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Grain and Flour Market in Egypt and Iran

04 November 201514 min reading
Being the top wheat importer in the world today, Egypt has a major role shaping the global wheat market. Milling industry of Egypt which consumes 18-19 million tons of wheat annually consists of public and private sectors. Public industry represents 52 percent of total milling capacity and the private sector represents 48 percent. Being the 8th wheat consumer and consuming 15-17 million tons of wheat annually, Iran is known to have more than 335 mills. Majority of these mills are owned by private industry. ulke71 Majority of the population works in agricultural sector in Egypt which has the third largest economy among Arab countries. Nile Delta which has been important in terms of agriculture for ages continues to contribute to Egypt’s agricultural economy today. Primary products that are manufactured are cotton, wheat, corn, fruit, sugar cane, feed and rice. Wheat ranks first in grain production of Egypt; however production amount is far from meeting the domestic demand. Thus, Egypt meets its wheat demand by importing. The other manufactured grain products in Egypt which is the top wheat importer are corn, rice and barley. One of the significant petroleum producers, Iran cannot get adequate yield from these lands due to improper water sources and land conditions although it has large arable lands. Iran, which has been cultivated for ages and thought to be the country windmill was discovered, produce staple foods like wheat, corn, rice and barley in 70 percent of its cultivated lands. Although, the majority of cultivated lands in Iran used for these products Iran imports a considerable part of its grain demand just as Egypt does. Iran remains one of the top importers of wheat, corn, rice and barley in the world. GENERAL ECONOMIC OUTLOOK One of the most important countries in Middle East and Africa, Egypt has a population of 85 million and a surface area of more than 1 million km2. Despite its large surface area, a significant part of the lands in the country consist of deserts. Thus; more than 90 percent of the population has centered on small lands in Egypt. Being located on Northeast of Africa mostly, Egypt is neighbors to Israel and Saudi Arabia in the east, Libya in the West and Sudan in the South. Shifting to republican regime in 1953, Egypt is also the third major economy among Arab countries following Saudi Arabia and The United Arab Emirates. It is the second largest economy in African continent following the Republic of South Africa. Although Egyptian economy has developed, it has a significant foreign trade deficit. Of Egyptian economy which has developed 2.2 percent in 2014, agriculture shares 14 percent, industry shares 38.9 percent and services share 46.5 percent. Petroleum industry, textile and ready-to-wear industry are prominent sectors. Tourism, natural gas and profit coming from Suez Canal became the locomotive of Egyptian economy when united with renovation works in Gulf Countries. Having nearly 40 banks registered in Central Bank, Egypt continues its reform process to adopt market economy since 1990s. Egypt introduced fiscal-monetary-bank policies in this aspect and carried out works to set up free trade. An upward movement is expected in the trade deficit of Egypt in the following days and also Suez Canal and tourism are expected to make great contributions to Egyptian economy. Being located in the interception point of Asia and Europe, and maintaining its strategic importance for ages, Iran has become more and more important after the discovery of petrol. Iran where an Islamic state has been founded after Shah was overthrown in 1979 has a population of 71.5 million. About 70 percent of the population lives in cities. 40 percent of Iranian economy is directly managed by the government and 45 percent of it is managed by foundations called “bonyad”. Being the world’s third largest petrol producer, Iran is the second one after Russia in terms of natural gas reserves. 40-50 percent of the country’s income comes from petrol. As to the decision taken by United Nations Security Council due to Iran’s nuclear activities, it was imposed economic sanctions. With these sanctions, mostly Iran’s institutions operating internationally are targeted. In this aspect, the government whose income decreases aims to make investments required for sustainability of petrol and natural gas via direct foreign investments and privatizations. THE PLACE AND IMPORTANCE OF AGRICULTURE Agriculture sector which forms 14.5 percent of GDP in Egypt employs nearly one third of the population in Egypt. About all of the agricultural lands in the country is located on Nile Delta. Being consisted of deserts and arid lands mostly, Egypt is known to be one of the oldest agricultural civilizations. As Nile River has been enabling a civilization engaging in agriculture for thousands of years, this caused the population is centered on this region. Having insufficient rainfall made Nile River the only water source in the country. The most produced agricultural products in Egypt are cotton, wheat, corn, citrus fruits, sugar cane, feed crops and rice. One third of Iranian lands are suitable for agriculture. Due to arid lands and insufficient water sources in the region, there is no agricultural activity in most of the land in the country. It is known that only 12 percent of all the lands are cultivated and one third of these lands are used for irrigated farming. Mostly western and northwest of the country is used for farming. Agricultural activities forms one fifth of Iran’s GDP. Most of the farmers operate on less than 10 hectare lands and use old agricultural practices. Grain products like wheat and rice, sugar beet, sugar cane, fruits, nuts and cotton are among the major agricultural products of Iran. GRAIN PRODUCTION AND CONSUMPTION IN EGYPT Grain products have a significant place in agricultural production of Egypt, as it is mentioned above. According to the data of US Department of Agriculture, Foreign Agricultural Service (USDA FAS), it is seen that wheat is the most produced grain product in Egypt. Egypt is among the top 15 wheat producer countries. According to the data of USDA, Egypt’s wheat production which was 6.4 million tons in 2003/04 season reached 8.2 million tons in 2007/08 season. Being 8.5 million tons in 2009/10 season, production amount reached 8.4 million tons and remained above 8 million tons although it reduced below 8 million tons in 2011/12 season. Being 8.3 million tons in 2014/15 season, wheat production is estimated to remain at this level in 2015/16 season. It is clear that wheat consumption of Egypt is more than two times the amount of production. Between 2003/04 and 2007/08 seasons, wheat consumption changed between 13.6 million tons and 15.8 million tons. By 2008/09 season, the amount of consumption increased above 17 million tons and reached 18.7 million tons in 2012/13 season. Recorded as 19.1 million tons in 2014/15 season, wheat consumption is estimated to be 19.6 million tons in 2015/16 season. With this consumption amount, the country is ranked as the 7th major wheat consumer in the world. It is seen that the second highest amount in grain production of Egypt belongs to corn. Producing about 5.8 million tons of corn between 2003/04 and 2005/06 seasons increased this amount over 6 million tons between 2006/07 and 2010/11 seasons. As of that year, reducing below 6 million tons, corn production was recorded as 5.8 million tons in 2013/04 and 5.9 million tons in 2014/15 season. Corn production is expected to be around 6 million tons in 2015/16 season. Corn consumption amount is parallel with the amount of corn production of the country. Being 9.2 million tons in 2003/04 season, corn consumption increased above 10 million tons in the following seasons and reached 12.5 million tons in 2010/11 season. Recorded as 13.2 million tons in 2013/14 season, corn consumption increased to 13.9 million tons in 2014/15 season. Egypt is ranked as the 8th with a consumption amount of 13.9 million tons in global corn consumption. Forecasted corn consumption for 2015/16 season is 14.5 million tons. Another important product in grain production and consumption of Egypt is rice. Recorded as 3.9 million tons in 2003/04 season, rice production increased in the following seasons and reached 4.6 million tons in 2012/13 season. Reaching the highest rice production amount with 4.7 million tons in 2013/14 season, Egypt produced 4.5 million tons of rice in 2014/15 season. However, estimates show that rice production will remain around 4 million tons. Rice consumption remained around 3-4.5 million tons between 2003/04 and 2011/12 seasons. Reaching 4 million tons by 2012/13 season, rice consumption is forecasted to remain at the same level in 2015/16 season. GRAIN PRODUCTION AND CONSUMPTION IN IRAN According to the data of US Department of Agriculture (USDA FAS), it is seen that the highest production amount of Iran belongs to wheat. Wheat production of Iran which shows an unsteady graphic between 2003/04 and 2009/10 seasons was recorded as 13.5 million tons in 2010/11 season. Reducing to 12.4 million tons in 2011/12 season, production amount reached to 13.8 million tons in 2012/13 and 14.5 million tons in 2013/14 season. Producing 13 million tons of wheat in 2014/15 season, Iran is expected to produce 14 million tons of wheat in 2015/16 season. Consumption graphic is steadier and increasing compared to production graphic. According to the data of USDA, wheat consumption of Iran exceeded over 15 million tons in 2006/07 and 2011/12 seasons; reached to 16 million tons in 2012/13 season. Consumption amount continued to rise in the following seasons; reached 17 million tons in 2013/14 and 17.5 million tons in 2014/15 season. Being ranked as the 8th largest wheat consumer country with this consumption amount, Iran is estimated to reach a consumption amount of 18 million tons in 2015/16 season. According to the data of USDA, the second highest amount in Iran’s grain production belongs to corn. However, corn production of the country seems relatively low compared to total corn production in the world and major corn producers. Being 1,6 million tons in 2003/04 season, corn production of Iran reached the highest production amount of the last 10 years with 2,7 million tons in 2011/12 season. ın the following seasons, corn production remained around 2.5 million tons. Corn consumption is higher than production amount. Showing a significant increasing graphic, corn consumption amount of Iran was 3.5 million tons in 2003/04 season and then reached 5.1 million tons in 2007/08 season and 6.2 million tons in 2011/12 season. Reaching 7.2 million tons in 2014/15 season, consumption amount is estimated to reach 7.7 million tons in 2015/16 season. Another important product in Iran’s grain production and consumption is rice. Rice production of Iran reached 1.9 million tons at most in the last 12 seasons. Showing an unsteady graphic between 2003/04 and 2009/10 seasons, rice production was recorded as 1.5 million tons in 2010/11, 2011/12 and 2012/13 seasons. This amount reached to 1.6 million tons in 2013/14 season. Reaching 1.7 million tons in 2014/15 season, rice production is estimated to remain in the same level in 2015/16 season. On the other hand, consumption amount is really high. Consuming 2.9 million tons of rice between 2003/04 and 2004/05 season increased this amount over 3 million tons in the following seasons and it reached 3.5 million tons in 2012/13 season. Recorded as 3.5 million tons in 2013/14 and 2014/15 seasons, rice consumption is forecasted to be 3.5 million tons in 2015/16 season. Barley is one of the grain products that Iran has an influence globally. Barley production has been recorded between 2.7 million tons and 3.5 million tons for 12 seasons. Recorded as 2.8 million tons in 2013/14 season, barley production was recorded as 3.2 million tons in 2014/15 season. When compared to the other products, with this barley production amount seeming low, Iran was ranked as the 10th in global barley production. Barley consumption of the country is estimated to be 3.3 million tons in 2015/16 season. Just like other products, barley consumption is higher than the production and it continues to rise every season. Accordingly, barley consumption which is 4.5 million tons in 2013/14 season reached 4.6 million tons in 2014/15 season. Forecasted consumption amount for 2015/16 is 4.8 million tons. GRAIN TRADE IN EGYPT In Egypt where grain consumption increases gradually, grain import amount continues to rise every year because production amount is insufficient for domestic demand; especially for wheat production… Being the top wheat importer in the world today, Egypt has a major role shaping the global wheat market. According to the data of USDA, Egypt’s wheat import which was 7-8 million tons between 2003/04 and 2007/08 increased to 9.9 million tons in 2008/09 and 10.5 million tons in 2009/10. Reaching the highest level of the last 10 seasons with 11,6 million tons in 2011/12 season, imports reduced to 8,3 million tons in 2012/13 season, increased again in 2013/14 season and reached to 10,1 million tons. Reaching to 11 million tons in 2014/15 season, wheat import amount is estimated to be around 11.5 million tons in 2015/16 season. The country imports wheat mostly from Black Sea area such as Russia and Ukraine. The second major product in the country’s grain import is corn. Being one of the top 5 corn importers, Egypt imported 4.3 million tons of corn in 2005/06 season and increased this to 5 million tons in 2008/09 season and 7.1 million tons in 2011/12 season. Reaching the highest level of the last 10 years with 8.7 million tons in 2013/14 season, corn import was recorded as 7.5 million tons in 2014/15 season. Corn import is forecasted to reach 8 million tons in 2015/16 season. GRAIN TRADE IN IRAN Iran is a major wheat importer like Egypt. Being ranked in world’s top 10 wheat importers, Iran has been importing large amount of wheat especially in the last four seasons. According to the data of USDA, wheat import amount of Iran which shows unsteady graphic between 2003/04 and 2011/12 seasons exceeded 1 million tons in only 3 of these 8 seasons. However, in the following seasons, import amount did not decreased below 1 million tons. Wheat import amount of the country which is 2.4 million ton in 2011/12 season increased to 5,6 million tons in 2012/13 season, 6,6 million tons in 2013/14 season. Import amount which reduced to 5 million tons in 2014/15 season is forecasted to be 4.5 million tons again 2015/16 season. Another important product for Iran’s grain import is corn. Corn import amount which was 1.8 million tons in 2003/04 increased gradually in the following seasons and reached 4.3 million tons in 2009/10. Reaching 5.5 million tons in 2013/14 season, corn import was recorded as 6 million tons in 2014/15 season. Forecasted import amount for 2015/16 season is 4 million tons. The other grain products which Iran imports are rice and barley. According to the data of USDA, importing 950 thousand tons of rice in 2003/04 season, Iran increased this to 1.6 million tons in 2008/09. Reaching 1.9 million ton in 2010/11 season, rice import amount was recorded as 2.2 million tons in 2012/13 season. Decreasing again the next season, rice import amount of Iran was recorded as 1.6 million tons in 2013/14 and 1.7 million tons in 2014/15 season. Forecasted rice import amount for 2015/16 season is 1.6 million tons. There is not a steady graphic in barley imports. Increasing up to 2 million tons in certain seasons, is around 1-2 million tons in general. FLOUR INDUSTRY IN EGYPT AND IRAN According to the Grain and Feed Annual Report dated 2014 and prepared by The US Department of Agriculture, milling industry of Egypt consists of public and private sectors. Public sector represents 52 percent and private sector represents 48 percent of total milling capacity. About 70 percent of produced flour comes from public sector. The number of public mills in Egypt is 126. It is known that most of them are small and middle-scale mills. 109 of them are used for the production of 82 % flour, 10 mills for production of 76% extraction flour. Flour in this category is used for production of traditional bread called as “tabaki”. 7 mills also produce extraction flour to use in commercial sales. All of these mills are related with Food Industries Holding Company (FIHC) and Holding Company for Rice and Wheat Mills (HCRWM). The FIHC is an umbrella organization that encompasses most state-owned mills including nine milling enterprises with total milling capacity approaches 7 million tons. It is also known that there more than 335 mills in Iran. Most of these mills belong to private sector. Consuming annually 150 kg flour per capita, Iran has one of the highest flour consumption rate compared to the other countries. It is also known that more than 10 million ton of flour is consumed in Iran and most of it is used for production of bread called “lavaş”.
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