bühler machines that offer various advantages to our mills. As a leading group, Al-Hazaa always ensures to build upscale mills that match the highest international standards in the milling field, not only for machines but also for its silos, laboratory and quality assurance equipment and so on.