April 11, 2018 / 3:50 PM / 8 days ago

UPDATE 2-Egypt sets local wheat price in line with int'l markets, angering farmers

(Adds farmer syndicate comment, recasts)

CAIRO, April 11 (Reuters) - Egypt set its local wheat buying price at 570-600 Egyptian pounds ($$32-$34) per ardeb on Wednesday (150 kilograms), tying it to international prices but angering farmers who warned it could push them to grow other more profitable crops next season.

Egypt, the world’s largest importer of wheat, harvests its own crop from April through July and has said it is looking to buy over 4 million tonnes from its farmers.

Speaking at a weekly cabinet meeting, Supply Minister Ali Meselhy said the local purchase price was in line with international prices Egypt has paid for imported wheat over the past year, continuing a policy the government imposed last year, which scrapped a subsidy that paid farmers an above-market rate.

In recent years a higher subsidised local procurement price led traders to smuggle in cheaper foreign wheat from abroad and sell it to the government as Egyptian-grown in order to cash in on the higher price.

The lowest price at an international purchase tender Egypt held last month was $217 per tonne for Russian wheat, whereas farmers according to this year’s pricing will receive about $215-$225 per tonne for their crop.

Farmer’s syndicate head Hussein Abou Saddam called the procurement price “unjust,” and said tying Egyptian farmers to low international prices was unfair considering that the prices are partly the result of other countries subsidising their farmers.

Saddam said the syndicate had requested 700 pounds per ardeb, and the lower price would lead to the “destruction of the wheat crop”. “Most farmers are going to grow other crops with more profit (next year),” he said.

Moselhy also said Egypt aims to increase its storage capacity for wheat through ongoing projects in order to accommodate 4 million tonnes of the grain, up from 2.9 million tonnes currently, though he did not specify by when.

The government has said it expects to import about 7 million tonnes during the fiscal year ending in June - wheat it uses along with its local crop to supply a sprawling subsidised bread programme.

Last year Egypt procured about 3.6 million tonnes of wheat from its farmers, the first year it scrapped the subsidy and followed international prices.

This year’s procurement price is a modest increase from last year, when Egypt paid its farmers 555-575 Egyptian pounds per ardeb.

$1 = 17.6525 Egyptian pounds Reporting by Moemen Saeed Atallah Writing by Eric Knecht Editing by Mark Heinrich and David Evans

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